Gulshan Gandhi, Senior Consultant, TCS BaNCS for Capital Markets

One of the most complex challenges for a Corporate Actions platform in any large asset servicing organization has been its integration with legacy partner systems (such as client data, assets, position keeping and accounting – cash and stock). Currently, corporate action platforms integrate with downstream or upstream partner systems (mostly legacy platforms built decades back in mainframes) via the traditional point-to-point architecture.

Representative Integration Landscape of a Corporate Actions platform in an Asset Servicing Firm:

With the evolution in integration architectures and the availability of modern, scalable platforms based on real-time event streaming, API-based integration etc, these Corporate Action platforms along with the entire asset servicing ecosystem now have access to the right set of tools /ammunition to handle integration complexities and expedite the modernization of their legacy applications. The “Distributed Event Streaming Platforms (ESP)” now allows for such modernization to happen at a lightning-fast speed. These platforms model their architecture on pub-sub messaging, asynchronous service-to-service communication used in serverless and microservices architectures. They are highly scalable, distributed, durable and fault-tolerant and are now widely used across industries for data integration in industries from manufacturing to banks to insurance and telecoms.

Its unique capability lies in their ability to support multiple types of integration architecture:

a) Queuing (Point-to-Point) – Traditional Architecture

b) Publish-Subscribe (Pub/Sub) – Modern Architecture

Using distributed event streaming platforms, Corporate Action platforms do not have to worry about challenges of integrating with multiple downstream systems of a similar kind. For example, it has been seen that many large asset servicing firms especially custodians maintain multiple position keeping systems for clients. Without an integration layer between the corporate actions platform and legacy partner system, in most of the cases, it becomes the corporate action platform provider’s responsibility to integrate with multiple position keeping systems, by first connecting via different protocols (MQ, NDM) and then publishing and receiving data in multiple formats (flat file, CSV, XML, JSON etc.).

Distributed event streaming platforms address the above challenge by utilizing “Publisher-Subscriber Architecture” making it scalable. It allows corporate action platforms to broadcast data in real time, continuously and synchronously to multiple consumers.

Some of the well-known benefits of Distributed Event Streaming Platforms are:

Traditional Integration Model for Corporate Action platforms: P2P with Legacy systems (Representative List of Legacy systems):

Modern Integration Model for Corporate Action platforms via Distributed Event Streaming Platforms – Pub Sub Architecture

Having said that, it is important to understand that the path to modernizing the integration landscape may not happen with a big-bang approach, dueto technology limitations of legacy systems within asset servicing firms to integrate directly with distributed event streaming platforms and move away from point-2-point architecture. To solve this problem, one must carefully review the capability of each legacy system and decide the right path forward. Based on the legacy system capabilities, one can envisage three paths for integration:

Path 1: Traditional Path - P2P Connectivity – Ideal for those legacy systems who are unable to connect to the distributed event streaming platforms due to technology limitations and would expect the data to be published in their format and protocol.

Path 2 – Tactical Path: For those legacy systems who can eleiminate some of their technology limitations but would need some sort of transformation layer between the distributed event streaming Platforms to transform the data in the necessary  format and protocol.

Path 3: Strategic Path – New-age partner systems without any technology limitations and can be onboarded to connect to distributed event streaming platforms.

To summarize, distributed event streaming platforms will play a vital role as a modern and scalable “middleman / integrator” in the financial services industry for both vendors providing Corporate Action platforms and consumers such as asset servicing firms.

Disclaimer: Views or opinions represented in this blog are based on the author’s own research and do not represent TCS BaNCS.

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