Ancient Problems, Modern Solutions
Consider, for a moment, ancient history. Pick any civilization: Sumeria, Greece, Rome — it does not matter for this little thought experiment. Certainly, they have much in common; they were great empires, they innovated the world in ways no one else had before — all those bells and whistles. The similarity that needs to be pointed out, though, is the importance of concrete data.
Everything we know about the past is built upon scraps of information that somehow managed to survive one catastrophe or another and the merciless predation of changing cultures or regimes. Archeology as a field has spent painstaking efforts in trying to cross-analyze one source from another to build a solid view of the way things were “back then.” Even so, much of these efforts lead to one thing: the nebulous realm of speculation.
Banks and financial firms cannot function on speculation.
Consistent, clear, concise communication is key. Now, the chances that you will be needing to unearth data from a couple thousand years ago is pretty slim, but the left hand needs to know what the right hand is doing.
This is the crux of the issue: the operational risk inherent in reference data.
What is reference data? Reference data is a two-headed animal. The left head is static data. This is, as the name suggests, the mostly immutable aspects of finance. This includes supply chain information, expiration dates, and counterparties involved in a transaction. The right head is dynamic data. This is the information driven by the human element — closing prices, credit ratings, and the like.
Reference data is the information a bank or financial firm needs to ensure that they are not reinventing the wheel during the syndicated loan process. It is, effectively, the history that you are building upon.
Now, let us return to the analogy of archeology for a moment. Let us suppose a new, overzealous treasure hunter is on a dig in Egypt somewhere. He is rooting around in the sand and he picks up a gold necklace. It seems intact and it looks to be an incredible find. He presents it to his mentor only to discover, much to his embarrassment, that the gold necklace was made of brass and dropped by a tourist a few months back.
Do not be a treasure hunter.
Hunting implies you need to find something. Financial firms want to be treasure librarians. They need an orderly system to find reference data.
It seems sad to say but many companies are unintentionally taking the treasure hunter approach. Duplication of reference data, human error, and the siloes of systems can all lead to a nightmare of record keeping. When it comes time to claim the pearl, they find only useless grit instead. How could this happen?
The truth is, though the most recent generation would not know any better, is that the world of business is starkly different than it has been even as recently as five years ago. The world is changing fast; so fast, in fact, that only in the past decade has any decent progress been made on standardizing reference data policies. In terser terms, the world of finance is experiencing constant growing pains.
Naturally, this is disconcerting news.
The shell that firms know and love is now too small for them. It is time to find something more suitable to their needs and the needs of their clients, something that can almost guarantee that everyone will have a veritable pearl necklace.
Like a whirlwind romance, it can be a little frightening but ask any Musk or Bezos, and they will tell you there is a reward in risk. Innovation is born from the primordial chaos of necessity.
While that is a poetic way of putting it, this change — and the uncertainty that comes with it — is not fun. The turbulence has got to come to an end at some point, right? That is where we step in.
Forest Park Group is not like that poor hopeful digging around in the deserts of Egypt. We are not hunting.
We are finding.
Yet, more than that, we are creating. Our entire effort presently is to develop our latest software: LoanOS. With it, the entire process of treasure hunting for reference dating will be a thing of the past.
We present our sincerest apologies to the Indiana Jones hopefuls out there. Who knows, maybe someone will take an academic interest in the way we use to blunder about and do a bit of archeology on that. As for us, we would like to fly into the future with a clear navigational chart and we would like our client firms to soar with us.
