RiskTech100 2024 Winner’s Spotlight: ION

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ION had another strong year in the RiskTech100, again collecting wins in the Commodity Trading and Risk Management (CTRM) and Treasury Platforms categories. With a focus on workflow improvement and automation, the London-headquartered vendor offers a range of products for capital markets, banks and corporates, including Allegro, Aspect, TriplePoint, RightAngle, OpenLink, Wallstreet Suite and Reval.

According to Sunil Biswas, Chief Product Officer at ION Commodities, ‘Across ION our ethos is all about digital transformation. We focus on specific user communities, examine their manual business processes and then codify them. Through automation, our customers gain substantial benefits. We deliver business insights by leveraging the data running through the ION software solutions our customers use, so they can improve decision-making.’

Broad portfolio, flexible approach

Over the years, ION has built up a portfolio of solutions in the commodities and treasury spaces. Today, its solutions span a variety of corporate needs, which ION considers a key differentiator. ‘We have assembled a portfolio of CTRM solutions that serves the demanding needs of trading, risk, operations and finance for commodity-intensive firms,’ details Biswas. ‘With this portfolio, we span energy and non-energy commodities, across the supply chain, in multiple geographies.’ ION also points to its adaptability and flexibility in servicing corporate customers of different sizes as intrinsic to its success. ‘We service different tiers of customers, from startup firms migrating off spreadsheets and seeking configurable packaged [software as a service] SaaS solutions to large multinational energy corporations that require extensive customization and enterprise integration,’ explains Biswas.

Likewise, ION’s portfolio of treasury platform offerings gives corporate customers solutions tailored to their requirements at the right price point. Michael Kolman, Chief Product Officer at ION Treasury, states, ‘We believe there is no one-size-fits-all solution. As a result, we take solutions and develop them with a specific segment of the market in mind. In Treasury, the underlying business processes are largely similar from company to company, but complexity comes in when a company scales and more bank accounts, countries and currencies are introduced. Some companies want to be as standard and simple as possible; others don’t have that luxury and need to be able to manage more complicated set-ups.’

ION also points to the company’s long-term mindset as a driver for product investment. Kolman states, ‘We are invested for the long term, which is critical, as the technology to enable digital transformations isn’t built overnight – it’s developed with recurring investment over time, as new innovations are introduced to our solutions.’

Commodities developments

In the commodities space, ION has been working to help its customers overcome the challenges of disruptions to globally connected supply chains. The commodities sector witnessed significant price volatility during and after the COVID-19 pandemic. Since then, the onset of the Russia-Ukraine war has shifted the parameters of risk management. ‘Over the last few years, we’ve really stepped up our efforts to help customers manage inventory, exposure and risk through periods of volatility,’ states Biswas. ‘It’s not just market risk, it’s also about efficiently managing through supply chain disruptions, as well as counterparty credit and liquidity risk, given the impending threat of recession.’

In view of this scenario, ION has invested heavily in its asset optimization models. As Biswas details, ‘For those firms that have storage facilities, there’s the question of optimal usage given contractual commitments. For example, when is the best time to inject and withdraw from a gas storage facility and what are the hedging implications to maximize P&L?’

Energy transition and sustainability goals are also top of mind for corporates. ION has worked to ensure that renewable power and renewable fuel are supported front to back in its solutions. ‘It’s more than just capturing contracts and modeling trades; you have to calculate the exposures and risk to ensure correct hedging,’ says Biswas. ‘Then there are other aspects too, such as managing emissions. This requires support for carbon trading, certificates lifecycle management and reporting to carbon registries.’ Integrating these factors into its offering has been no mean feat; it is an area in flux, and the rules are constantly changing. Furthermore, ION’s globally diverse customer base means it needs to support a wide range of sustainability schemes; as such, the company anticipates that this will continue to be a key area for investment going forward.

A third area of investment has been the delivery of risk management results across the enterprise through its streaming risk platform. ‘We’ve always calculated P&L and risk, but the numbers provided to the traders might be different from the risk numbers available to the financial control group, which in turn may be different from those analyzed by the risk group. This is because they use different views of the market, calculation timing is not synchronized and the underlying analytic models may be different,’ details Biswas. ‘We’ve now tightened this up with the introduction of our streaming risk platform, where a consistent set of P&L and risk results is distributed in real time across the enterprise. This also allows our customers to nourish their downstream applications, such as limits management for business control.’ The streaming risk platform has been particularly well received by larger firms for providing consistent P&L and risk information across the front, middle and back offices.

Treasury developments

In the treasury space, liquidity management has been the main customer priority in recent years and has come even more to the fore in this high interest rate environment, when the cost of capital is high and holding excess liquidity is expensive. Kolman elaborates: ‘The central challenge for treasury is liquidity management and providing a 13-week forecast. A lot of this comes back to digital transformation and being able to connect everything through [application programming interfaces] APIs. Essentially, liquidity management is just an aggregation of lots of different data points from several sources that provide you with visibility into the optimal level of liquidity. However, many companies are still several steps back and trying to move off spreadsheets to gain real-time visibility of their cash.’

Recognizing this customer need, ION has developed a new liquidity planning tool that aggregates forecasts from different sources using APIs. Detailed data is critical for identifying particular behaviors. ‘If you see a certain customer paying late every time they make a payment, and they’re always 15 days late, the likelihood is that the next payment will be late,’ states Kolman. ‘Understanding that kind of behavior is a great application of machine learning. So we’ve developed our machine learning for cash forecasting capability as part of our liquidity planning module. It’s not a replacement for the existing forecasting processes that are in place, but we do see it as an opportunity to be able to refresh the forecasts very quickly, with low amounts of effort, and provide a secondary source of forecasting that may be able to make better predictions in some cases than a human.’

Future plans

Looking to the future, ION has several plans in the works. In the commodities arena, a key focus area is portfolio optimization and cash flow risk. Biswas details: ‘We’ve had value at risk [VaR] in all our systems for a while, but we’re moving beyond standard parametric VaR and now offer historical and Monte Carlo VaR techniques to all our customers. On the cash flow side, trade financing is integral to the commodities industry. We’re working to help commodity trading firms better understand their cash positions to finance trading activities optimally with banks.’

ION’s treasury offering has a particular focus on payments. ‘We have recently released our payment hub functionality, and we’ll do more around this,’ says Kolman. ‘Large companies will have several, maybe even more than 100, different sources of systems that might generate payments. This is a lot of connectivity to manage. We centralize all of this into a common hub, which is where we can leverage workflow and other payment services like sanctions screening and fraud detection, and we have plans to continue to add new capabilities here. We’ll also continue to roll out some additional use cases for machine learning, in particular on the cash side, to help automate more cash reconciliation and tagging of transactions.’

Fueling ION’s future development is its ‘build once’ strategy, which leverages assets and capabilities across the group to deliver innovation to customers faster. ‘We’re often asked how we manage so many products. When a certain functionality is required, we take a build-once approach, where we make the functionality accessible to all customers, regardless of their treasury or commodities platform,’ says Kolman. ‘For example, we have a common bank account module, which is in all our treasury systems. This approach allows us to develop at scale and with speed across the large development teams we have. Not only that, but the more we can incorporate and leverage the assets across the entire group, the more we can increase our differentiation in the market,’ he concludes.

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