Automating pre-trade compliance and improving client reporting flexibility
In early 2006, with the help of external consultants, the search began for the right system. DIAM International has always supported its business with leading technology but also recognizes that technology moves forward all the time, so the search began with a comprehensive review of the current market in front and back office asset management systems. The pros and cons of upgrading existing installed software were also considered.
Choosing the right software
Initially the idea had been to implement one system for the front office and another for the back office. However, if a single system could be found that could support all requirements, a potentially complex reconciliation process and lengthy implementation could be avoided. This kind of solution would mean that from the start there would be only a single supplier relationship to manage and on completion, the headache of daily reconciliation between systems would be a thing of the past.
DIAM International concluded that there was just one front-to-back investment management system in the market that could both do the job required and do it at an acceptable cost – SimCorp Dimension.
As SimCorp Dimension is an extremely flexible system, it was important to assess carefully what would be the best configuration for DIAM International and so the implementation project commenced with a detailed analysis phase. The implementation progressed smoothly, staffed by a team comprised of both DIAM International personnel and SimCorp staff managed out of SimCorp’s London office. “It was a surprisingly good project”, says Jan Weber, DIAM International’s Chief Operating Officer.
Working with the new system
When the new system went live DIAM International found immediate benefits in running with the new system. Although operational staffing levels have remained unchanged, transaction volumes are up 50% and the business has been able to cope with that increase. Furthermore, the operational processes are more robust.
Particularly helpful is that compliance rules are now checked automatically pre-trade by the system. System outputs in this area are very clear and the daily burden on the compliance team has been significantly reduced. Also production of client reports, a complex process as DIAM International is very focused on client service and many reports are tailored to individual client requirements, is increasingly driven directly from SimCorp Dimension’s core Oracle™ database using Crystal Reports™. The potential for flexibility and transparency in this area is the direct effect of the single-system approach DIAM International has chosen, as all the system’s data is in one place and, subject to individual authorization, is available to all DIAM International’s users simultaneously.
We’re confident we’ll be able to adapt to changing requirements of our clients, no matter how demanding they might be.
For DIAM International, the potential for meeting diverse future reporting requirements more efficiently is one of the biggest differences between the old operating platform and the new one. SimCorp Dimension’s design, with all functionality based around a core database will simplify the implementation of new functions. All the data in the system may be commonly accessed by all modules, so the implementation of new functionality does not have to involve setting up new databases or interfaces with those SimCorp Dimension modules that are already in use. Such flexibility is key for DIAM International, with Weber stating that, “We’re confident we’ll be able to adapt to changing requirements of our clients, no matter how demanding they might be.”
The investment management firm also derives comfort from SimCorp’s ongoing investment in product development, which is controlled for each broad business functional area by industry expert domain managers within the company. ”Some things we’ve tried to do, say involving less commonly used instruments, have presented challenges, but none insurmountable. We have liked SimCorp’s response though. The domain managers that we’ve met are on the ball and very aware of market pressures,” notes Weber, ”and a big positive for us is that we know there are three hundred plus developers working on the system full time.”
We have been very pleased with the personnel SimCorp have brought in.
In summary, DIAM International’s decision to implement SimCorp Dimension has resulted in automating pre-trade checking today, while at the same time insuring against potential difficulties in dealing with future requirements. ”The best thing is that previously any new business requirement involved another add-on system or a complicated work-around, but implementing SimCorp Dimension has opened up the whole of the front and back office for us so we have a lot more flexibility in the business,” says Weber, ”overall we can be more forward-looking with the system we have now.”
Name: DIAM International Co.
Headquarters: Tokyo, Japan
Industry: Asset Management
AUM: USD 135 billion (as at September 2015)
DIAM is the largest manager of public pension fund assets in Japan. The DIAM entity was formed as a result of the strategic alliance between Dai-ichi Mutual Life Insurance Company and The Industrial Bank of Japan in October 1999. DIAM fully utilises the wealth of investment expertise from Dai-ichi Mutual Life Insurance Company (dating back to 1902) and combines it with a body of forward thinking investment professionals and progressive technology to provide an asset management company that is committed to the pursuit of excellence in the services it provides.
DIAM is jointly owned by two market leaders: Mizuho Financial Group and Dai-Ichi Mutual Life. This ownership has given DIAM the financial strength and backing to evolve into a global asset management firm with USD 135 billion AUM (as at September 2015), with offices in London, Tokyo, New York and Hong Kong.