Shedding light on what front office managers expect from their technology infrastructure.
While still in the process of implementing, and six months away from going live, they shared some insights about their selection process, desire to consolidate and how their implementation project has gone to-date.
Belfius Bank is among the top four leading banks in Belgium and serves approximately 3.5 million customers, offering commercial activities in three main fields: retail and commercial banking, the public and corporate sector, financial services and insurance. Jo De Mil is Senior Product Manager at Belfius Bank, responsible for the development of investment products and discretionary portfolio mandates for the private banking clients of Belfius Bank and initiated and carried out the selection process having identified the need for a portfolio management system.
Selecting a new platform
For years, Belfius Bank had been struggling with an outdated proprietary technology that had too many manual processes and integration points. Rather than building themselves, they wanted to prevent any future limitations to them running a streamlined front office operation.
Based on the way Belfius Bank handle asset allocation, factoring performance and risk calculations into their investment decisions for clients, having straight-through processing (STP) capability was important to them. At the outset, Belfius Bank was clear that the fewer interfaces they had to deal with, the better. According to Jo, SimCorp Dimension offered Belfius Bank a single view into the full trade lifecycle and enhanced their portfolio rebalancing capability.
Belfius Bank had internal custodial and compliance functions but they needed a front-end solution. “We really needed a solution that allowed for an end-to-end approach,” states Jo. “SimCorp Dimension’s front office and investment book of record (IBOR) was perfect to have one vendor bringing all components together. By not having multiple systems to interface, we are able to go live much faster than if we needed to connect different systems together. Multiple implementations and multiple integrations would have led to a real operational headache, so I’m glad we found a vendor that could offer everything our front office needed. We not only saved on time, but also the potential for future risks associated with running multiple systems,” explained Jo.
Multiple implementations and multiple integrations would have led to a real operational headache, so I’m glad we found a vendor that could offer everything our front office needed.Jo De Mil, Senior Product Manager, Belfius Bank
With a very sophisticated private banking wealth division, Belfius Bank needed functionality to handle multiple funds. Jo says that, “the functionality for options and derivatives trading in SimCorp Dimension was world class, so we knew we’d found a good fit with our business requirements.” These instruments are frequently utilized within their investment strategies and having a holistic, current view of the entire portfolio, including the more complex asset classes, is a priority. Multiple factors can impact the day to day investment changes required and Belfius Bank needs to be able to act quickly on behalf of its clients.
Having narrowed it down to a handful of vendors, SimCorp came out on top. According to Jo, “they were the only end to end solution that could handle the level of sophistication we required based on the asset classes we maintain and the intra-day portfolio analytics we needed to factor into our decision making.”
Fewer systems just makes sense!
Belfius Bank has chosen to implement one platform across their front and middle office, as well as an investment book of record. Jo explains that at a high-level, “we are expecting to have time savings in terms of the builds required, faster time-to-market for audited performance reports and portfolio reports for clients. We also want to ensure that data flow is consistent and reduces processing time from end to end, SimCorp’s IBOR will be particularly important for that.”
The advantages to be gained from deploying a fully integrated solution versus multiple point solutions from different providers was clear for Belfius Bank. Jo says that, “We could easily have found five different vendors covering what we now have from SimCorp alone. That is a significant advantage in my mind. Fewer vendors to manage, fewer systems to integrate, and a better overview of data. It was just common sense.”
We could easily have found five different vendors covering what we now have from SimCorp alone. That is a significant advantage in my mind. Fewer vendors to manage, fewer systems to integrate, and a better overview of data. It was just common sense.Jo De Mil, Senior Product Manager, Belfius Bank
Regulatory demands were also a driving force when selecting an integrated solution. Belfius Bank increasingly needed a full overview of their positions, and the ability to oversee all compliance rules. Previously, Belfius Bank had them embedded or hard coded in the compliance system, but this wasn’t a viable solution explains Jo, “With SimCorp Dimension, each and every fund deviation from a rule is elevated. New asset classes, new investment structures in a rule set are much easier to translate. This means that there is now consistency of investment logic. Going forward, regulations such as MiFID II and others that come along, will be much easier to handle. This is a big relief to our compliance teams, as well as Senior Management.”
Looking at the key business benefits
While cost reduction was one reason Belfius Bank began this project, it was not the main one. It was really the discretionary management for private banking and wealth that they wanted to improve. It was more about increasing the functionality here so that they could optimize margins in a margin-sensitive environment. As a discretionary manager in particular, having the ability to take immediate action on real-time information is critical, otherwise it is an opportunity lost. Having all impacts on positions and cash, inclusive of corporate actions and fees, flowing through and running analysis on those impacts, all without manual intervention was the long-term solution we required.
In terms of mitigating risk, Belfius Bank now have fully audited performance, reduced integration points, straight through processing and very strong depth of oversight. They have reduced multiple manual points from contract mandate to reporting to the client while having the same number of people in place. Jo says that while it would be difficult to give a specific improvement calculation, there has been a significant reduction in manual processing, and thus risk.
Scalability was also a key differentiator, with SimCorp Dimension being seen as an enabler. “It's now possible to start mandates much more quickly and we've actually been able to reduce the mandate process by anywhere from three to six months,” explains Jo. This time reduction is referring to the full time-to-market, from conception of a new mandate to setting-up and configuring the system. This is now much more fluid for Belfius Bank and a lot of the configuration is already in place. The actual onboarding timing itself has also been reduced.
Reflections of the partnership with the vendor
As with any major software purchase, your relationship with the vendor is extremely important. Do you believe in their product roadmap? Do they invest enough back into the product? Do they have services to support you down the track? These are important questions that need answering when signing up for such a long-term commitment as an investment management solution.
SimCorp has always offered very realistic timelines in the implementation and they bring in the right specialist at the right time. We feel challenged when they ask the hard questions of our business analysts and IT people.Jo De Mil, Senior Product Manager, Belfius Bank
Jo believes that the relationship with SimCorp has been very collaborative, saying that, “we at Belfius Bank appreciate the intellectual honesty and consistency of the consultants we work with. They want a robust set-up, and to get things right the first time around. They don't start the process with us until they understand what's required.”
Working with a vendor should be viewed as a partnership. As Jo explains, “SimCorp has always offered very realistic timelines in the implementation and they bring in the right specialist at the right time. We feel challenged when they ask the hard questions of our business analysts and IT people. They have created a lot of trust with our team and what we can deliver together. They also don't take shortcuts that can come back to us after the implementation.”
Name: Belfius Bank
Headquarters: Brussels, Belgium
About Belfius Bank
Belfius Bank and Insurance:
Belfius Bank is an autonomous Belgian banking and insurance group wholly owned by the Belgian federal state through the Federal Holding and Investment Company (FHIC). Belfius Bank & Insurance is, above all, a local bank, collecting savings deposits and investments via its distribution networks in Belgium. It then re-invests these funds into the society in the form of loans to individuals (mainly mortgage loans), the self-employed, small and medium-sized enterprises and the liberal professions, corporates and, in particular, public and social institutions. The company's headquarters are in Brussels.