Jochen Müller, EVP, MD Operations and Accounting Services at SimCorp, explores the commercial benefits for insurance companies and pension funds to outsource their investment accounting.
Q1: Why are insurance companies and pension funds looking to outsource their investment accounting?
A number of clients tell us they are running to stand still. The daily operations keep them fully busy, and they don’t have enough time to concentrate on what is their core competence: manage and grow their investments and be prepared for the challenges of the future. Given the increased complexity of the investment landscape and regulatory needs they must focus on those strategic questions rather than the day-to-day operational processes. Investment firms can buy accounting software, but they are still responsible and accountable for delivering the day-to-day accounting outcomes. What we are seeing is more customers asking us to commit to those outcomes.
Many clients don’t want to consume technology as they did in the past. They say, our technology is already highly automated and consequently they want us to take the full responsibility for the accounting process and provide them with the insurance reports. We can do this very efficiently since we have the oversight how our technology works from all our clients and permanently build these process improvements into our technology. So now that’s what we’re doing. We have created a dedicated business unit to deliver these services, we have hired an experienced team and I have moved from Chief Commercial Officer to head up this new unit.
- Investment Accounting Services
Get to the right numbers quickly to see the big picture
Investment Accounting Services is a unique combination of three value-adding components - advisory, operations and change management – that work together to give you back valuable time to focus on what really matters to your business – insight, analysis, innovation and growth.
Q2: What benefits can they expect to achieve?
In addition to the benefit of focusing on the core investment duties of the firm clients can expect to achieve control, insights, cost efficiency and operating model flexibility. Let me expand on these points:
With highly efficient processes and a service level agreement to rely on, investment accountants will have accurate, timely and verified accounting data – allowing them to close the books earlier so that they can concentrate on analysis of the data and drawing conclusions rather than aggregating and reconciling data.
They will also retain control of their data with full and transparent access to validated and enriched accounting data, held in their geographical region in line with international data regulations.
The ability to combine the accounting data with non-accounting data in a cloud-based data warehouse ensures that the investment accountants and clients can gather the insights they need from SimCorp’s Digital Portal. Clients can slice and dice the data as they need it and concentrate on what the data means rather than focusing on processing the data.
Greater cost efficiency
Leveraging the shared platform and highly efficient processing ensures an efficient and cost-effective service is delivered. This enables you to focus your resource on the differentiating tasks and add to the company bottom line.
Faster time to market
Many times, the operational complexities of accounting in new jurisdictions or for new instruments such as alternatives or complex derivatives are the bottlenecks in the investment lifecycle. SimCorp has over 30 years of experience in ensuring the accounting frameworks and instruments are correct and can therefore ensure that the accounting duties are one less process to worry about when moving into new markets or asset types.
Front to Back Operating model
SimCorp is the only provider of a hybrid operating model combining in-house platform and services across the full front-to-back investment value chain in a single integrated system. This enables you to directly access front office applications, include additional SaaS (Software as a Service) services such as Performance as a Service, and combine with Investment Accounting Services to seamlessly leverage the same underlying data.
This combined with the removal of key person dependency risk, in often difficult or expensive to recruit geographical regions, allows you a level of flexibility in your operating model.
Q3: How do you believe you can deliver investment accounting services more efficiently than other providers?
The foundation of the service is the leading investment accounting platform, SimCorp Dimension, which already has over USD 30tn AUM processed for accounting. The platform has more than 70 accounting frameworks, more than 170,000 instruments supported as standard and a highly automated 95% STP rate, ensuring an unrivalled level of automation. Therefore, we know that our investment accounting service can manage more portfolios and thus deliver efficiency to the customer.
Software and automation are not the only answer since we do not live in a perfect world and the numbers don’t always add up. Therefore, we employ industry professionals with an average of 12 years of global and local experience. This group of qualified accountants and experienced operations specialists ensure all exceptions are investigated and resolved, validate the accounting analytics and reporting and can inform and advise on ongoing regulatory and accounting changes.
We believe this combination of leading technology and a global and local service team delivers an unrivalled service and delivers huge benefits to our clients.