EQUINOR ASSET MANAGEMENT ASA: A POWERFUL ENGINE RUNNING UNDER THE HOOD OF THEIR BUSINESS

Equinor Asset Management ASA (formerly known as Statoil Kapitalforvaltning) is a Norwegian-based energy company operating in 36 countries. To manage their financial assets for their pension plans and insurance captive, they established a fund management company, Equinor Asset Management. In 2001 they selected SimCorp Dimension to support them and today they manage approximately EUR 10 billion in AUM.

We caught up with Inger Martha D. Engø, Head of Control & Risk Management, Pål Gjerden, Principal Analyst, and Trond Todnem, Senior Portfolio Manager, to hear about their journey towards an integrated front-to-back solution.

Trond Todnem, Senior Portfolio Manager, Pål Gjerden, Principal Analyst, and Inger Martha D. Engø, Head of Control & Risk Management.

Life before SimCorp

In the beginning, Statoil used separate front and back office applications and several in-house built solutions to support their investment management. As Trond explains, “We came from a world with a lot of manual processes and spreadsheets, we did all the deal matching and had manual interfaces with the banks where we had to upload the transactions, and had spreadsheets, calculating exposure, running compliance models, and so on. We had spreadsheets for basically everything.”

This struggle with manual workarounds and disparate systems led them to look for a solution that could support them overcome these key challenges, first in the back office, then the middle office, and now increasingly in the front office.

According to Trond, things have really “picked up pace in the past 5 years, as we have sought to automate more and more processes and that has lead us to expand our business. The use of SimCorp Dimension has been an important tool in this transformation.” Most recently Equinor Asset Management has begun using Asset Manager and Compliance Manager in their front office.

Front office success

Trond, a Senior Portfolio Manager managing a portfolio of US equities uses the Asset Manager component for all his daily work, while the fixed income side use Asset Manager for position control (as well as Bloomberg). Going forward, Equinor Asset Management plans to expand their front office suite by adding real-time updates and the Order Manager. Trond explain, “by having an integrated front office solution we have the benefit of one version of the truth, less integration and interfaces and a simpler front office workflow from simulations of positions to order creation and booking of transactions.”

Why did they expand their use of SimCorp Dimension? Inger says that the “main goal was to collect all functionality into one solution in order to automate operations and minimize operational risk by reducing use of personal spreadsheets and remove interfaces between the different solutions.” In addition, compliance, exposure and results can be monitored and reported in a more efficient way. From a compliance and control perspective, the monitoring is automated and can now be performed effectively by a minimum number of employees.

A solid solution underpinning their business

According to Pål, Principal Analyst at Statoil, SimCorp Dimension is a powerful engine running under the hood of their business. “System platform manager has been crucial to effectively implement all the support processes and services we needed. From a technical point-of-view, I believe that SimCorp Dimension is an extremely stable solution, especially considering its size. We’ve had upgrades where we didn’t need any patch for 3-4 months. This is pretty impressive for such a huge IT platform.”

Equinor Asset Management is a relatively small asset manager, and therefore takes extra effort to be operationally lean. Being able to implement new business functionality and processes without much effort or hassle, is a huge plus for them. According to Pål, “it means that we can focus more on the business side, safe in the knowledge that the technical aspect is taken care of.”

Having spent years working with a lot of other systems in other industries, Pål says that “this was the first instance where users consistently report 100% performance. In my experience, SimCorp is always available, it’s always on – and that is extremely reassuring for someone in my position.”

A journey towards consolidation

From a system architecture perspective, it’s always been very clear for Equinor Asset Management that if they’d had several systems and several interfaces, then there is an increased risk of having incidents. “By having everything in one system with one architecture, and one base configuration, I feel much more secure in our system stability, and know that if something goes wrong, then there is a clear path to resolving it,” says Pål.

In the beginning, SimCorp Dimension was used as the investment book of records and accounting, with spreadsheets for almost anything else. Over the years the use has been gradually expanded into risk and performance functionality, improved settlement and STP, fund accounting, improved reporting and lately also into the front office suite. Trond explains that “as a small organization, we don’t have access to specialists for everything, so having one system and fewer integration points makes it easier to keep things going as a business user, and less dependent on tech and resources.”

Entering a new business area

Equinor Asset Management recently set up a new business becoming a fund manager and establishing seven UCITS funds in 2016. Even with this expansion of products and tasks, it was possible without any addition of new employees. Thanks to automation and strong STP rates, Equinor Asset Management has been able to expand into new business areas without additional costs and staff. Inger explains that, “SimCorp Dimension is our core solution, and we’ve been able to take on more business with the same organizational setup, if not less.”

In addition, Inger says that, “this has been a success story for us. The ability to grow with the same cost base is obviously a great feat. And it’s been possible thanks to increased automation, and less manual processes and fewer inhouse built models and spreadsheets. In essence, it’s been down to the breadth of SimCorp Dimension that it was possible.” Equinor Asset Management has reduced their use of spreadsheets and manual processes by approximately 50 %.

Regulation

While Norway is in a special situation regarding regulation, as implementation of EU regulations in general is behind schedule compared to the rest of Europe, regulations such as MiFID II will still impact them. To that end, Inger says that they have been supported by the solutions, provided by SimCorp, as they helped develop a special solution for us to meet the Solvency II requirements.”

Conclusion

A lot of what Equinor Asset Management has tried to achieve in the past years, have been to reduce costs, while at the same time growing their business. Trond says that, “SimCorp Dimension has enabled us to keep things simple. We are very cost efficient and have added a lot of activities without increasing costs, this has been a great help to us.” Finally, Inger adds, “we must maintain the goal to keep costs low to remain a preferred provider in the future.” Having automated many of their processes, operational risk has been reduced and employees spend their time on more complicated and value-adding tasks.

About Equinor Asset Management ASA (formerly known as Statoil Kapitalforvaltning)

Equinor Asset Management ASA is a subsidiary of Statoil ASA and has 13 employees. 

Equinor Asset Management ASA is authorized by The Financial Supervisory Authority of Norway as a Management company for securities funds and provides investment products and services to clients. The activities include investments in equities, fixed income, money market instruments and management of 7 UCITS funds. Total assets under management amount to approximately NOK 93 billion.

Image source: Photographer: Ole Jørgen Bratland / Statoil