GROW AND MEET REGULATORY REQUIREMENTS with the right investment management IT platform
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Grow and meet regulatory requirements
Growth in a period of intense – is your organisation positi Unprecedented regulatory change coupled with more stringent client demands is a hindrance to a still modest recovery in market growth. With markets only gradually recouping the losses suffered during the financial crisis, competition among investment managers for new business is fierce. In this type of environment, only the most visionary and best-prepared investment managers can expect to thrive.
“81% of investment management companies surveyed see regulatory interference as the biggest hindrance to growth.”
“86% of investment management companies surveyed see increased regulation as inhibiting growth.” ‘Report on Global Investment Management Growth Survey 2010’, SimCorp StrategyLab, May 2010
‘Renewing the promise: time to mend relationships in investment management’, KPMG, 2009
Regulatory change is seen as the biggest challenge to growth
With unprecedented regulatory activity and more stringent
possible. The system should be frequently updated and offer
In the aftermath of the financial crisis, current and pro-
will be difficult without the right investment management
a technology point of view, the investment management
posed regulation from government and standardisation
bodies is irrevocably changing the way business is done in the investment management industry. With heightened
scrutiny from the authorities, imposition of standards such
as IFRS 9, Solvency II, UCITS IV and AIFM in Europe,
client demands on investment managers, achieving growth IT infrastructure in place. Regardless of whether investment managers pursue growth strategies of low-cost leadership,
product differentiation, expansion into new markets and segments or a combination of these, it is imperative that the
technical infrastructure is in place to support the desired
and legislation such as the Dodd-Frank Wall Street Reform
growth strategy.
wonder that investment management organisations see
Does your organisation’s investment management IT system support your growth ambitions?
and Consumer Protection Act in the USA, it is little
increased regulation as the primary barrier to growth going forward.
“The ongoing regulatory debate, taking place between governments, regulators and industry, has a lot in common with popular horror movies: you know that something dramatic is going to occur – you just don’t know when it will happen or what it will look like.” ‘Positioning for a new financial landscape’, Deloitte, October 2010
Lessons from the financial crisis have set new demands
Regardless of the growth strategies employed by investment
managers, there is one common challenge faced by all when
delivering on the promises made to clients to provide attractive returns on their investments. If investment managers are
forced to divert scarce and valuable resources to overcoming operational issues and deficiencies in their investment
management IT platforms, then their prospects of achieving
growth look bleak indeed. The current market situation can be compared to a period of famine – only the survival of the fittest is certain. The financial crisis has already culled the
weakest of the flock and more natural selection is impending; with the right investment management IT platform, your company will be capturing rather than merely defending market share.
Investment management clients have also learned from
IT system requirements for achieving growth and regulatory compliance
reporting, lower risk tolerance and higher pressure on fees
An optimal investment management system removes data
this has not reduced client expectations regarding growth
processes by providing a core system with a single data
the financial crisis. Their demands for transparency, better have and will continue to increase substantially. However,
and returns – on the contrary.
quality and integration issues and errors from manual
source, combined with as high a degree of automation as is
coverage of all asset classes and financial instruments. From system must be designed in a manner that allows for
seamless, expedient changes to existing workflows and
processes in order to accommodate new regulation. The system must be scaled to accommodate higher transaction volumes and new asset classes, funds and portfolios. Such
a system allows investment management firms to focus on
their core competency of adding value for their clients versus devoting an inordinate amount of resources to operations and IT workarounds.
“The full extent of regulatory change is still unknown, but the initial catalyst of reform has come from the marketplace. Institutional clients of IMFs have decisively voted with their investment dollars. IMFs that cannot show sound operations and resulting technical support will not receive investment dollars ... With more than 1,000 IMFs for institutional clients to choose from, for IMFs to ’grow’ their business many must ’transform’ existing operations and technology in order just to stay in business.” ‘Introduction of the Asset Management Hub’, Gartner Group, June 2010
Grow and meet regulatory requirements
regulatory change ioned to win? Are IT systems issues constraining your growth ambitions? If the following pain points seem familiar, the time to acquire a new investment management IT system is now.
Lack of transparency
Outdated regulatory support
As data is stored in several databases and systems, including spreadsheets, it is difficult to get a true indication of risk exposure as well as to gain insight into liquidity, valuations and similar metrics. Far too much time and resources are used trying to consolidate disparate data sources into a clean picture of the business.
There are many months – even years – between new releases or upgrades to the investment management IT platform, which forces diversion of IT and other resources to creating workarounds in order to comply with legislation. Rather than dedicate time to growing the business, the company is scrambling just to keep up with the tide of new regulation.
Manual processes and duplicate data entry
Insufficient support of asset classes and financial instruments
Due to limitations in the investment management IT platform, there is an abundance of manual processes and duplicate data entry, which consume resources and result in higher error rates. Among other things, this makes it more difficult to comply with existing and pending regulation.
The investment management IT platform does not support all asset classes and financial instruments, thereby limiting opportunities to grow by expanding investment offerings.
Want to learn more? If you want to learn more about enabling growth while achieving regulatory compliance with your IT platform, SimCorp offers a wide variety of knowledge resources for the investment management industry. Discover valuable findings about growth issues in the investment management industry in ‘Report on Global Investment Management Growth Survey 2010’. Download the report at www. simcorp.com/enablegrowth.
Get insights into the growth strategies available to investment management organisations when preparing a return to growth in ‘Enable growth strategies with SimCorp Dimension’. Download the brochure at www.simcorp.com/ enablegrowth.
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Grow and meet regulatory requirements
Sharpen your competitive the optimal investment manag As a business leader, you know that your investment management IT system should be an asset rather than a liability. In today’s market, the right investment management IT system can make the difference between winning and losing investment mandates. Problem or solution? With outdated technology that cannot scale to meet today’s
investment management IT platform as a problem rather
becomes: “What characteristics define an optimal investment
to adapt to new regulation or expand the business into new
should facilitate rather than hinder growth and serve as a
is unique to each investment manager, some common themes
needs, and with system limitations restricting the ability markets or segments, many investment managers see their
than a solution. Ideally, an investment management IT system source of competitive advantage. The question accordingly
management IT system?” While the answer to this question are shown below.
From unsustainable to indispensable – defining your next investment
Current challenges Compliance with regulation and risk modelling is made more difficult due to disparate systems for different business functions such as risk management, accounting, reporting, compliance, etc. Reporting on risk figures and level of exposure. Low quality of enterprise data makes it difficult to measure the risk and regulatory compliance impact of proposed investment decisions. Utilising various systems on disparate platforms throughout the enterprise means lack of transparency. Human errors in manual workflows and transfer of data.
Ongoing system maintenance and keeping system up to date. Different systems to comply with various local tax and accounting standards. Maintaining interfaces. Human errors due to manual processes. Manual creation of reports. Product innovation. Managing non-standard and exotic instruments. Scalability. Local requirements when entering new markets.
Grow and meet regulatory requirements
edge – deploy gement IT system
management IT system
Vision of the future One integrated solution offering enterprise-wide functionality based on a single database. All position data is available across asset classes and the same risk models can be applied to all data, enabling correct quantification of risk and compliance with accounting, reporting and regulatory requirements. Fully automated reporting to clients, management and authorities, reducing the risk of compliance breaches and manual errors. An integrated solution – flexible and modular front-to-back system with no need for interfaces or duplication of data and with the same set of data used throughout the system – minimises the risk of having investment decisions carried out on the basis of incorrect information. All functionality needed for different business functions in an integrated system creates transparency. Internal and external STP processes reduce the need for manual processes and consequently the number of human errors. Semi-annual product releases, expert support and, where possible, automated upgrade, validation and testing procedures minimise the risks in ongoing system maintenance and upgrades. Utilising one set of data throughout the system reduces costly duplicate manual processes and also avoids the need to train staff on multiple systems. Minimised usage of external interfaces, which also reduces the costs related to maintaining them. Automation of labour-intensive processes reduces human errors and related costs. Automated reporting functionality significantly reduces operational costs. Support for an innovation-driven growth strategy through extensive coverage of financial instruments. A tool that enables rapid implementation of complex and non-standardised instruments and that can be included in portfolio modelling. New products, new clients and higher transaction volumes can be accommodated without a corresponding increase in cost. New tax and accounting standards as well as reporting requirements can be accommodated without additional investments in development.
This is not just a utopian idea of how things could be – read on to learn how SimCorp Dimension is the indispensable solution for your investment management needs!
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Grow and meet regulatory requirements
SimCorp Dimension – the ri for your investment managem SimCorp Dimension is the best investment management platform in the world today. SimCorp Dimension is a comprehensive IT system offering investment managers unprecedented flexibility, scalability, functionality, usability, performance and reliability in a highly configurable and fully integrated modular solution, helping to enable growth while mitigating operational risk and reducing costs. Investment managers can be secure in the knowledge that SimCorp Dimension supports both existing and upcoming regulation and legislation.
Bring your growth strategies to life with SimCorp Dimension
Simple, logical and fast
160+ migrations from other systems
SimCorp Dimension meets the challenges imposed by
SimCorp Dimension is designed with the principles of
simplicity and logical investment processes and workflows
Perhaps the most compelling arguments in favour of adopting
in mind, coupled with a degree of process automation that
migrated over 160 clients from other solutions, while no
regulators, the market, and, most importantly, investment
management clients. SimCorp Dimension ensures that your
growth strategies are brought to life and your company can concentrate on its core competency – delivering value for
investors. With the technology, functionality and 40 years of experience in serving the needs of investment managers worldwide, SimCorp Dimension is the right solution to support your investment management needs.
few, if any, can match. Typically implemented in three to nine months, with return on investment/payback periods normally within two years, SimCorp Dimension delivers on our value proposition of mitigating risk, reducing costs and enabling
growth. SimCorp Dimension has never experienced a failed implementation.
SimCorp Dimension come from our clients. SimCorp has
SimCorp client has ever replaced SimCorp Dimension with a solution from a competing vendor. But please don’t just take our word for it – read our clients’ testimonials below and learn how SimCorp Dimension enables investment
management companies to realise their growth potential, while fulfilling regulatory requirements.
Learn how SimCorp Dimension supports our clients in realising their g Automated processes, reduced risk and lower cost
A single database and wide asset and instrument coverage
Scalability, flexibility, integration, transparency and reporting
Cutting processing times and error rates through automated processes, hereby reducing costs and mitigating risks related to manual errors.
Eliminating costs and resource requirements associated with maintaining disparate databases and systems as all data is stored in a single database without the need for middleware.
Enabling growth through scalability and flexibility, where new products and higher transaction volumes can be achieved without a corresponding increase in costs.
“Challenger has reported significant productivity benefits and estimates that automated unit pricing will save around 4,000 hours annually.”
Providing an array of asset class and instrument coverage that few can match. In addition, SimCorp Dimension’s XpressInstruments tool allows clients to add new instrument types quickly and efficiently.
Offering an open architecture that facilitates integration with any number of external data sources.
Challenger case story published by SimCorp
“The best thing is that previously any new business requirement involved another add-on system or a complicated workaround, 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 ... Overall, we can be more forward-looking with the system we have now.” Jan Weber, CFO, DIAM International
Providing transparency and comprehensive reporting capabilities throughout the investment process.
“We used to have workarounds on top of workarounds ... For example we’ve been able to rationalise 4,500 legacy reports down to about 250.” Matthew Oakley, Head of Group IT, Schroder Investment Management
Grow and meet regulatory requirements
ight solution ment needs Want to learn more? If you would like to know more about how SimCorp Dimension supports the investment management industry in mitigating risk, reducing cost and enabling growth, download these and more resources of knowledge at www.simcorp.com/brochures.
Learn about SimCorp’s front-to-back investment management platform, SimCorp Dimension, in ‘The enterprise solution for the investment management industry’.
Get an overview of SimCorp’s catalogue of tailor-made service offerings in ‘SimCorp Services for the investment management industry’.
Discover SimCorp’s customised solutions for the fund industry in ‘SimCorp Dimension for the fund industry’.
Get insights into SimCorp’s offerings developed to cater for the needs of asset managers in ‘SimCorp Dimension for the asset management industry’.
growth potential while fulfilling regulatory requirements Cross-border-regulatory support
Updated functionality meets new legislative demands
Strategic IT platform supports overall business goals
Adapting more easily to new regulations. With SimCorp Dimension, one can apply as many as 10 different accounting standards and five tax schemes to the same portfolio or fund fully supporting cross-border or global business activities.
Releasing a new version of the product twice a year ensures that the system is up to date and reflects the latest regulatory changes. In acute situations, periodic service packs also ensure that clients have the functionality to deal with regulatory changes in good time.
Supporting overall business goals makes SimCorp’s operational platform a strategic asset. SimCorp Dimension is a way to remove process obstacles and achieve competitive advantage through cost-efficient design, reliability, flexibility and scalability.
“With SimCorp Dimension’s automated, scalable STP processing and improved audit trail, I have great expectations for DnB NOR Asset Management’s corporate actions processing during future increases in business volume and activity on emerging markets.”
“With the flexibility of SimCorp Dimension and its broad range of features we are now ready for the future requirements in fund administration. The further implementation in the areas of portfolio management and middle office will increase quality and efficiency throughout the entire investment management process even further.”
“SimCorp Dimension will become a strategic platform for our Investment Management middle and back office functions.”
Yngve Andersen, Head of Settlement, DnB NOR
Hans Schilcher, Deputy Chairman of the Board and COO, Raiffeisen Landesbank
Gudrun Neumann, Senior Vice President and CTO, American Century Investments
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Grow and meet regulatory requirements
SimCorp: global investment ma software developer for the Choosing an investment management platform is no trivial matter. SimCorp understands that a decision to invest in SimCorp Dimension will impact a client’s business for many years to come.
SimCorp headquarters in Copenhagen, Denmark Introducing SimCorp SimCorp supports global investment management organisations in mitigating risk, reducing cost and enabling growth through development and implementation of its integrated and market-leading financial software solution SimCorp Dimension.
Solid foundation Founded in 1971, SimCorp has decades of experience in
vide an innovative product which, by virtue of unique and
To find appropriate solutions and to gather relevant best
keep pace with an ever-changing market characterised by
investment management industry, SimCorp StrategyLab
timely functionality and quality, will allow our clients to stricter investment management process requirements.
With semi-annual releases containing new functionality, SimCorp grows with its clients and the demands of the market – and it is SimCorp’s perennial guarantee never to offer its clients an outdated solution.
developing solutions for the financial sector. Headquartered
Superior know-how
America and Australasia, SimCorp is listed on NASDAQ
focusing all of their efforts on a single investment manage-
in Denmark and with subsidiaries throughout Europe, North
More than 1,100 enthusiastic employees worldwide are
OMX Copenhagen A/S and has a continuous track record of
ment system: SimCorp Dimension. Their core competen-
creating value for its clients, shareholders and employees alike. Cutting edge SimCorp’s clients include financial institutions, asset managers, insurance companies, pension funds, mutual funds, banks and mortgage lenders, all of whom rely on our ability
to constantly be at the cutting edge of developments in the investment management industry. More than 160 satisfied
suggestions for best practices which are intended to minimise risk, find ways to achieve sustainable cost savings and enable growth.
that SimCorp is relentlessly dedicated to providing truly advanced solutions and services.
In direct response to a new agenda in the investment man-
needs and provides value-added services to their business.
cost control and growth opportunities, SimCorp established
able partner who understands their organisation’s business
agement industry with increased focus on risk management,
opment is SimCorp’s ability to develop, maintain and pro-
a result, SimCorp StrategyLab is able to provide competent
development related tasks, which is our clients’ guarantee
SimCorp StrategyLab
An indispensable prerequisite for our clients’ future devel-
recognised academics and established industry experts. As
SimCorp’s revenue is re-invested in research and system
future business needs. With SimCorp, clients have a reli-
Perennial guarantee
is carried out in close collaboration with internationally
experience will be constantly expanded. Almost 25% of
SimCorp creates solutions that support both current and
of the SimCorp business model.
challenges in the financial sector. The research programme
strategic foundation of SimCorp’s business activities, this
Thought leadership in investment management:
mitment to supporting clients’ business are fundamentals
carries out its own research and analysis of trends and
cies are in economics, finance and IT, and serving as the
clients worldwide will tell the same story: working with
Long-term strategic client relations and a dedicated com-
practices for the top strategic institutional levels of the
its independent research institution, SimCorp StrategyLab, in December 2008. Through its extensive research and
know-how, the institution’s aim is to provide insight into some of the many challenges facing professional asset
managers throughout the world. Going forward, SimCorp
StrategyLab will continue to seek to suggest ways to meet these challenges and to share best practices.
Ingo Walter, Director of SimCorp StrategyLab, is Vice Dean of Faculty and Seymour Milstein Professor at the Stern School of Business, NYU. Professor Walter has held visiting professorial appointments worldwide and remains a Visiting Professor at INSEAD in Fontainebleau, France. Professor Walter's principal areas of academic activity include international trade policy, international banking, environmental economics and economics of multinational corporate operations.
Grow and meet regulatory requirements
9
1,000 EUR
management future 200
SimCorp revenue EURm Revenue
190
180 174
180 170 156
160 150 140
50 45 40 35 30 25 20 15 10 5 0
127
130
EBIT EURm Profit from operations 38 (EBIT) 34
38
40
22
2005
2006
2007
2008
2009
120 110
102
100
25
90
20
80
Development cost related to revenue 24.6 20.9
20.5
15 10
50
5
40
0
30
SimCorp’s revenue has increased steadily with a continuously stable and robust growth rate throughout the past decade. With focus on innovation, SimCorp invests around 25% of its revenue in R&D, one of the highest rates in the industry, demonstrating the company’s dedication to providing clients with advanced solutions and services.
Want to learn more?
Development cost related to revenue
70 60
24.6
22.1
SimCorp – a solid and strong business partner
2005
2006
2007
2008
2009
20 10
To learn more about SimCorp’s financial performance, download its latest annual report at www.simcorp.com/ financialreports.
0 2005
2006
2007
2008
2009
SimCorp’s financial performance, 2005-2009
Organisation SimCorp StrategyLab is formally organised under the management of a board of directors. The chairman of
SimCorp StrategyLab’s board is the CEO of SimCorp,
Peter L. Ravn (Ph.D.). SimCorp StrategyLab is headed
SimCorp StrategyLab conducts research that applies to strategic levels at global asset management companies. The research is aimed at finding ways to allow asset managers to mitigate risk, reduce cost and enable growth, with efforts focused on defining industry best practices. For the 2010-2011 research programme, a team of leading thinkers in the academic world and the financial industry has been gathered by SimCorp StrategyLab especially to examine the interactions between the challenges and best practices in the investment management industry.
by the renowned Dr. Ingo Walter, Seymour Milstein
Along with SimCorp StrategyLab’s partners, and building
University, who is in charge of the research institution’s
industry experts and executives who contribute to its research
Professor at the Stern School of Business of New York academic affiliations and oversees the quality of its research work and related activities.
bridges between theory and practice, are leading academics, programme and other activities.
Mission
Vision
The mission of SimCorp StrategyLab is to contribute to identifying ways of mitigating risk, reducing cost and enabling growth in the global investment management industry.
The vision of SimCorp StrategyLab is to become a renowned and trusted thought leader in the investment management industry through the contribution of applicable research and knowledge in matters of strategic importance for IT and investment management.
Want to learn more? Go to www. simcorpstrategylab.com to learn more about SimCorp StrategyLab’s research programme and activities.
Download the profile brochure at www. simcorpstrategylab. com to learn more about SimCorp StrategyLab.
SimCorp SimCorp is a leading provider of highly specialised software and expertise for the invest-
SimCorp is headquartered in Copenhagen with subsidiaries and branches in Amsterdam,
ment industry. SimCorp supports global investment management organisations in mitigating
Brussels, Frankfurt, Helsinki, Hong Kong, Kiev, London, Los Angeles, Luxembourg, New York,
risk, reducing cost and enabling growth through development and implementation of its
Oslo, Paris, Singapore, Stockholm, Sydney, Toronto, Vienna and Zurich. For more information
market-leading financial software solution SimCorp Dimension. Established in 1971, with
about SimCorp, visit www.simcorp.com.
more than 1,100 employees, SimCorp is listed on the NASDAQ OMX Copenhagen A/S.
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