Automating transaction processing

In addition to fund selection in the front office, performance monitoring, risk control and relationship management, technology is playing a crucial role in the consolidation and settlement of all investment transactions. The wealth management sector has long been focusing on the need for further automation of these back-office tasks.

Belgium’s Bank Degroof decided to create its own platform to deal with these issues. It partnered with IBM to create Finance Technology. The firm offers technology solutions for the banking sector, and recently developed the X-IBBA tool to enable private banks to consolidate their back-office systems.

“Instead of selling them a new system, we can use systems that are already present in terms of front office and install a full STP [straight-through processing] solution,” says Olivier Meyer, executive manager at Finance Technology.

Single platform

The firm has enabled an offshore private banking organisation to operate different business models for different brands and geographies on a single back-office platform, while retaining existing front-office systems.

Although this type of solution can clearly simplify processes and cut costs for banks, Mr Meyer believes the sector is still reluctant to invest in technology. “The market was down for a few years and that has brought a lot of pressure on profits,” he explains. “But private clients, who in the past have usually been more complacent, have now got more knowledge and more information sources and they request better services and better execution.”

More opportunities onshore

Mr Meyer adds that even though there has been more activity among offshore private banking entities, there will be increasing opportunities in the onshore arena, since changes in regulation and tax amnesties are helping to boost domestic private banking operations that will involve IT expenditure.

“You never have the technology that you want. The market and the technology change so quickly that when you think you are getting there, new applications and hardware come up,” says Banif’s spokesman Luis Moreno. “This forces you to continuously invest in technology.”

Those who have been delaying things might not be able to wait for much longer. “There have been a lot of projects and initiatives that have been put on hold for a number of reasons, like cost, but they can’t wait for ever if changes really have to be made,” says Neil Craddock at Citisoft. “These changes can reduce cost and risk in the longer term.”

Meyer: “you never have the technology you want”