Custodians are always happy to brag about the number of markets they cover around the world, but are usually more reticent when it comes to talking about the processing infrastructure underpinning that global or regional presence. Not surprising really – while all appears serene on the surface, behind the scenes their operations staff are peddling furiously as they attempt to hold together a Heath Robinson-style ragbag of acquired platforms and in-house systems. State of the art, a few exceptions aside, this is not.
This is pretty much the situation in which ING Wholesale Banking/Securities Services, like so many others, finds itself. The bank was using SunGard’s OMNI-IC platform for the Netherlands and the eight markets in Central and Eastern Europe in which it operates; meanwhile, in Belgium it was making do with a
collection of home-brewed custody systems for both its retail and wholesale businesses. As Renaud Migeot, director, Belgium, acknowledges, this was far from ideal.
“The COBAL-based platform in Belgium is now really showing its age,” he says. “Not only that, many veteran staff are now retiring so in that respect we have a continuity issue to address. Moreover, SunGard has said that it is reducing the level of support it offers for OMNI-IC, so we have been forced to look at alternative solutions there as well.” It was therefore decided to reengineer the entire systems infrastructure and put in place a single custody platform covering all European markets, with migration planned to start next year.
“Obviously we need to deal with the enormous growth in cross-border volumes, and a single platform will also allow us to reduce operational risk,” says Migeot. “Process alignment and client reporting will be greatly enhanced. The ability to offer a robust and well-monitored solution is more critical than ever today, plus ING as a bank is committed to managing costs more prudently, and one platform is going to be far cheaper than maintaining multiple systems.”
ING will be using a platform ‘package’ purchased from a (currently undisclosed) third-party provider, and which will be operated by that provider on an ASP (application service provider) basis. Migeot observes that, five years ago, this would not have been an option. “There was not a lot of choice at that time, but today that has totally changed – when we carried out the RFP (request for proposal) to select the right provider to work with, we had no less than 15 different platforms to choose from.”
While the platform will offer clients a ‘single window’ onto Europe, a degree of what Migeot calls ‘low-level’ functionality will continue to be done at the local level: “We have split the various functions into two categories. There is the BSP, or business service provider, category, which covers those processes that are common to everyone across all the locations, and which is effectively a one-stop shop; and overlaid on that are a series of processes that have to be tailored to individual markets.”
In the longer term, as the operating environment matures and the platform becomes more mature, the plan is to shift more and more of those low-level local processes into the BSP category. “How long that takes is difficult to say at this time, because there are of course certain variables involved that are outside of our control,” adds Migeot.
Improved STP (straight through processing) rates, uniform web-enabled reporting, the centralisation of functionality such as data scrubbing, event and corporate action notification and the harmonisation of pricing structures and tariffs will all be key benefits of the new platform. “In terms of functionality, we are very confident that the new platform is flexible enough not only to meet our current needs but also those that arise as our operating model evolves,” says Migeot. “The technical capabilities of your systems are now always one of the key questions in RFPs today, and we are convinced this new and sophisticated platform will allow us to further build our market share, particularly in central and eastern Europe.”
q This is my last column for IPE, and I’d like to take the opportunity to thank all the organisations that have provided input over the past five years and those who have read what I had to say.