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Peter Tranberg
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SimCorp: Thinking Beyond the Traditional

As the investment management industry learns to operate in the post-crisis environment, the need for state-of-the-art systems is becoming acute. Many firms still base operations on legacy systems and question whether they will support them going forward. Either they have to continue patching and upgrading these systems or they have to implement a new and future-proof system.

The need for moving away from legacy platforms 

By legacy IT, we mean an investment management system that is infrequently updated; and that is often running on outdated, poorly-documented, or obscure technologies; and that has difficulty in automating or adapting to business processes as well as providing a real-time consolidated overview of the business. By contrast, a state-of-the-art investment management system is based on cutting-edge technologies; and it is characterized by a high degree of automated processes and workflows; and it is continuously updated and sufficiently flexible, adaptable, and scalable to deal with current and future market requirements.

A recent survey conducted by the private research institution, SimCorp Strategy­Lab, showed that buy-side firms operating with legacy systems need to invest more compared to those with state-of-the-art solutions – simply to keep up with the pace of change in the market. In other words, they are running to stand still.

Looking ahead, the ever-rising flow of new demands, exotic financial instruments, and regulatory requirements will continue to pile pressure on the industry to modernize systems – making the case for innovative solutions even more compelling.

Keeping up with industry demands 

So the challenges of today and tomorrow require a solution that can easily adapt to and comply with the requirements, as well as provide timely and accurate reporting to the relevant authorities, clients, and management. This is a simple question of accountability that no firm in the industry can ignore.

With the worst of the financial crisis behind us, many investment managers are gearing up for growth and need a platform that can scale and grow with them as their business develops. Only a system that is adaptive, flexible, and agile can do that.

In a cut-throat market, investment managers only have scarce resources available to help generate alpha and meet client demand. Tying up resources in manual workarounds and inefficient processes is no longer an option.

The pace of change is bound to continue unabated, and the industry must prepare for further changes such as new regulation, introduction of new financial instruments, entry into new markets, and increasing transaction volumes.

Having the right future-proof system in place is critical; not only does it provide the foundation of the investment manager’s business, more importantly it helps create competitive advantage.

Developing state-of-the-art solutions

In order to constantly offer state-of-the-art solutions that meet the latest market demands, SimCorp invests substantial resources in research and development: approximately 30% of SimCorp’s total expenses are investments in the product, involving more than 41% of all employees within the SimCorp Group. During the last decade, SimCorp Dimension has been released in a new and updated version every six months. It is a fundamental strategic decision to continue to invest in the development and improvement of SimCorp’s solutions and services to the benefit of clients. SimCorp offers a perennial guarantee that its clients will never operate on an outdated platform.

As a basis for the development process SimCorp has a large team of researchers, constantly collecting inputs for what to develop. They discuss specific needs with clients and potential clients, attend industry events, and consult analysts and other industry experts to be on top of the latest trends and requirements in the market. Decisions about which enhancements and developments should be made to the platform, are based on this research. This way SimCorp secures innovative solutions that constantly meet market as well as client demands.

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