Luzerner, St. Galler and Thurgauer cantonal banks outsource their securities management operations

10 July 2008

The cantonal banks of Lucerne, St. Gallen and Thurgau have decided to outsource their securities management in connection with their migration to the Avaloq banking platform. This is a first in Switzerland, as banks have previously kept their securities management in-house. The service is being provided and managed by Swiss independent business service providers Fin-Log AG and Comit AG together. St. Galler and Luzerner cantonal banks have been operating the new system for several weeks already and Thurgauer Kantonalbank will go-live shortly too.

When the three cantonal banks decided to migrate to Avaloq’s comprehensive banking platform, they also resolved to outsource the key banking-related aspects of their securities data management to a specialised provider. Following an intensive evaluation process, Fin-Log and Comit won the tender to implement and provide the service. Having successfully implemented the project, the Luzerner and St. Galler banks have been receiving their securities, event and price data in a refined, user-friendly format from Fin-Log/Comit for several weeks. Thurgauer Kantonalbank will start operating the new system on 1 August.

By fulfilling this mandate, Fin-Log/Comit have become the first external provider to deliver these key banking services. Securities, event and price data are integral components of banking back office operations. Banks have traditionally used highly qualified staff for these processes, as inaccurate data can lead to major financial losses. Until now data processing and refinement services have therefore mainly been provided within banking groups or in cooperation with computing centres. However, the relatively new trend towards commercial solutions has prompted the cantonal banks to respond positively to a partnership with an independent provider.

Securities, event and price data are ideal for business process outsourcing because:

• All banks have practically identical requirements in terms of professional securities data management.
• Banks’ securities universes have close to 90% overlaps.
• The level of automation for processing master data within banks is low, while products are becoming more complex.
• The required technology and business know-how relating to these processes are demanding increasing levels of investment, operational expenditure and management attention.
• At the same time, processing securities data does not represent a fundamental difference to other banking services. Client satisfaction and loyalty are not overtly linked to securities data processing.

The joint service provided by Fin-Log/Comit to the cantonal banks is the first independent commercial venture of its kind. Frank Müller Erkelenz, CEO of Fin-Log, affirms: “We are convinced our service is a milestone in the young history of business process outsourcing in the Swiss banking industry. This service not only relieves banks of an extremely demanding and costly process, it also helps them achieve cost savings of up to 30% and a return on investment (RoI) within 12 to 24 months.”

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