Terry Flynn, a product specialist with SimCorp North America, took questions about the company winning the Best Investment Book of Record (IBOR) Solution honor via the 2017 FTF News Technology Innovation Awards competition.
(Editor’s note: SimCorp has been a longtime proponent of investment book of record (IBOR) technology and has been riding out the hype-wave when suddenly every vendor had an IBOR offering. The vendor’s efforts were affirmed when it won the 2017 FTF News Technology Innovation Award for Best Investment Book of Record (IBOR) Solution. FTF News reached out to Terry Flynn, product specialist, SimCorp North America, to talk about the IBOR landscape then and now. Flynn is a senior member of the SimCorp sales team focused on large investment managers.)
Terry Flynn, product specialist, SimCorp North America
Q: In 2016, were there any industry developments that helped SimCorp make the case for the relevance of IBORs?
A:
- Bad data: Industry survey after survey this past year cited bad data as the biggest concern asset managers face.
- System consolidation: Firms are seeking to simplify their operating model, which validates SimCorp’s whole office approach, and IBOR is the foundation of that approach
Q: Much of the hype around IBORs has subsided, but how competitive is the IBOR market?
A:
- While the hype may have subsided, the need has not. IBOR became a buzzword and every vendor claimed to offer one but few could actually deliver. This deflated the hype a bit but did nothing to address the need that a proper IBOR fulfills.
- SimCorp has identified 10 key requirements that the ideal IBOR solution needs to fulfill to ensure an up-to-date and overall front-office based view on current positions and investable cash. They are:
- Full instrument coverage
- Position management
- Event management and drill-down
- Cash forecasting
- Security forecasting
- Reconciliation and exception management
- Integration to source systems
- Market valuation, accruals, and analytics
- Distribution to receiving systems
- Online view of IBOR information
The full white paper can be downloaded here: http://bit.ly/2wr9ltr
Q: Why has SimCorp continued to advance IBORs?
A:
- SimCorp has delivered the information the industry now calls IBOR to its clients for nearly 10 years because it helps our clients manage their assets.
- Data integrity and credibility are widely cited as the most critical issues facing large asset managers.
- There is no other way to get an accurate, real-time view of positions and cash across asset classes and regions.
- By adopting an integrated approach, firms can eliminate issues inherent in most legacy and best-of-breed investment architectures, empower the asset manager with accurate data to generate alpha and ultimately spend less time on manual procedures.
- We believe we have reached a tipping point in the industry. One of our clients points out that with SimCorp as its IBOR, it can analyze client portfolios faster, and share the information expediently among their investment analysts, traders, portfolio managers and executives. Because the entire organization can read from the same book of record at the same time, it allows them to make better investment decisions for their clients, who in the end are the main beneficiaries of the system they have in place.
Q: What is holding back securities firms from embracing IBORs?
A:
- Legacy technology that cannot accommodate timely reflection of data across all asset classes:
- Best of breed architecture makes a consolidated view of data difficult if not impossible:
- And inertia — doing nothing may not be the best strategy, but it is the easiest
Q: How much can SimCorp tell FTF News about its future IBOR development efforts?
A:
- We have a mature IBOR solution. As mentioned, it has always been the basis on which SimCorp Dimension is built and is continually developed.
- We invest more than 20 percent of our annual revenue in research and development, which is among the highest R&D investment made in the FinTech industry; ~25% of that is invested in IBOR relevant areas. We have more than 500 people in R&D, which is 37 percent of our total staff.
- Our roadmap going forward is focused on areas around the IBOR that we invest in. Some of the most important would be:
- Reconciliation to reconcile the IBOR with custodians and other systems;
- Alerting — to automate exception handling;
- Application programming interfaces (APIs) / Web services to enable better integration between the IBOR and other systems;
- Artificial intelligence to also handle alternative investments as part of the IBOR:
- Forecasting;
- And a data warehouse
- Stay tuned for our next release in late August where there will be more innovation to come.
