Standing tall in the digital age

Murex, and FIS take the top spots in this year’s rankings, as financial institutions embark on journeys towards business transformation and digitisation

echnology is both driving and facilitating major change in . Consequently, the role of capital markets technology providers is metamor- phosing from that of specialist product vendors to essential partners, as financial institutions embark on journeys towards business transformation Tand digitisation. There are many stages to these journeys, but an early step is the rationalisation and consolidation of functionality on a consistently flexible and modern central technology platform. Murex, which has topped the technology rankings for 2018, decided early on to adopt a platform model for its software, creating a cross-asset, front-to-back-office system with a centralised repository and a unified calculation engine for pricing and risk. It backed this with high-performance technology, including GPU parallel processors, computing grids and cloud capabilities. Murex’s platform model is proving popular with institutions revamping their Guy Otayek, Murex Asia-Pacific technology infrastructure as part of a business transformation. Such projects are often substantial and multi-year, and cut across the organisation. In anticipation of this, Murex invested significantly in its support network across the region, both within the company and with implementation partners and advisory firms. “A deepening relationship with our clients is at the heart of our strategy today,” says Guy Otayek, chief executive officer of Murex Asia Pacific, who is based in Singapore. “As our clients embark on these big transformation projects, which can be painful and not cheap, our objective is to make sure they maximise the value they get from our platform. Having a large team in Asia is essential to address this.” A critical element of the business transformation challenge is ’ need to digitise their capital markets business, says Otayek. Retail banks have largely achieved this, using data to improve customer experience, drive new revenue sources and increase productivity. However, for those facing capital markets, digitisation is particularly challenging, because of the complexity of the business and fragmentation of products and business functions such as trading and risk. Overall: All categories “Despite these challenges, there are already some leading banks in the region that are well advanced in the simplification of their ecosystems and are strategically ready for the Provider digitisation of their services,” says Otayek. The banks are turning to Murex to overcome 1 Murex some of the hurdles. 2 Finastra These banks are working to offer customers access to many of the tools and services 3 FIS that have until now belonged internally to the dealing room. Doing so will remove the 4 Calypso need for traditional intermediaries and improve banks’ margins, as well as help increase 5 Bloomberg productivity for the banks and their customers. The services include advisory, news, 6 IHS Markit products, pricing and portfolio analytics. 7 Numerix “We think we are not too far away from seeing institutional customers using an app 8 Moody’s Analytics that leverages a ’s core capital markets platform for all their needs, and Murex is the 9 IBM Risk Analytics technology partner many banks are turning to drive the multi-year digitisation 10 Thomson Reuters programmes that will deliver these kinds of transformational customer experiences,” says Otayek.

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036-041 AR 0918 Tech Rankings.indd 36 19/09/2018 18:30 Overall: Risk management Overall: Derivatives pricing Overall: Trading systems and risk analytics Provider Provider Provider 1 FIS 1 Murex 1 Finastra 2 Murex 2 Finastra 2 Murex 3 Finastra 3 Calypso 3 Calypso 4 Moody’s Analytics 4 FIS 4 FIS 5 Calypso 5 Fenics 5 Bloomberg

Innovation and collaboration shift in the industry – from a three-layer banking readiness for [new] international financial For Finastra, business transformation implies model, with large, regional and small players, to reporting standards, while also continuously openness, innovation and collaboration and two layers comprising big consolidated global developing [the institution’s] people and driving technology needs to reflect this, says Arnaud institutions and a number of smaller dynamic cultures of risk and compliance,” he says. Picut, global head of risk practice at Finastra, niche market players. This has dramatic Denimal says UnionBank in the Philippines is who is based in Hong Kong. “Implementing an implications for institutions, especially regional using a number of FIS solutions to re-engineer open and collaborative platform is critical to banks, which need to choose which way they its commercial lending processes, including achieve the essential digital transformation that want to go and speed up their transformation. origination and credit assessment, liquidity and helps banks stay competitive, meet new client “Technology is and will be the life saver for capital charge of loans and portfolios, data expectations and build a strong ecosystem to many banks if they understand and adopt it fast management and reporting. The bank is also cope with culture shift,” he says. enough. The flip side of the coin is that those using an integrated platform of FIS solutions However, this does not mean a bank has to who are slower to adopt new technology and across asset liability management (ALM), junk all its existing systems. bring in new talent, and liquidity risk and capital management to help it “The objective is to leverage innovate and collaborate, will comply with regulatory requirements, such as proven legacy back-office find their troubles accelerate Philippine Financial Reporting Standards, and systems and make them open significantly,” warns Picut. proactively manage enterprise risk. to new innovative technologies “FIS technology also has enabled the bank to such as artificial intelligence, Digitisation challenges take advantage of advanced third-party data machine learning and other FIS, which topped risk analytical tools through the use of open predictive techniques,” he says. management and came third application programming interfaces. The result To this end, Finastra recently overall, agrees technology is key has been improved credit risk monitoring and a introduced FusionFabric.cloud to the future success of many greater ability to capitalise on growth opportuni- – a cloud-based platform-as-a- institutions, particularly given ties in business lending,” says Denimal. service that opens up the the challenge of digitisation. It company’s core systems, so points to the changing relation- Reducing costs third parties, including banks, François Denimal, FIS ship between banks and their Moody’s Analytics identifies the need for fintech firms and consultants, technology providers. significant efficiency improvements and can develop applications on top. This has struck “In the last decade, technology companies cost reductions as key drivers of the trend a chord in the industry, with the company were providing solutions to fix financial towards integration and consolidation of leading the systems architecture, open banking institution issues and business problems,” says technology platforms. platform and implementation efficiency Singapore-based François Denimal, managing “Banks are undertaking large initiatives to categories in the rankings. At the same time, director, capital markets, Asia-Pacific, for FIS. implement a centralised system that can be used Finastra is continuing to satisfy banks’ core “Today, traditional financial institutions listen to across the various middle office operations,” says business requirements, winning the trading and rely more on technology providers to drive Singapore-based Shailendra Jain, senior systems categories overall. their innovation, so the ability to innovate is a director-general manager, enterprise risk “On the trading side, banks are not only key factor, and it will be up to technology to lead solutions for Moody’s Analytics. “Our clients are looking for consolidation and simplification to institutions on their digital journeys.” able to effectively integrate ALM, liquidity, stress maximise efficiency to trade standard products, Most Asian banks are transforming their testing, credit risk and financial planning and but also for flexibility and openness to enable counterparty credit risk assessment processes by analysis into the system without having to them to launch more sophisticated products reviewing front-to-back-office operating models manage multiple instances of the system.” faster,” says Picut. and the organisational alignment of finance, An integrated consolidated platform is a key Finastra sees the individual institutional front office and risk, says Denimal. “The goal is initial step towards ensuring future success for transformations taking place against a structural to ensure capital structure efficiency and financial institutions. Other areas that need to

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036-041 AR 0918 Tech Rankings.indd 37 19/09/2018 18:30 be addressed include developing responsiveness provision has become increasingly fractured. This technology to support their businesses. The other to evolving customer demands, competing with has allowed regional institutions to compete in critical aspect is to adopt a standardised and open unconventional credit disintermediaries and these niches against traditional forex liquidity platform that will enable firms to innovate and collaborating with fintech innovators, says Jain. powerhouses. The company also sees the trend to introduce new products and services, leveraging a All these factors will require institutions to increased flows, both OTC and listed, through software-as-a-service model and progressively transform the way they have historically multi-dealer platforms extending to Asia. Among embedding artificial intelligence and machine organised themselves and to prepare for a recent client signings is Hong Kong’s Dah Sing learning techniques to reduce total cost of dramatically different future. Careful change Bank, which is using Fenics’ pricing engine to ownership and transform the client experience, management will be a critical factor, as will provide market pricing for forex options across says Raj Manghani, global head of product effective deployment of advanced technology. the institution, including integration with management at Calypso, who is based in “The customers financial institutions will serve third-party and proprietary California. “We view capital in the future will be technologically savvy and front-ends for different user markets technology as a key will expect very quick turnarounds and highly groups, enabling the bank to innovation enabler in the personalised service. Providing all of this, while have consistency of pricing evolution of financial markets keeping costs in check, is only possible through through a single interface. in APAC, as in other regions,” the innovative use of technology,” says Jain. he says. From its experience with clients over the Standardisation years, Moody’s Analytics concludes any Margin and collateral Compliance matters institution wanting to revamp its front office management and clearing are While institutions strive to and become more customer-friendly, agile, good examples of areas where make progress on their business responsive and fit-for-purpose must first new regulation is pushing transformation and digitisation transform its middle- and back-office systems. institutions towards more journeys, they must also meet “At Moody’s Analytics, we are increasingly integrated and standardised the immediate demands of working with our clients on their risk and platforms, as well as to Boon Huat Lee, Calypso regulatory compliance. With finance transformation journeys, and we firmly considering outsourced the implementation of believe in the power of combining expertise, options, such as managed services, for reducing regulation comes the need to prepare and deliver data, insight and technology to help them get total cost of ownership of technology. what are often extensive, complex and time- prepared for the future,” says Jain. Phases 4 (effective September 2019) and 5 critical reports. IHS Markit, which won the (effective September 2020) of the Basel regulatory reporting category, grew its reporting Forex pressure Committee on Banking Supervision (BCBS)/ capabilities out of its experience as a data The move to digitisation is especially marked in International Organization of Securities provider and its successful MarkitServ trade foreign exchange. “Market participants are Commissions (Iosco) rules on initial margin for processing and workflow service. The company under pressure from customers, both institu- non-centrally cleared derivatives will bring many now has 30 significant institutions on both the tional and retail, as well as from regulators and more institutions in the region into the scope of buy and sell side using its regulatory reporting from their competition to digitalise their forex the regulations, and they will need to start service, says Ross Allen, Asia-Pacific managing business,” says Richard Brunt, -based implementing margin and collateral solutions director, IHS Markit who is based in Singapore. managing director of Fenics, which was voted soon if they have not already done so, says Boon “The fragmentation in the region in terms of best FX technology provider as well as innova- Huat Lee, Singapore-based managing director, markets, regulators and regulation creates extra tive specialist. APAC, for Calypso. problems for reporting compared with the US Fenics kACE TS enterprise forex platform Calypso has been at the vanguard of develop- or Europe, and leads institutions to look for enables firms to incorporate electronic liquidity ing functionality for margin and collateral cost-efficient services and third-party solutions. from banks and trading platforms into their management and clearing – the company topped Through our data, analytics and trade processing workflows, digitise their price-making, internally the clearing and collateral management categories services, we are already a trusted partner for and externally, with customised quoting logic and came fourth overall in the rankings – success- many institutions, and they have been looking and workflows, and provides turn-key connectiv- fully helping BCBS/Iosco’s initial margin phase 1 to us to extend into reporting,” says Allen. ity to venues for additional liquidity. institutions meet their compliance deadlines in Clients who already rely on IHS Markit for “The platform has helped our clients deliver 2016, and many others in phases 2 and 3 since. mainstream capital markets information are now significant workflow efficiencies and the “Our clients are able to leverage a single also approaching the company for alternative electronification of their client experience,” says integrated system for risk calculation, collateral data sets they can use for data-driven decisions, Brunt. This digitisation is not a passing fad, he management and processing with full straight- says Allen. For example, the company provides notes. “We anticipate an acceleration in through processing. Furthermore, the front office real-time satellite tracking data on marine vessels, investment in this [electronification] technology.” is able to calculate margin costs before they both current and historical. From this, trade Another area where Fenics has been working execute trades,” says Lee. finance departments can track whether vessels with clients is enabling them to market-make Functional coverage is clearly one aspect have entered restricted ports or carried restricted selective currency pairs, as global liquidity institutions need to consider when evaluating goods and should therefore be avoided. ■

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036-041 AR 0918 Tech Rankings.indd 38 19/09/2018 18:30 Risk management Derivatives pricing and risk analytics Credit risk management Economic capital calculation (CVA, counterparty limits, collateral, and management Commodities netting, PFE, credit value-at-risk, etc) Provider Provider Provider 1 Moody’s Analytics 1 Openlink 1 Murex 2 Finastra 2 Murex 2 FIS 3 FIS 3 FIS 3 Calypso 4 Murex 4 Bloomberg 4 Finastra 5 IBM Risk Analytics 5 Finastra 5 Numerix Regulatory capital calculation Credit Market risk management and management (eg, Basel III, Pillar I) Provider (price simulation, stress testing, etc) Provider 1 Murex Provider 1 Moody’s Analytics 2 FIS 1 Murex 2 FIS 3 Finastra 2 FIS 3 Finastra 4 Bloomberg 3 Finastra 4 Murex 5 Numerix 4 Moody’s Analytics 5 IBM Risk Analytics 5 Calypso Equities Asset and liability management Provider Operational risk management Provider 1 Murex Provider 1 Moody’s Analytics 2 Finastra 1 FIS 2 FIS 3 FIS 2 SAS 3 Calypso 4 Numerix 3 IBM Risk Analytics 4 Murex 5 Imagine Software 4 Oracle 5 Finastra 5 RSA Foreign exchange FRTB Provider Liquidity risk management Provider 1 Fenics Provider 1 Murex 2 Finastra 1 Finastra 2 FIS 3 Murex 2 FIS 3 Calypso 4 Thomson Reuters 3 Murex 4 Finastra 5 ION 4 Moody’s Analytics 5 Moody’s Analytics 5 SAS Interest rates Limit management & compliance Provider Enterprise-wide risk management/ Provider 1 Murex cross risk integration 1 Finastra 2 Calypso Provider 2 Murex 3 Bloomberg 1 FIS 3 FIS 4 FIS 2 IBM Risk Analytics 4 SimCorp 5 Finastra 3 Moody’s Analytics 5 RSA 4 SAS Hybrids 5 RSA Provider 1 Murex 2 Finastra 3 Numerix 4 Calypso 5 FIS

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036-041 AR 0918 Tech Rankings.indd 39 19/09/2018 18:30 Trading systems

Commodities Interest rates Cross-asset (front-to-back office) (front-to-back office) Provider Provider Provider 1 Finastra 1 Openlink 1 Murex 2 Murex 2 Murex 2 Finastra 3 Calypso 3 Finastra 3 FIS 4 FIS 4 FIS 4 Calypso 5 Bloomberg 5 Thomson Reuters 5 Bloomberg

Credit Hybrids IFRS 9 (front-to-back office) (front-to-back office) Provider Provider Provider 1 FIS 1 Finastra 1 Finastra 2 Finastra 2 Murex 2 Calypso 3 Murex 3 Calypso 3 Murex 4 IBM Risk Analytics 4 FIS 4 FIS 5 Wolters Kluwer 5 Bloomberg 5 Numerix XVA management Equities Clearing Provider (front-to-back office) Provider 1 Murex Provider 1 Calypso 2 Finastra 1 Finastra 2 Murex 3 Bloomberg 2 Murex 3 Finastra 4 FIS 3 FIS 4 FIS 5 Numerix 4 Numerix 5 IHS Markit 5 Bloomberg Back office Collateral Provider Foreign exchange management 1 Finastra (front-to-back office) Provider 2 Calypso Provider 1 Calypso 3 Numerix 1 Fenics 2 Murex 4 FIS 2 Finastra 3 Finastra 5 Temenos Group 3 FIS 4 FIS 4 Murex 5 Lombard Risk 5 Thomson Reuters

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036-041 AR 0918 Tech Rankings.indd 40 19/09/2018 18:30 Others (support services, data and innovation)

Application service provider Best cloud-based services provider Mifid II Provider Provider Provider 1 Murex 1 Amazon Web Services 1 Thomson Reuters 2 FIS 2 Microsoft 2 Bloomberg 3 Calypso 3 Oracle 3 IHS Markit 4 Finastra 4 SAS 4 BearingPoint 5 Bloomberg 5 IBM Risk Analytics 5 Axiom SL

Data vendor Best innovative specialist vendor Regulatory reporting Provider Provider Provider 1 Thomson Reuters 1 Fenics 1 IHS Markit 2 Bloomberg 2 ActiveViam 2 Axiom SL 3 IHS Markit 3 ION 3 Wolters Kluwer 4 S&P Capital IQ 4 Numerical Technologies 4 BearingPoint 5 FactSet 5 Vector Risk 5 Moody’s Analytics

Implementation efficiency Open banking platform Alternative data Provider Provider Provider 1 Finastra 1 Finastra 1 IHS Markit 2 Murex 2 Temenos Group 2 Neudata 3 Calypso 3 FIS 3 Convergence 4 FIS 4 SAP 4 Thasos Group 5 Moody’s Analytics 5 MuleSoft 5 Quandl

After-sales service Cyber security Provider Provider 1 Murex 1 RSA 2 FIS 2 BAE Systems 3 Calypso 3 Darktrace 4 Numerix 4 Thomson Reuters 5 Finastra 5 Oracle

System architecture IFRS 9 system Provider Provider 1 Finastra 1 Moody’s Analytics 2 Murex 2 FIS 3 Calypso 3 Wolters Kluwer 4 FIS 4 Oracle 5 IBM Risk Analytics 5 Finastra

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