Following the signing of a partnership with Luxembourg-based, application service provider (ASP) specialist CetrelSecurities earlier this year, data management solution vendor Aim Software has acquired its first joint customer in the Luxembourg market. Josef Sommeregger, vice president business development and sales at Aim Software, explains that the joint offering is aimed at netting the vendor more clients in the mid-sized asset management range in the country.
“We began discussing the partnership in the second quarter of 2009 and the decision was reached fairly quickly to move ahead,” he says. “We implemented the joint solution for our first customer over the summer and we are in the process of beginning the migration of our existing customer base onto the solution, which will happen in a phased approach during the course of next year.”
According to Sommeregger, Aim Software had already achieved some traction in the Luxembourg market with its pricing and reference data solutions prior to the partnership, including Banque de Luxembourg and RBC Dexia. However, the vendor was keen to improve its buy side offering and hence decided to team up with CetrelSecurities, a subsidiary of the Luxembourg-based Cetrel.
“Cetrel already had a Swiss partner but its customers were seeking a greater breadth of service on the pricing side than they could provide and so Cetrel recognised that they needed to come to us for a new set of technology capabilities,” explains Sommeregger.
CetrelSecurities focuses on the provision of ASP services in the area of pricing, reference data and corporate actions management to European financial institutions. In order to fulfil the specific requirements of one of its larger European customers, CetrelSecurities opted for Gain Golden Copy from Aim Software and thus the partnership was born. Renaud Oury, executive vice president of CetrelSecurities, explains: “We are convinced that our joint know how and expertise will help our clients to increase the reliability and quality of their overall reference data management, effectively cut down their costs, while reducing their operational risks.“
The benefits for the Cetrel customers include a high level of availability from the ASP environment and therefore more stability, contends Sommeregger. “Cetrel was lacking this prior to our partnership and they also now have all the functionality of our golden copy platform available to their customer base. They now have the ability to extend their capabilities in the reference data space,” he adds.
CetrelSecurities’ customer will therefore have direct access to Aim Software’s Gain Data Management platform, while being spared the effort of installing and maintaining it in-house, the vendors claim. The rationale behind this is that by relying on an outsourced service, this client will be able to increase its operational efficiency and to concentrate on its core business at the same time.
Carlo Houblie, executive vice president of CetrelSecurities, explains: “Aim Software‘s flexible reference data solution as well as CetrelSecurities know how in the area of ASP Provision complement each another in an ideal way. By being able to built on product components such as more than 15 maintained data feed connectors and on a highly secured production environment, CetrelSecurities and Aim Software are able to provide a high quality tailor made data service.”
On the other side of the coin, Sommeregger explains the benefits for his own clients: “From the Aim perspective, for clients that have installed the Gain platform, we are now able to provide specialised services around regulatory certified data checking, for example UCITS related eligibility checks. Our customers can therefore add these as a new data capability.”
Sommeregger reckons Aim’s more standardised approach to reflect the industry’s requirements around specialised pricing services was a draw for the Luxembourg-based ASP specialist firm. The addition of this functionality is to meet the new regulatory requirements and rules around the selection and validation of fund pricing, he continues. This is not only a technical ASP issue, it also represents the solution to a functional business challenge for these mid-size firms.
“We also offer similar services on the compliance side with our UCITS checking service for asset managers in the pre-trade space. This is where we also combine technology with business function requirements by providing industry specific standards adapted to meet our clients’ needs,” adds Sommeregger
Over the course of the next year, Aim Software will be adding more services to the sets it currently offers via Cetrel around reference data, pricing and corporate actions. “This will be for both funds and private banking clients and we will adopt a step by step approach to launching these new offerings over 2010,” elaborates Sommeregger. “For our UCITS related offering, we already have a clear timetable and three customers are already on board for this. One is a French securities services firm and the others are based in Luxembourg and these will likely be announced in the first quarter of next year. We currently have around 50 clients interested in the joint offering, largely due to compliance related pressures driven by UCITS.”
In the second quarter of next year, the vendor will also release a new pricing services solution with Cetrel. “On the pricing services side of our business, regulatory change has also had a big impact on uptake. The market volatility following on from the crisis has also meant that banks’ systems have been unable to cope with the volumes, this has meant a lot of demand for scrubbing and validation services for prices. Firms need to provide the right quality checks to meet market standards and they also need to contain their costs,” says Sommeregger.
The vendor will also soon be rolling out campaigns for the joint Cetrel offering in France and Germany by indicating the benefits of reducing their time to market and their costs, he continues.
However, although the vendor has high hopes for the CetrelSecurities partnership in these regions, Sommeregger is quick to stress that it is not an exclusive partnership deal. Earlier this year, the vendor also signed a partnership agreement with IT operations outsourcing service provider B?Source and ASP and outsourcing vendor SFB services4banks, both in the Swiss market.
Moreover, ASP partnerships may be on the menu for the vendor and the market this year, but Sommeregger reckons the flavour of the month may soon be outsourcing. “ASP service provision is merely a step on the road for the market towards business service provision (BSP), or outsourcing. The market is gradually becoming more open to the idea of outsourcing the cleansing and scrubbing of pricing data and we believe that this will increase in the market over the next year,” he predicts.
Outsourcing may have had a bad rep in the past, but Sommeregger is confident that the pressures of increasing costs and declining headcounts will drive financial institutions to consider outsourcing some reference data capabilities. “You need to differentiate the business critical processes that cannot be outsourced from those that are suitable for an ASP model. Technology has advanced so much that previous issues, such as segregation of data in a multi-entity environment, are no longer a problem. It is now possible to guarantee a secure and stable environment for data processing with clear monitoring and auditability of that data. This fits in to the need for IT departments to cut their overheads, thus externalising these challenges is more appealing,” he concludes.