Having selected Capco as business service provider and CounterpartyLink as data provider, AXA Investment Managers has kicked off the third party client data phase of its ongoing reference data project. Analysis is under way at the firm into the approach to take in the next phase of the project, focusing on securities data.
But despite the commitment of senior management to a thoroughgoing reference data re-engineering process, the pressure to continually re-confirm the value of the project is ongoing, Valerie Malaval, global head of change management data at AXA IM, told delegates at FIMA 2006 recently. Setting out to describe “the components of the magic potion for launching this kind of initiative”, Malaval advised her listeners to “plan big, but attack in manageable deliverables”. Avoid the Loch Ness Monster image, she warned: “Everyone is talking about you, but no-one has ever seen your delivery!”
AXA IM’s reference data strategy is far-reaching. The firm’s aim is to focus only on its core activities. It outsourced its operations to State Street in December 2004 and it is now implementing flexible and modular platforms “more adapted to (its) franchise model” and supported by the delivery of consistent data in a timely manner, via the AXA IM data backbone. The business case for AXA IM’s reference data project depends on decommissioning three systems/databases in the company. “That’s a measurable result we have to achieve,” Malaval said. She also outlined predicted savings within AXA IM of 10-15 per cent on data feeds, 25-30 per cent on “system industrialisation”, 25-30 per cent on FTE reduction, 25-30 per cent on systems decommissioning and 2-5 per cent on failed trade processing.
An important factor for success, Malaval said, is to strike the right balance between top down and bottom up approaches to reference data improvement projects. “With the top down approach, change is more readily adopted but the projects take more time and you have to keep re-selling the initiative. There is a long-term financial commitment, but everyone can see that cost. The bottom up is the quick win model. The business is happy because it is seeing results, and there is a better time to market. But there can be a lack of executive direction and this creates the possibility of a fragmented solution.”
While AXA IM is mainly following the top down approach, Malaval has sought to find a balance between the two approaches. “We decided at the beginning of this year to launch 10 quick wins – delivery of tactical benefits to the business. This helps to encourage the business to wait for a long term solution,” she said.
The firm is making decisions on a case by case basis as to the right strategy for creating master files for different data types. “When you have a huge programme like this, you can’t do everything internally,” she said. “There are so many master files to build – we can’t do it all.” For the counterparty data phase, there was no desire internally to build the technology or create a big administration team to manage it, she added. “In this case a BSP is quite the best solution. Perhaps we won’t take the same decision for the securities master file.” That said, AXA IM is determined not to build any data applications inhouse going forward.
Malaval told Reference Data Review that before selecting Capco as the BSP provider for the administration process of its client and third party data, AXA IM did review other options, including the Ness proposition and a platform within AXA. “We didn’t select the internal platform because we wanted to attract some expertise on the management of such a programme.
Capco won the deal as it has a strong offer in place, with some key clients and a European presence. More than a simple provider, Capco is involved in the success of the programme implementation and is helping us change our internal processes.” Capco Reference Data Services will develop a data management strategy to ensure the quality and accuracy of the third party data on which AXA IM relies, applying its “make it clean, keep it clean” methodology.
Having reviewed a range of available counterparty data providers – including Dun & Bradstreet, S&P CrossWalk and Bloomberg – AXA IM settled on CounterpartyLink because “they were the only provider who would allow us to customise the services for asset manager needs” Malaval explains. “With CounterpartyLink we get the services we choose, and they have engaged themselves to deliver a very good quality of data, with compliant processes, and this we couldn’t negotiate with the other providers. Even if the cost might be higher, it is very important when working with such data for us to find a partner with whom we could work on a long term basis and with the appropriate process adapted to all new regulatory rules.”