The Bank of New York Mellon is currently analysing the reference data assets inherited from both the Bank of New York and Mellon pre-merger, as part of its efforts to create a “best of breed” platform to support its clients going forward. A decision is expected by the end of this year on what the reference data components of that best of breed platform will be, and on the future strategy for the managed reference data services offering Mellon built around the Eagle platform acquired through its earlier purchase of Eagle Investment Systems.
This process of comparing the two banks’ legacy assets will include analysis of the contributions made by the arch-rival data management systems vendors owned by Bank of New York and Mellon respectively – Netik and Eagle – which found themselves under the same parentage when the two banks decided last year to merge to create the world’s largest securities servicing and asset management firm (Reference Data Review, December 2006). Since it is standard post a merger to streamline overlapping assets, speculation has been rife that the combined bank will ultimately take some action regarding the competing data management platforms it owns. While both Netik and Eagle have continued to sell their systems directly since their acquisitions by the banks, the technology of both is embedded in the banks’ respective outsourcing solutions for their asset manager clients – the assets that are under examination now.
Amy Harkins, senior vice president at Mellon and director in its Global Asset Servicing division, puts the work to compare reference data assets in the context of an effort under way throughout the “new world” of the Bank of New York Mellon. “At this point, with anything around the merger we are focusing on best of breed,” she told Reference Data Review. “Our goal in the product development area is to continue to serve our clients to the highest quality. The process of comparison that reference data is going through now is happening across the board – global corporate actions, global class actions, global proxy et cetera. We are looking at all the Bank of New York and Mellon assets and picking the best of breed.”
Explaining the status of the work currently, Harkins says: “Tim Kafesjian (who has replaced Brian Buzzelli, who spearheaded the development of Mellon’s managed reference data services (Reference Data Review, October 2005) and has now joined Reuters) has begun work on examining client issues and requirements and the two platforms – comparing the Mellon reference data products and the Bank of New York reference data products. Prior to his departure, Brian had done some work on comparing the two product offerings and made a recommendation on how to proceed, and Tim is now picking up that work. The process of comparing the respective Bank of New York and Mellon assets will include the two data management platforms, Eagle and Netik, because the Eagle application is used in the Mellon outsourcing product and the Netik solution in the Bank of New York outsourcing product.”
Reference data was a vital asset to both banks pre-merger, she says, and will continue to be so. “Reference data was very important to Bank of New York, and is critical to all the bank’s product lines. Mellon’s reference data outsourcing offering had reached a degree of maturity, built up since Mellon acquired Eagle and using the Eagle technology. Bank of New York may not have reached the same degree of maturity in terms of managed reference data solutions, but it certainly had in place very sophisticated security master applications. Reference data is an important component of all the service offerings we have, and we are committed to continuing to provide the highest quality service,” Harkins continues.
Despite no shortage of providers entering the space, the take-up of managed reference data services (from the likes not only of Mellon but of Accenture, SunGard, Capco and IBM) has not so far been as widespread as might have been expected, due in part to the perennial problems with outsourcing of first convincing early adopters to take the plunge and second effectively building a scale business while still accommodating the particular, specialist requirements of different clients. It remains to be seen whether the Mellon managed reference data services continue to be made available as a standalone product, as distinct from the merged bank’s investment management outsourcing solutions as a whole, but Harkins says: “Our philosophy is to enhance value for our clients and expand our offerings, not detract from existing products.”
The review of the two banks’ legacy reference data products could lead to the maintenance of a hybrid environment to support outsourcing clients going forward, she suggests. “Because of the size of the combined organisation, we will probably always have multiple platforms for information around reference data. It may not be the case that one sole platform is selected. How we continue to serve existing outsourcing clients on both sides may well depend on the maturity of the client relationship. It may be that we have one strategy going forward for new clients, and retain a mix of platforms for existing clients. We will not necessarily be moving existing clients on to a new platform just for the sake of it.”