Believing a cohesive reference data strategy will give it a competitive edge as well as improving efficiencies as the Corporate and Investment Banking division grows, Wachovia Corp. last year embarked on a three-year initiative to develop strategic building blocks.
The aim is to create a solid foundation, much of which will be supporting reference data, says George Vega, managing director of capital markets. But this is not just a technical drive. “We are aiming to align the technology across multiple businesses to ensure initiatives are revenue driven,” he says.
A key tenet of this strategy is to buy rather than build where Wachovia believes the applications, technology or data are commoditized, but to still retain the intellectual capital within the firm. Says Vega, “We have worked on key relationships such as Tibco for messaging and Microsoft for the desktop. We are also looking at offshore capabilities where it makes sense.
“Our overall goal is to increase capacity and efficiency while decreasing costs. To do this we need the right number of people distributed across the organization in combination with leveraging our partners.” A result of this approach has been the recent decision to extend the use of Asset Control’s AC Plus data management platform. This will form the core reference data sourcing, integration, cleansing and maintenance engine. The selection followed a review of other data management platforms including Goldensource and Tap Solutions.
Asset Control was already in use at the firm within the Corporate and Investment Banking’s risk management division, where it was implemented earlier this year to consolidate multi-source pricing data.
But the main reason the software firm was selected, says Vega, is due to its “modular component-based approach and architectural build which fits in with our own build, which is essential as we are tying the infrastructure to our own distribution platform. It solves our data sourcing issues and provides rules so that we can fit the selection of multiple data sources into the Wachovia view and workflow.”
Perhaps hinting at future developments, Vega says, “We don’t see such maintenance platforms being onsite as they are commoditized solutions. Rather, we should only have small teams focused on intellectual capital onsite.”
It’s worth noting that Asset Control’s platform forms the basis of the outsourcing solution on offer by Accenture, which recently secured its first client in Citadel.
With a progressive viewpoint, Vega says, “I’ve built data platforms before and know it can get political fast. Instead we as an organization should be spending our time developing new risk models, which is more fun and you can see the impact on revenues immediately.” Rollout Schedule The Asset Control platform will be live in December and data will be added asset class by asset class, beginning with fixed income in line with the firm’s core focus.
Says Vega, “The rollout is based on where we believe we’ll gain most efficiencies.”
The first phase will involve the addition of structured fixed income instruments, including mortgage-backed securities (MBSs), asset-backed securities (ABSs) and collatoralized mortgage obligations (CMOs). This data is currently sourced from Reuters (EJV) and FT Interactive Data (Muller Data). The firm is also hoping to add CMO data from Intex, traditionally an analysis and modelling firm.
This content will be bolstered with corporate, government, municipal and agency bonds in the first quarter of 2006, says Mike Feinstein, director of product and pricing infrastructure. Bloomberg is the main source of cash fixed income data, primarily due to its use on trading desks, says Feinstein, and so to ensure consistency, is used in mid- and back-office functions also.
Equities will be added in the second quarter of next year. The platform could possibly be used to partially automate corporate actions, a process that currently is fully manual, though no set time frame has been decided here.
The Asset Control platform helps Wachovia’s drive to “source the highest quality data at the lowest price,” as it provides the firm with “the flexibility to evaluate, drop and add sources to suit our needs,” says Feinstein.
Vega says that the aim is to migrate internal clients with the minimum of disruption and to move them over as soon as possible. As such he says, “We are not waiting. We are now working with lots of systems to figure out how the data will look so that when we come to migrate, it should just be a matter of plugging in the back-end.”
Regarding the business units that will be migrating to the platform, “the heads of risk, operations and technology have the largest stake in this project,” says Vega. Other units consuming the reference data will be trade systems, sales applications, research, analytics, reporting, and settlement and clearing among others.
The hope is that Wachovia can reduce the use of its current 40 disparate databases on the product side to about 10. “The question is how to source once and distribute many times so we can get consistent access to client and reference data across the organization,” says Vega. The firm also operates around 20 client databases. There is an initiative in the client and entity data space being discussed although it is early days yet. The building blocks strategy – known internally as the ‘Core Infrastructure Program’ – is being driven by the chief information officer of Wachovia’s Investment & Corporate Banking division Susan Certoma , who joined last year. In her role, she oversees areas including capital markets, operations, compliance and audits, risk, and letters of credit. And as is essential for such large-scale projects to succeed, the strategy has the support of senior management including the chief executive officer.