1-Sep-04
Private banking markets and business models are at a crossroads. Customer satisfaction and retention through improving service levels are more important than ever. Private banking is obviously a people business and an efficient platform can help private bankers optimise their client relationships, in particular with reporting, optimising portfolios, offering tailored solutions per individual portfolio and transparent performance calculations. Commerzbank International S.A. Luxembourg chose Triple A as their integrated front-end user platform. How?
In April 2001, Marc Flammang moved to Commerzbank International S.A. Luxembourg (CISAL), a 100% subsidiary of Commerzbank AG, Germany. As senior vice president Private Banking, he is responsible for product development and strategic issues. CISAL uses investment models that are continuously refined for market movements and to maximise return of clients‘ portfolios per defined risk profile. A range of products, from investment funds to tailor-made mandates based on CISAL‘s monthly Investment Committee, is offered and then implemented through security or fund selection.
Additionally, the Portfolio Management department is specialised in economic and financial research, and CISAL works with research entities within the Commerzbank group. These are the building blocks for dynamic portfolio optimisation and portfolio management processes.
CISAL manages discretionary portfolios according to the global investment policy of the bank, using a range of instruments, geographical and sector diversification and technical analysis to optimise portfolio performance. The risk levels of portfolios are standardised. “We prefer fulfilling 100% expectations for one segment of the market, particularly Private Banking, rather than meeting only a part of expectations for 100% of the market” says Flammang. CISAL uses its expertise in the area of hedge funds to adapt the clients’ portfolio mix to the market environment.
Choosing the right system
Market conditions, new regulations and increased competition mean a growing need for an up-to-date IT infrastructure. CISAL invested in a new portfolio management solution, anticipating the current market recovery, basing the decision on a detailed business case of competitive cost/income ratios and a quick payback period (under 4 years). The aim is to improve client service and reduce costs through a platform satisfying several key points:
* High-quality institutional and individual reporting; multi-channel communication to increase client satisfaction while reducing costs
* Allowance for AIMR and GIPS compliancy standards
* External connection to the platform for reporting purposes during trips and for external managers
* Straight-Through-Processing, covering the whole order life cycle
* Productivity functions allowing the automated rebalancing of portfolios against complex and flexible strategies or asset allocations to offer real individual portfolio structures to clients, that can also be managed on an central basis
* Compliance controls and risk
* Spurring communication between client relationship managers and portfolio managers
Equally important is the integration of a contact management system with pro-active client portfolio monitoring for an all-inclusive individualised service that can be integrated subsequently.
Meticulous selection by the Private Banking Division, with IT and the Organisation Division, resulted in Odyssey’s Portfolio Management solution Triple’A being chosen. A fully integrated solution covering everything from relationship management to all portfolio management services, was implemented in a 12 month project. There was complete ‘front-to-back’ integration with the Globus back-office system from Temenos, including fully automated coverage of corporate action processing, integration with existing trading systems, as well as the processing of bulk orders. Order input masks were re-designed for new compliance rules and any client-specific restrictions. Consolidation within the system of portfolios, or positions by account manager, allows for global analysis of portfolio risk, and simulation of expected margins.
Client information is improved through reporting and personal communication. Flammang believes that “in order to be irreplaceable, one must be different.” Transparency helps clients to better calculate their investment risks and cost intensive enquiries can be minimised. A significantly improved and structured process in providing investment advice is one of the key benefits and client service differentiators.