Downward pressure on fees, increasingly complex client needs and more diverse product sets are among the new realities requiring investment managers to gain better insight into profitability drivers. Some firms have begun measuring revenue in addition to the traditional profitability proxy of assets under management. However, these metrics are no longer adequate.
Capco can help you model and understand the economics of your business today, enabling you to quickly make more confident decisions on resource allocation, product structuring, pricing and service delivery. Our experienced investment management teams will work with you to attain a multidimensional view of economic performance. Our implementation approach, prototyping tools, frameworks, and accelerators can help reduce implementation time and cost and facilitate business acceptance of results.
What does a Solution Architect do? In deference to traditional deliverable-based architect role definitions, Solution Architecting spans the SDLC. While SAs are responsible for some deliverables, they primarily configure the required building blocks of the working product. They make transparent a myriad of tough decisions, encourage stakeholder collaboration, break deadlock and resolve difficult issues. SAs have a "line of sight" from ideation through implementation. Figure 1 summarizes the major processes by Project Management Institute (PMI) function where an SA could have the greatest impact.
This white paper offers a brief, practical Solution Architect role definition in terms of the PMI PMBOK knowledge areas. The reader's familiarity with PMI knowledge areas and process groups is assumed and Capco's suggestions on optimizing current project management practices follow.
Regulatory fall-out from the credit crisis and the ongoing economic meltdown in Europe are thrusting collateral management (CM) into the spotlight. Historically a stand-alone function primarily focused on mitigating counterparty credit risk, CM is becoming an integral component of trading, liquidity management, market risk and financing activities.
An enterprise-wide, cross-product CM environment can help transform a historically high-cost support function into a proactive profit center across OTC, ETD, financing and prime brokerage business units. Capco has demonstrated expertise in CM centralization, founded on a deep understanding of best practices and organizational, technological and regulatory impacts.
As a leader in derivatives transformation, we can help you integrate the foundational changes required for central counterparty clearing, including straight-through processing from swap execution facilities to clearing, margining and submission to industry trade repositories.
Despite uncertainty over the ultimate form and scope of the rules, smart financial services companies are moving ahead to prepare. Dodd-Frank is law, and many key provisions will be implemented regardless of how the next months' proceedings play out and political winds blow. The Volcker Rule will alter how banks trade and invest. The Collins Amendment will intensify capital requirements. The Lincoln Amendment will require some banks to spin off their swap desks.
A bias for action is understandable given the substantial new requirements and potential opportunities associated with reform. But companies could be making decisions and taking actions that prove to be ill advised once rules are issued. Capco has identified seven critical questions related to strategy, customer and counterparty disruptions, structure, and technology that board members and senior executives of financial services firms should consider as they measure the effectiveness of their regulatory reform programs.
Continuing turmoil in global financial markets has led to a deeper examination of financial industry practices and policies, and frequently, stricter regulatory standards. Firms are learning that a failure to develop an adequate Governance, Risk and Compliance (GRC) solution is expensive. In the last year, financial services firms paid over $250 million annually in fines for failing to comply with published policies.
Capco's Integrated Safety and Soundness solution establishes the baseline of a firm's obligations, harmonizing regulatory oversight with the institution's processes. Our data-driven approach to compliance framework design often results in a less costly GRC function that also positions the institution to safely pursue growth objectives.
What are the forces reshaping the financial services industry?
Customer expectations are evolving and new channels are proliferating. Credit and market risks are growing. The lines between traditional and nontraditional banks continue to blur. These and other factors are having an unprecedented impact on the industry, compelling institutions to address competitive threats, solidify customer relationships, and strengthen fraud prevention and security measures.
How has the industry responded?
Forward-looking institutions are striving to provide the products and services that customers want, as well as the ability to interact with the institution in the manner they choose. To do this, institutions are expanding cross-selling capabilities, reevaluating channel strategies and examining their use of technology.
How can Capco help you realize significant transformational opportunities?
Our multichannel banking sales and service transformation process can help you measurably improved customer experience, while achieving substantial efficiency gains, cost reductions and revenue enhancements. We will work with you to:
� Design a consistent customer experience, with the flexibility to move customers across channels without rework.
� Improve cross-selling capabilities to increase value through higher initial sales and customer retention.
� Provide customers with richer cross-channel, self-service capabilities and faster issue resolution. Potential impact: 40 percent increase in cross-sell ratios and 25 percent improvement in outbound telemarketing.
Financial institutions are struggling to deal with the data deluge. Outdated information management plans and poor results from initiatives such as bespoke data warehousing are compelling organizations to find better solutions. Burdened with ongoing business and regulatory change, redundant and siloed information, and inadequate stewardship, financial services organizations need strategies that address key enterprise data management issues while answering the concerns of diverse, impatient stakeholders.
Capco can help our clients get there! Capco and FIS together form the largest technology and consulting company focused exclusively on the financial services industry. We are uniquely positioned to deliver the right combination of business, technology, and data management expertise to banking, capital markets, and wealth and investment management organizations. Capco can help our clients make the highest and best use of tier firm's data to improve performance in areas such as risk management, strategy and project alignment, and data controls and accountability.
IT complexity: A new metric to evaluate the impact of change
What if complexity was a discreet, measurable metric rather than a discretionary, ambiguous term? Could a complexity metric reshape the decisions and activities of a CIO?
The information technology field is filled with quotes and anecdotes about organizations trying to contain, explain and manage complexity. Often these words reflect an inclination to assume that if complexity exists, we should try to reduce it. As computer science pioneer Alan Perlis once said, "Fools ignore complexity. Pragmatists suffer it. Some can avoid it. Geniuses remove it." Pure genius, however, rarely exists. And with our world in a state of constant change, we need to master, not remove complexity. The reduction of complexity can reach diminishing returns, and the existence of complexity can allow greater business flexibility. Without a doubt, an appropriate level of complexity is necessary to maximize return.
Leading financial institutions recognize the need to acknowledge, embrace and harness complexity. They understand that the many layers and connected dependencies of today's IT environments cannot be managed with simple heuristic, or experience-based, approaches alone, but instead require objective, quantifiable measurement of their origins and effects.
This white paper describes a groundbreaking initiative underway by Germany-based Commerzbank and consulting firm Capco to develop a model for measuring IT complexity in the financial services industry.
Change amidst uncertainty: how banks are adapting to the emerging regulatory landscape is a Capco report, written by the Economist Intelligence Unit. It examines how, in light of continuing regulatory uncertainty, financial institutions are reshaping their capital markets businesses to operate effectively in the new environment, and focuses particularly on the likely effect of regulation on overall structure as well as front, middle and back office operations.
The research is based on three components:
� A survey of 60 senior executives at financial institutions, half operating in the UK and half in the US. All firms had annual global revenues of more than US$5bn and all respondents work in operations, risk, trading or regulation.
� Interviews with a range of industry participants and experts, as well as a follow-up qualitative questioning of survey respondents. Because of the sensitivity of the topic, interviewees spoke off-the-record.
� Desk research, including a review of financial institutions - regulatory filings.
The author of the report is Geraldine Lambe and the editor is Monica Woodley.
IT Complexity is so important that 'learning through failing' is no longer satisfactory given that this form of complexity so clearly and harshly impacts the cost, delivery quality and flexibility of the IT landscape.
We now need a robust and functioning model for complexity measurement and mitigation. This paper describes how Commerzbank, in partnership with Capco, is deriving such a model. We also examine how it can be developed over time to provide a cross-industry standard. Specifically, we will be looking at:
� The shape of the model - how does Commerzbank, with Capco's input, model complexity at the moment.
� The key components - a deconstruction of the key components of a rigorous understanding of complexity - the indicators - covering applications, interfaces, data and infrastructure.
� A pathway to live implementation - overview of the key steps required for an organization to start using rigorous, predictive complexity insight as a management lever.