Nykredit

When the European Securities and Markets Authority (ESMA) imposed increased reporting requirements to reinforce investor protection, many banks suddenly found themselves faced with an enormous task. This was also the case for Nykredit, one of the biggest banks of Denmark, administrating around DKK 180 billion.

The new law requires banks to report to investors if the value of an individual portfolio has decreased by 10 per cent or more since the previous report, or if the geared instruments in the portfolio have decreased by 10 percent since the acquisition of the instrument. With tens of thousands of portfolios, Nykredit was faced with a huge amount of data, which needed to be analysed to ensure compliance with the new reporting requirements.

Nykredit was already using Vitec Aloc’s PORTMAN investment management solution for client reporting, and when Vitec Aloc approached Nykredit, the parties quickly engaged in dialogue about the possibilities. From the very beginning, Vitec Aloc’s goal was to create a complete standard solution at an attractive price. Rasmus Grinderslev elaborates:

“We spoke with all the clients and sat down together to draw up the individual workflow, to make it as functional as possible for both the big banks and the individual asset managers. To keep costs to a minimum, we aimed to build a solution using the mantra ‘one size fits all’, while still retaining enough flexibility so the clients would feel that it was built for them. From the very first sketch, therefore, we focused on the client to understand their needs, and built the solution based on that: Was the solution deep enough? Was it broad enough?”

In doing this, Vitec Aloc employed a development process where the future user could contribute to setting up the framework for the finished product.

The users had their say

Vitec Aloc established a user group with representatives from Nykredit, which marked the beginning of a circular process, where the user could draw up processes and define their demands and desires for the solution in direct dialogue with Vitec Aloc’s business developers. According to Rasmus Grinderslev, the unique thing about PORTMAN MiFIR is that the solution is designed based on the users’ existing workflow.

”Instead of building the solution on the basis of the logic of the legislation, we quickly concluded that the solution should be based on the users’ workflow, automating as many processes as possible – from the system identifying potential violations to the delivery of finished client reports. The banks have just one working day in which to complete this process, and the law does not care if the bank has one or 70,000 clients to examine, which necessitates a highly operational workflow.”

Vitec Aloc brought multiple clients onboard early in the project, which meant that the development was quickly initiated. During the development phase, the solution was pressure-tested by many different future users, compliance officers and data suppliers. After just a few months, Nykredit went into production with the first version of the solution, and the reactions were positive.

“One of the responses we received from Nykredit was that our solution was state-of-the-art compared to the ones available from our competitors. The users are really enthusiastic, which is largely because they were highly involved in the process from the start”, explains Rasmus Grinderslev.

Cost-efficient process and peace of mind for senior management

With PORTMAN MiFIR, the portfolio manager can run the reporting tasks with high efficiency because the solution quickly gives an overview of value changes that do not fit the reporting requirements, without having to search manually in the data. In other words, the portfolio manager is notified when reporting is required as a result of a value change. This gives an obvious operational advantage, as well as providing peace of mind for senior management. Klavs Holten is Head of Reporting at Nykredit, and elaborates: