Storebrand AM Completes Move to SimCorp Dimension

Storebrand Asset Management has announced it has integrated SimCorp Dimension’s front office and fund management technologies to further automate and standardize investment processes as part of a wider consolidation strategy.

During the IUCM SimCorp event in Milan on September 18, the Norwegian asset manager said that the latest implementation marks the last leg of the project to provide a holistic and single system approach to its front-to-back office operations.

Following a review process, in 2016, Storebrand identified a need to establish a unified operational infrastructure to remove unnecessary IT systems, reduce costs and enable scalability for future growth. On the sidelines of the IUCM event, Erik Kaland, the chief operating officer of Storebrand Asset Management, explained that when he joined the asset manager five years ago, he quickly realized the firm needed to replace decades worth of fragmented front office systems, custom-built applications, manual processes, and structural inefficiencies.

“The picture I was confronted with was that we had a lot of customization and many systems, more than 100 we counted at one point, and we no longer had the skillset in our employees to maintain and develop these further,” he adds. “It was very costly and it reduced our agility and ability to onboard new types of solutions.”

Kaland further explains that the complex IT infrastructure, combined with diminishing returns across all assets classes, influenced the firm’s decision to scale back its IT systems. He highlights that the asset management community is under increasing pressure to reduce costs, tackle fee issues and compete with migration to smart beta and passive portfolios.

“We had a situation with higher costs, high complexity, lower agility, and diminishing margins,” he says. “So we had to do something. It is a fundamental strategic choice that you have to make.”

During Storebrand’s restructuring, it selected SimCorp Dimension as its core IT engine and has since decommissioned multiple IT systems across order management, execution management, portfolio management, and external risk systems, saving an annual cost of €1 million ($1.7 million). Among those removed were Excel models, customized features and Charles River’s front-office tools. Despite that, Storebrand has retained parts the older system such as its factor-based algorithmic funds for portfolio managers, which has been integrated into SimCorp Dimension. 

As part of the consolidation project, the asset manager has also automated its risk management and post-trade compliance operations using SimCorp’s Compliance Manager technology. This has resulted in a 58 percent reduction in post-trade compliance breaks. 

In addition to the recent front office integration, Storebrand AM will also implement SimCorp Dimension’s fund-administration technology, replacing five different fund configurations and enabling multiple fee setups. The fund integration to date has increased straight-through processing for all funds, minimized operational maintenance and enabled a faster time to market with the ability to provide new share classes live in less than 24 hours.

The SimCorp integration will also provide real-time data analytics designed to improve the front office’s investment decisions. The SimCorp Dimension modules are supported by its investment book of record (Ibor), its centralized source of data. Klaus Holse, CEO of SimCorp, explained at the same event that having this single source of data throughout front and back office of an asset manager is key to driving efficiency, reducing operational issues and enabling scalability within a business.

 “In some sense it’s simple, but consolidation drives an alignment across the company, because suddenly the compliance department, the risk department, the portfolio manager, the accounting staff are all seeing that one set of accurate, real-time data,” he says. “There’s no more data discrepancy and time wasted on reconciling start-of-day positions,” he adds.

Since its restructuring, Storebrand looks to continue to reduce costs, remove inefficiencies, grow strategically and scale internationally. One example of this is its recent acquisition of Skagen, the Norwegian active management firm in October 2017.