banks, selling a solution for one area and then broadening from here. For instance, during 2011, it claimed many ALM clients had also bought liquidity management functionality. Some of the components have been rewritten, typically with a move to more modern platforms. There has been a standardisation on Microsoft, including at the database level with SQL, in part for reasons of cost of ownership. Sungard’s Ambit Risk & Performance MD for sales, Alwin Meyer, admitted in late 2011 that it was still a battle to persuade users that Sungard had a homogeneous platform. ‘It is the main thing we have to fight against, that we just have different components.’ In fact, he claimed not only a consistent look and feel but also emphasised that Sungard had started on integration earlier than some others. He pointed out that suppliers such as Algorithmics (IBM) and Oracle also had different pieces from different sources within their offerings. For credit risk, the Sungard solution is meant to cover


credit assessment, credit portfolio management and stress testing. This is more or less for commercial lending and not the type of pre-trade real-time credit risk of Adaptiv. For operational risk, the Sungard partnership for the Sword


product appears to have worked well and there has been a fairly good uptake. The area of greatest activity is ALM and market risk. ALM, as mentioned, is the origins of Almafin. Areas covered include earnings simulation, hedge management, funding optimisation and economic value of equity (EVE). The Adaptiv- derived market risk capability is still for smaller banks, with some of the facilities of the full Adaptiv offering basically turned off as they are not needed by the target segment. In this environment, Ambit Risk & Performance supports market risk management on a T+1 basis, with VaR and stress testing. The Adaptiv component has only been brought into the suite since Sungard went private, in 2005, at which point, as mentioned, the traditional divides between the different Sungard companies started to be dismantled. The fourth component is liquidity risk management, which has been built by the Sungard Risk & Performance team. There are pre-packaged stress test solutions and a scenario engine that can accommodate current and future stress testing needs, and supports countermeasure activities and measures their impact. There are also pre-defined extensible key risk indicators. To move data in and out of the platform – always a challenge within risk projects – there are migration tools within the offering for data validation, consolidation, enrichment, transformation and reconciliation. Above the credit, operational, market and liquidity risk components are layers for ‘risk mitigation’ centred on capital management, with both a regulatory and economic aspect to this (in line with Basel). It spans capital adequacy, performance stress-testing and risk aggregation. There is also an umbrella layer for risk adjusted performance


management, including profitability analysis and risk adjusted return on capital (RAROC) to a single transaction level. Sungard has added these capabilities within the last few years, through in-house development, with initial demand coming from the US. There is also a layer for budgeting and planning, including margin and payroll planning. The main development centres are New York, Boston,


London, Winterthur (where Almafin was based) and Melbourne. There are dedicated delivery teams as well in the Gulf, Zurich, Paris, Madrid, Pune, Johannesburg, Singapore, Beijing and Sao Paulo. Sungard largely handles the implementation of its suite


itself. For generic needs, such as project management, it can also draw on Sungard Consulting Services. The supplier claims a single code base for all customers. There has been cross-marketing into some of the core system user bases. This has happened with Apsys/Ambit Private Banking. It has not occurred with Symbols/Ambit Core Banking to date, with the main focus being selling treasury systems with this, although a push with the risk components was planned for 2012. There are also adaptors for third party applications, such as those of Avaloq, ERI (Olympic), Finnova and Temenos (T24). On the technology side, clearly Sungard inherited different systems of different ages and on different platforms but it made the decision, as noted, to standardise on Microsoft and Intel for Risk & Performance, including on SQL at the database level. The lower cost of ownership was deemed important for the target base. Meyer said he was aware of only two or three deals that had been lost over the years due to the platform (he cited China as particularly keen on Oracle rather than Microsoft) but felt this had been far outweighed by the speed of development that is feasible through the ability to focus on a single platform. As a potential alternative to the traditional licence software route, there has been little or no adoption of Sungard’s Software as a Service (SaaS) model (branded as Infinity) on the risk and performance side to date. It is worth noting that Sungard and SAP formed a partnership in mid-2007 whereby Sungard’s risk solutions were meant to be brought into the latter’s compliance suite. The first focus was on Bancware for ALM. SAP’s Business Process Platform (BPP) financial database was meant to integrate all transactions for operational risk, said the supplier’s Marc Derungs, VP of banking, with analytics on top. When the development started, there was huge pressure around Basel II and, in western Europe, IAS. However, ALM then started to become more prominent, he said. In traditional universal and retail banking, margin pressure had definitely increased in the last couple of years, he said. This had brought the need for more sophisticated ALM. ‘Before it was a risk control exercise – stay in limit and provide reports to the regulator.’ Now it was much more strategic, centred on taking interest rate risk as a revenue opportunity. SAP could have developed a solution to fill this gap, he said, but in the interests of time, it decided to


Risk Management Systems & Suppliers Report | www.ibsintelligence.com 143


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