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Nykredit

Nykredit received a user-friendly and scalable MiFIR solution

State-of-the-art. That was the verdict on Vitec Aloc’s investor protection solution, PORTMAN MiFIR, after two months of operations at Nykredit, which was one of the first clients to obtain the solution. Rasmus Grinderslev, the then Product Manager at Vitec Aloc, understands the enthusiasm: “It wasn’t just a black box they were provided with. The users have been part of the journey right from the very start, and the solution has been designed based on the actual workflow of the user – this enabled us to ensure that expectations are fulfilled from Day 1”.

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 per cent 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 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:

With PORTMAN MiFIR, Vitec Aloc has supplied a solution for the daily reporting challenges necessitated by the change in the law. Our reaction time has been shortened considerably and, considering the potential risk of other dramatic changes on the securities market, knowing that we are prepared provides us with peace of mind.

From Vitec Aloc’s perspective, it has been essential to offer clients a solution that goes beyond the technical solution. Rasmus Grinderslev has no doubts that Vitec Aloc has succeeded in this.

It is a scalable solution, which offers great value at a relatively low price and does not suddenly require a lot of additional time. And because the system is so efficient, the risk of errors or incidents being overlooked is low. A manager of one of our other bank clients claims that the MiFIR solution acts as an insurance against compliance violations.

The MiFIR solution takes into account noisy data, which can influence the control. Rasmus Grinderslev continues:

There may be data that cannot or should not be corrected, but that still affects the control. We have therefore ensured that the user can suppress false alarms, and we cooperate continually with the clients to refine functionalities such as these”, explains Rasmus Grinderslev.

More for less with a subscription solution

Since the solution was implemented in Nykredit, the new law has come into force and several new subscribing clients have joined the solution, which is represented in the user group. Vitec Aloc has frequent meetings with the group in order to ensure that everything is still functioning as intended and to see whether the solution can be further refined. Based on the broadly composed group, Vitec Aloc facilitates a network of users and clients, which creates the possibility to exchange knowledge and to benchmark against each other, which creates great value for the clients.

At the same time, the continual feedback from the user group functions as Vitec Aloc’s primary source for further development of the solution. As the clients become increasingly comfortable with the solution, the user group starts to function as an innovation forum, with a focus on inexpediencies and potential improvements. Rasmus Grinderslev explains:

Along the way, we have become aware of details that neither we nor the clients had considered at the start of the process, as we were not then able to see the full picture. It has therefore been invaluable that the client can contact us directly and ask if we can toggle something on or off or develop a new functionality. This has contributed to continual improvements in convenience.

In Vitec Aloc’s sales and client department, the general focus is to highlight the advantages of subscription-based solutions, such as the MiFIR solution. Thanks to this model, the clients obtain advantages in terms of influence and the continual development of the solution.

The client feels that they can propose requests for the solution, and if it is something that makes sense for the group, then it becomes incorporated into the subscription. This often involves modifications or changes that we can implement quite quickly – and the client is not charged any additional fees for this,” concludes Rasmus Grinderslev.

If you would like to learn more about PORTMAN MiFIR, please feel free to contact us.

Our customer says

“With PORTMAN MiFIR, Vitec Aloc has supplied a solution for the daily reporting challenges necessitated by the change in the law. Our reaction time has been shortened considerably and, considering the potential risk of other dramatic changes on the securities market, knowing that we are prepared provides us with peace of mind.”

Klavs Holten, Head of Reporting i Nykredit

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