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Achieving back office efficiency with front office differentiationJean-Philippe Bailly, Nordea Bank LuxembourgMichel Jongen, TemenosHervé Maillot, Deloitte

19 May 2016

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1. ‘Highlander’ background

2. Temenos solution

3. Implementation process

4. Business benefits

5. Future plans

Agenda

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Highlander background

Jean-Phillipe BaillyChief Operating Officer, Nordea Bank

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Context

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Mandatory Olympic migration was needed from the current version at the time, which offered no new and improved business functionalities. And the maintenance for it would’ve been ended within two years and quite costly.

WealthSuite Front Office upgrade to the next version (complex project to take on since the current one was highly customised)

In-house developed CRM (CIS), e-banking, Data warehouse. To maintain, it would‘ve meant to heavily invest into our resources

IT Infrastructure at the time

Core Banking Software ProductsCore application components: Olympic, WealthSuite Front Office and U-Link and

satellite applications to support the private banking and custody activities

Locations to support: Luxembourg, Switzerland, Singapore

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ORHigher Cost

Do we migrate to the new version of Olympic?

Crossroad QuestionsReplace it

with a totally new core banking

system?

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Huge Investment as IBM AS400 and related hardware: higher cost to compare to the Intel Server.

At 7 years old, it had already surpassed the industry’s standard life cycle (5 years) by two years.

Ageing Business Computing Infrastructure: IBM/AS 400

IT Infrastructure at the time

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ORHigher Cost

Stay on IBM AS400

infrastructure?

Change to a new

infrastructure; Intel Server?

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What about new markets? We could no longer rely only on our traditional markets as our customers aren’t just banking from core market locations.

Our applications licenses covered onlyLuxembourg, Switzerland and Singapore.

Bank’s Geographical Operations

IT Infrastructure at the time

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ORManage new

markets from the Bank’s hub;lowering ITfootprints?

Deploy operations across the borders?Higher Cost

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Additional drivers

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Client’s Perspective

Improvement of Front Office activities – finding a solution that would reduce multiple applications accesses to an integrated Private Banking Workspace.

Increase of core value proposition –finding a solution that provides a better client relationship management and improves clients service efficiency.

Digitalisation – finding an end-to-end digital solution for clients to be able to access their banking information as well as professional advisory services anywhere and at any given time.

Global Market Positioning – finding a trust-worthy and reliable solution that will be accessible by our clients globally.

We need to build a sustainable platform which supports massive development and meets the demands of the future.

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Client’s Perspective

STRATEGIC MARKETSo Franceo Germanyo Spaino Austriao Chinao Hong Kongo Thailando Malaysiao Nordics

CORE MARKETSo Luxembourg HQo United Kingdomo Switzerlando Singapore

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Operational Perspective

We need to build a sustainable platform which supports massive development and meets the demands of the future.

Simplification – operational efficiency gains by reducing the number of systems across the infrastructure, & by integrating functionality across back-office, front-office

IT-related Structural Cost Reduction –reducing the cost of upgrades and maintenance

Digitalisation – taking advantage of technological advancements to drive a higher level of automation across the organisation

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Operational PerspectiveAt the time Now

To be kept

To be removed

To be replaced

New

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Old Core Banking System

WealthSuite Front Office Upgrade

e-Banking + CRM

Client Reporting

AML Tool

Reconciliation Tool

Interfaces

DEVON

Infrastructure

MIS/COGNOS

Proc

esse

s A

ffect

ed

Operational Perspective

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Rationale

Risk management – providing the highest quality of service while minimising operational risk

Reinforcing client trust and loyalty

Mandatory regulations – keeping up with all regulations in a timely and cost-efficient manner

Financial services from a trustworthy institution

Regulations and Risk Perspective

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Temenos solutionMichel JongenAccount Management Director, Temenos

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Temenos Solutions

WealthSuiteChannels

Interaction Framework

Integration Framework

DIST

RIBU

TIO

NFR

ON

T WealthSuiteFront Office

BACK

WealthSuiteAnalytics & Reporting

MG

MT.

WealthSuiteCore Banking

Wea

lthSu

iteFi

nanc

ial C

rime

Oth

er…

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Integrated Back and Front office Data Synchronisation

Integrated Processes

Common Base Configuration

Unified User Interface

B2F and F2B Online interface, always synchronised

Pre-defined integrated processes Core Banking services called by F-O processes Pre-Trade Compliance, Fees & Tax, Elective CoA

Common (F/O and B/O) Model Bank Reducing time-&cost-to market Can be adapted to context

Core Banking screens embedded in FO platform Common User Agent Client connectivity Multi-channel mobile banking

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WealthSuite - Functional Architecture

FRONT OFFICE

CORE BANKING

&PAYMENTS

CHANNELS

RISK & COMPLIANCE

REPORTING & ANALYTICS

Branch RM IFA ATM Internet Mobile Open API

Cash Management

Payments

Trade Finance

Money Market

Capital Markets

Trading and Settlement

Forex

Corporate Actions

Market Data Management

FinancialIntelligence

Profitability & analytics

OperationalIntelligence

Predictiveanalytics

CRM

Customer Output

Advisory Services

Origination / onboarding

Prospect Management

Portfolio Management

Treasury Dealing

FATCA & CRS

AML

Screening

IFRS

Product Catalog

Accounts & Deposits

Lending

Limits and Collateral

Ordering

Teller

Regulatory Reporting

Data

Alerts

Campaigns

Overdues and Collections Accounting & G/L

Forfaiting and Factoring

MiFID II

Reconciliation

Fees & Tax

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Implementation process

Hervé MaillotDeloitte Advisory & Consulting Director

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1. Project Scope

2. Implementation Approach

3. Overall Timeframe

4. Key Success Factors

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1. Project Scope

Third party

systems

Replacement of 24 legacy applications by 8 new applications

108 interfaces developed

86 core gaps on Core Banking

Internet Mobile TabletChannels

Interaction FrameworkFi

nanc

ial C

rime

Analytics & Reporting

Inte

grat

ion

Fram

ewor

k Front Office

Core Banking Inte

grat

ion

Fram

ewor

k

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2. Implementation Approach

EVDEnterprise

Value Delivery

EVDEnterprise

Value Delivery

Highest value creation with lowest risk due to a proven

combined methodology

BUSINESS TECHNOLOGY PROJECT MANAGEMENT

Adopt instead of Adapt

Model Bank based

Started with the definition of a Target Operating Model

Time-boxed

Focus on Speed & Quality

TIMTemenos

Implementation Method

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Satellites build

T24 build

2013 2014 2015 2016Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

3. Overall Timeframe

Analysis

Build

Migration

Testing

ChangeMgt

Migration Design

Test Strat. and Prep. System Testing

UAT

Go Live

Integration Test

Procedures updatesOrganization Adaptation

Migration Build

TOMPLW

Core and Local Gaps Specifications

Satellites & Interfaces Specifications

Local customisation and development

Dry-Runs and Rehearsals

End-usertraining

Post-ProdSupport

Ongoing CommunicationPeople on-boarding

Inductiontraining

Ebanking deliveryTAP deliveryInsight delivery

Core Banking (T24) delivery

Dry runDress Rehearsals

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4. Key Success Factors

BUSINESS APPROACH PROJECT MANAGEMENT

Change Managementstarted early with regular communications

Early involvement of Power users already during Integration testing

Get earlier sign-off from business

Train more power users

Smoke testing within the vendor premises

Clear testing governance with proper definition of defects and enhancements priorities

Spend more time in fit-gap analysis and describing future processes

Full support from executive leadership

Strong and agile governance

Planning and budgeting tightly and centrally controlled

Postpone start of MIS stream

Key Success Factors Lessons learned

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Business benefitsMichel Jongen, Account Management Director, Temenos

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HighlanderBenefits

Foundation for Digitalisation

Efficiency

Best Private Banking Platform in EU

Integrated Platform

State-of-the-Arts Technology

Improved Security

A Unified Platform for Wealth Partners

A predictable, low-risk implementation approach

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Changed the Finance Organisation

Enabled consolidation of entities, granular reporting,

Better data indexing, standard rules, standard processes

We provide the right insights to front office to generate more business

Able to react faster to requests from the business

Streamlined processes for audit proof

30%Improvement of headcount efficiency

in the back office reporting

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Focus on banking

47%reduction in IT applications

used

Achieved full STP in internal processes

Enabled Nordea digital brand

Increased agility and became independent

Cost pressure removed

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Foundation for a client-centric bank

Aiming for 25% of back-office time shifting to client facing activities

Competitive edge Self-Service

Understanding client profitability

Fixed data discrepancies

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Future plans

Jean-Phillipe BaillyChief Operating Officer, Nordea Bank

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Extending use of available capabilities

• Investigating all range of capabilities of our system to find new functionalities; going further beyond what was initially proposed in the scope

• Improvement and development of all on hold functionalities during the first phase to deliver within the scope

Implementation of additional modules

• E-banking trading functions and providing more information to clients

• Mobile solutions

• Treasury functions

• MiFID II and Investment Advise proposal generator

• Online AML system; SWIFT filtering

Investigating synergies with rest of Nordea Group – ‘domestic’ Private Banking and Wealth Management

Next Step

Further Improvements and Investigations

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Thank you