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IT Management Faces New Regulatory Requirements

In Switzerland, more than 170,000 individuals are employed in the IT sector, a figure which rivals that of the finance sector and is three times more than the number of individuals employed by the watch making industry.

Meet Jean-Luc Freymond, the director of the Swiss company, SAGE Group SA, founded in 1986 and involved in IT management for banks and financial institutions.

The company known as SAGE was created in Switzerland in 1986. Initially specialising in the development of Enterprise Resource Planning solutions for large corporations, it made the transition to becoming a banking software provider, about seven years ago. Today it possesses 70 employees and achieved a turnover of 11 million Swiss Francs in 2012. It also has offices in Singapore and Dubai.

The company presently focuses on two platforms: The BlackSwan Financial Platform, a risk management and portfolio optimization tool of which a new version is currently being prepared, and the different solutions of the Prospero suite for portfolio management.

Jean Luc Freymond, the company’s CEO, provides us with insight on certain features of SAGE as well as his views on the market with a particular focus on the regulatory challenges within the finance sector. He states that the key concern of asset managers is the reduction of compliance costs in order to concentrate on management.

Why was the name SAGE chosen, a name which in other words is the same as that of the British software provider created at the beginning of the 1980s?

The similarity between the names of both companies is purely coincidental. SAGE is an acronym which stands for Systèmes appliqués à la gestion d’entreprise or Applied Business Management Systems. When our company was created, our British namesake was not as well known then as it is now and its influence had not yet extended beyond the United Kingdom. Since then it has experienced impressive growth although it caters to a completely different category of clients compared to ours. Any possible confusion in this regard is generally cleared up very quickly.

What kind of clients does SAGE presently cater to?

In Switzerland, SAGE caters to private banks, independent asset managers and family offices. The company Unigestion is one of our long term clients. Our clients outside Switzerland include a certain number of large banks such as Abu Dhabi Commercial Bank.

What are the requests of your clients as well as the key trends in IT Management?

There is currently a reticence on the part of institutions to engage in large scale projects. They are rather more inclined to seek out solutions to specific problems as doing so involves limited risk and provides a rapid return on investment.

Have there been any changes in requirements regarding global solutions such as Cloud for example?

There has clearly been a change of mentality with regards to Cloud. It is the sort of solution mainly chosen by small companies which do not possess a well-developed internal infrastructure. Experience has proven that it is more profitable to have a Cloud solution which is governed by existing rules and regulations in the industry and which possesses a highly secure infrastructure, of which the raised costs are shared, rather than a more modest proprietary infrastructure. Another advantage which clients are becoming more aware of is the rapidity with which it can be installed and the fact that it is independent of the availability of resources possessed by their IT departments.

In what way are providers of IT solutions taking regulatory changes into account, particularly with regards to the finance sector?

The initial perception of regulatory changes is generally negative due to the additional costs that they incur as well as risks in the event of noncompliance. On one hand, we remain alert in order to be able to anticipate the required changes to our systems so as to implement them promptly. On the other hand, we attempt to seek out opportunities which enable us to take advantage of these changes in order to make it possible for our clients to improve their services. For example, the fact that it is obligatory to question the client on their risk profile is beneficial in that it makes it possible to analyse behavioural patterns which can be quite useful for quantitative models.

What solutions do you propose that will enable financial institutions to spend more time on management and less on regulatory compliance?

Time saved due to implementing effective procedures either during the gathering of information, the transferring of orders, the processing of transactions or the periodic reviewing of records. At each of these stages, we assist users in reducing manual operations and above all the risk of error. We have developed a compliance regulatory programme which participates in the work flow and which alerts the user at each step in the event of any action which risks violating any established regulation.This programme is also combined with a control panel which makes it possible to constantly verify compliance with set regulations.

Regarding project implementation, what appeal do traditional procedures hold for clients compared to the Agile procedure developed about 10 years ago?

Experience shows that traditional methods of implementation are based on the premise of clients being able to express the totality of their needs at the beginning of the project. However, without entering into communication issues or the interpretation of those needs, their evolution is so rapid that a part of them are already altered during the period required to gather and document them. Agile’s development method which possesses a far greater degree of flexibility has been specifically adapted to software development and implementation within a context of rapid change.

What key challenges does IT Management face in the coming years?

It is certain that questions relating to data quantity and security will be central to concerns in the years to come. The generalized use of mobile platforms accessible from any location or using any device will result in the need for new means of ensuring data security. On the other hand, the amount of data generated will increase exponentially. The wealth of information contained in “Big Data” hints at very interesting opportunities. It will be useful to establish new kinds of infrastructure to gather, secure, and above all, process data of such quantity.

*This article was originally published in French by Marjorie Théry for L’Agefi, the daily economic and financial agency in Geneva, on 28th October 2013.