VWD: 'Think Global, Act Local'

Keferstein: We have seen an enormous increase in the amount of data to be handled on a daily basis. That clearly represents a trend in investment banking and provides the market with the possibility to realize practically every investment approach, no matter if it concerns a professional or a private investor. Our industry continues to support this trend by developing the necessary applications, which unfortunately has overextended the demand side. VWD Group has positioned itself to balance this disparity.

IMD: Vendors like VWD don't have the same resources as major global vendors to procure data directly around the world. How do you find the right balance between sourcing data directly versus via third-party partnerships?

Keferstein: We fully concentrate on the European market. All data essential for the top quality of our services is retrieved directly from global stock exchanges or OTC markets. This provides us with the utmost independence from our competitors, and at the same time allows us to win major contracts like the one with DZ Bank. Here, VWD delivers all the data needed-currently on more than 3.6 million financial instruments, as well as cross-media information-which is, needless to say, of the highest quality. Besides the fact that the VWD Group increases its global offerings on a constant basis, we are able to fulfill our customers' requirements to integrate third-party data into our services. Thus, for example, Thomson Reuters' data is also available on customer platforms designed and operated by VWD.

IMD: What can regionally focused vendors like VWD do better than global vendors, and why?

Keferstein: Our motto is "think globally, act locally." Therefore, all business has to be approached and handled locally, if you concentrate on the demand side of the market. And each market has its special requirements, be they tax laws, regulations, reporting rules and other instruments which are of importance to a specific regional market.

It is our most important goal to enable local market players to display the specialties of regional markets to their customers in the most efficient way, including local branches of international, globally active banking institutions.

And we leave it up to our clients to decide how intensively they want to use our process-oriented services. After all, history has proven that international vendors cannot do this as successfully as they take care of their supply-side-oriented business.

IMD: VWD has traditionally been strong in the private client advisory, wealth and asset management segments of the industry. Do you see the potential to expand into other business lines? If so, which areas are most appealing, and what challenges would you face?

Keferstein: No, we currently have no plans to expand into other segments, although our data scope and quality would allow us to do so. But we see great opportunities in retail and private banking, especially against the background of regulation and expanded transparency. This will have to lead to more integrated processes that will be very expensive for the banking side unless they use highly specialized Business Process Outsourcing companies like VWD, which can offer the most capabilities from just one source. Of course, this is also a great opportunity for banks to become first movers and gain back confidence and business.

IMD: Some of your acquisitions over the last couple of years, such as Tijd Nederland and Fides, have helped VWD establish a presence in European countries neighboring Germany. Do you have ambitions to further expand your geographic reach, and if so, which markets are you likely to target next?

Keferstein: Of course, we would like to continue our European expansion as our industry is very much driven by scalability. If there were interesting targets, we would seek a way to finance this from outside.

IMD: The financial crisis of recent years has shown an increasing interdependency across global markets. Do you ever see VWD striving to be a global vendor, or will you always retain a focus strictly on Europe?

Keferstein: Our main target market remains Europe, and there is plenty of opportunity. VWD's product offerings and systems will surely also be of interest to other continents as we have developed them for a highly competitive market. Our door is open for cooperation with other regional players on other continents who are interested in using our platforms on a white-label basis.

IMD: How has the recent economic downturn affected a company like VWD? Have the difficulties faced by many of your clients presented a threat to your business, or are there opportunities to be had as firms focus on cost control and look for alternatives to the global vendors?

Keferstein: On one hand we are negatively impacted in all those service areas which are supporting communication and marketing processes. In this sector, many VWD business models are based on a price per instrument, and for the first time the amount of instruments sold to public markets was shrinking. Furthermore, issuers were reducing their communications efforts in order to save cost, neglecting all other needs of the markets.

At the same time, these cost-saving efforts were boosting our other business fields, as we offer competitive and cost-efficient information systems. And banks are more often prepared to outsource those parts of their value chain that are not proprietary to their business.

This is a trend that has just started. The result of this development is that VWD continues to grow, albeit with pressure on its profit margin. But we feel that this is the right time to gain even more market share than before.

IMD: Does the current economic environment favor further acquisitions, or is now the time to focus on organic growth, and why?

Keferstein: As said before, we concentrate on organic growth, but are open to interesting and challenging new opportunities.

IMD: Since becoming a listed company in 2007, what challenges and opportunities have you faced directly as a result of acquiring a stock exchange listing?

Keferstein: We very much regretted that our share capital increase in Q4 2007 had to be postponed due to the upcoming financial crisis. This was planned to take place in the first quarter of 2007, but was delayed by unjustified legal actions by specialized small investors. Our biggest opportunity is the fact that the process of selling securities to the public will be deeply regulated. The listing itself helps and supports the visibility of the new VWD Group.

IMD: In terms of content, are there any areas of the financial industry where you see particularly strong demand for market data, either in terms of asset class coverage, analytics, or the depth of data underlying certain instruments?

Keferstein: Market data has become more and more of a commodity in our business, although there are only a few players who can deliver high-quality real-time data. In this context, it is more important to allow equal access to central data platforms like the Reuters Market Data System. The European Commission has become aware of that fact and started an investigation, which we fully support. As a company, we are now concentrating in the near-term on classifying data, whether we measure risk or product quality. In order to raise the efficiency of financial markets, it is inevitable to give investors more standardized data which allows them to drive the investment process in a more rational way. Risk management is the key for this. Against this background, we have extended our product offering, and now also deliver dynamic risk classification data, as well as product-quality scorings, through a subsidiary which is a university spin-off. This data will be integrated into our products in a way that allows highly automated processes to direct investor portfolios.

IMD: VWD has its own technology solutions group. How important is technology to your overall business?

Keferstein: It is key for us that about 95 percent of VWD Group's applications are developed within the company. This allows us to be state of the art in technology and capable of building customer-specific solutions that make use of our group's basic software modules. Combined with local customer support teams, this results in higher customer satisfaction, and we are proud that this allows us to compete with much larger rivals.

IMD: What are the key technology and business trends that you see occurring over the next five years, and how will those trends impact your business?

Keferstein: The business trends in the financial world will lead us to more integrated processes, which will result in better risk management for financial institutions both when managing their internal risk or the risk of investors' portfolios. VWD is focused on the latter, and firms will have to make enormous investments in both areas, no matter what technology they use.

The long-term gain will be even more substantial as immunity against the oscillation of markets will save all market participants more money than they have to spend upfront. This trend will be driven by innovative financial institutions or the regulators. I would be disappointed if it were the latter.