Following Joint Development, Mees Pierson Prepares System For Institutional Clients

Dutch Mees Pierson N.V. has gone live with the initial components of New York-based Financial Technologies International Corp.'s (FTI) Real multicurrency portfolio accounting and securities processing system at its Amsterdam-based back-office processing center. Mees Pierson expects that Real will provide the integrated, real-time and business rules-driven functionality it requires to service and expand its global investment management, custody and other investor services business lines.

Mees Pierson is one of a group of banks that have jointly participated in developing Real's data model and functionality. The group also includes ABN Amro, Northern Trust, Barclays Nikko Investment Advisers (formerly known as Wells Fargo Nikko) and U.S. Trust.

According to Mees Pierson director Sjoerd van Keulen, FTI will share royalties on future sales of the system with its development partners. Among other things, van Keulen says that spreading the cost of developing Real among a group of banks, as well as sharing royalties with them, has contributed to making the system a cost-effective alternative--for its early adopters, at least.

Mees Pierson was formed as a result of the merger of Bank Mees and Bank Pierson around three years ago. The combined bank has approximately $20 billion in assets under management and $65 billion in assets under custody. It has adopted an open systems, client/server architectural standard incorporating Real's global financial data and accounting application modules, Oracle Corp.'s RDBMS and a set of proprietary trading and back-office systems. Van Keulen says the bank believes that its Real-based systems architecture will afford it a competitive advantage in providing custom-tailored investor services to its diverse and global client base.

According to FTI officials, the vendor and its development partners invested seven years and more than $100 million in designing and developing Real. FTI released the system's core components this past summer. Real's three-tier, client/server architecture comprises a proprietary relational data model, a suite of object-oriented applications, an open applications programming interface, bi-directional internal and external messaging capabilities and a table-driven, user-configured set of business rules.

Running on a variety of Unix and legacy platforms and compliant with leading commercial RDBMSs--including IBM's DB2, as well as Sybase Inc.'s and Oracle's offerings--Mees Pierson has implemented the Real system on a diverse platform. The bank's environment includes an IBM mainframe running DB2, as well as Unix servers from IBM and Hewlett-Packard Co.

The servers run Oracle version 7.0. On traders' and account managers desktops, meanwhile, are workstations running Unix and PCs running Microsoft Corp.'s Windows and Windows NT. This architecture will eventually be rolled out to Mees Pierson's offices in Europe, Asia and the U.S.

In addition to Real's global financial data and accounting modules, Mees Pierson is currently up and running in Amsterdam with Real's so-called assets, institutions and prices module and its interface generator. Working as a joint development partner along with FTI, the bank is pilot-testing Real's investor workstation (IVW) and working with a prototype of its global corporate actions and income processing (GCA) products.

The bank plans to begin offering the IVW to its clients in April, affording them independent access to its trading, risk management and back-office systems. Van Keulen anticipates that clients will find IVW useful in meeting a range of investor service and information needs, from clearing, settlement, position reporting and investment accounting through portfolio management and regulatory reporting.

Mees Pierson's targeted client-base consists primarily of small to medium-sized institutional investment firms, mutual and hedge fund managers and broker/dealers. According to the bank's systems project manager Jos Vallinga, the clients appear somewhat surprised at the range of electronic services Mees Pierson as a medium-sized bank claims to offer. "Most of them are of the mind that only the largest international banks are able to offer such services," he says.

"We currently offer our clients a range of 'standard' broking, global asset management, custodial and clearing services. We're now working with them, demonstrating the capabilities and flexibility of our new technology platform and talking with them to more specifically determine how they can leverage these to improve their operations," Vallinga says.

Besides its global custodial and clearing services, Mees Pierson offers securities brokerage and lending services in Europe, Asia and the U.S. It also provides clients with off-shore fund and derivatives valuation services from offices in the Caribbean, Hong Kong, Dublin and Luxembourg. According to Vallinga, it clears over 30 percent of trades executed on Germany's Deutsche Terminborse and Hong Kong's futures and stock exchanges, and over 10 percent of trades done on the London International Financial Futures Exchange.

The major emphasis in the Netherlands and Europe these days, according to van Keulen, is on risk management and fiduciary services. "We service Dutch pension funds, asset managers in London, Asia and futures traders in the U.S. as global custodians and clearing agents. Showing them the value-added capabilities we can offer, such as performance measurement, independent risk management and valuation services, progresses naturally from how we ourselves make use of our integrated systems platform. Demonstrating and explaining these capabilities [to our clients] triggers a whole range of new questions in their minds as to how they can make use of these added capabilities," he says.

In addition to such revenue generating potential, bank management also expects benefits to include cost savings, more efficient operations and improved risk controls. Whereas the bank previously employed 120 back-office operations staff, this number is slowly being reduced down to an eventual 30 to 40 staff members, according to van Keulen.

One of the keys to its success has been its ability to build, and keep intact, an inhouse team of software engineers and systems analysts. Since joining the bank in 1988, Vallinga has put together a core team of around 15 systems analysts. The group has seven years of experience working together in designing and developing large-scale systems, Vallinga says.