Risk management technology provider of the year: OpenLink


Central banks are under intense pressure to address the changing nature of financial risk management, while simultaneously meeting the constant drive to gather more reliable data and process it efficiently. This inevitably puts a great deal of strain on the technology infrastructure underlying central bank risk management, irrespective of whether the platforms are developed in-house or brought in from off-the-shelf specialist technology providers.

Many providers struggle to keep up with or fail to customise their services to meet the needs of official institutions clients. But OpenLink, which offers transaction lifecycle management software for both buy- and sell-side institutions, appears to adapt with ease. "OpenLink's software is inherently very, very flexible," says one central banking client, who spoke on condition of anonymity. "Its single biggest advantage is that its users can actually influence the way it works."

The client was hunting for a core-system provider that could cover the vast majority of his institution's trading activities across the front, middle and back office in a single package. OpenLink was initially contracted some years ago on the basis that its technology could integrate smoothly with the central bank's existing in-house credit risk system - and the client has never looked back.

The institution embraced Findur, OpenLink's core system, and has subsequently integrated a wide range of external trading platforms. During the year in review, this included a significant project to connect with Bloomberg Asset and Investment Manager (AIM), a multi-asset trading tool hosted on Bloomberg's external platform.

The client described integrating the platforms as a "major" project that involved assimilating Bloomberg AIM and Findur "in both directions" to ensure information could pass freely between both systems. The purpose was to arm the institution's traders with the ability to conduct pre-trade analytics. "What we try to do is let the traders view trades on external platforms, before they feed directly through into Findur where they are validated and passed on to the back office," he said.

One of Findur's key components is its trade process manager (TPM) - a tool predominantly used to automate trade processing and validation in the back office. Users can design their workflows to be as simple or as complex as they wish. "It is very efficient and smooth, and remarkably quick too," the client said.

Even now, the central banking client is seeking ways to team up with OpenLink to improve its processes. "We continue to extend TPM. We are getting different desks involved in steps that guarantee we are processing the work in a structured and orderly way," he said.

All of the central banks using OpenLink's software - there are a dozen in total, including the Bank of Canada, Bank of Mexico, Central Bank of Costa Rica and Reserve Bank of Australia - share the same underlying technology. They can then purchase additional gateways to expand the system that are, in turn, entirely customisable.

"Although a rich set of standard functionality is available out of the box, we also provide many tools that allow our end-users to configure pretty much any aspect of the system," says Philip Wang, OpenLink's senior vice-president of financial services product management. "The tools are designed for business analysts to build products and features themselves, and roll them out quickly in their production environment."

Such an all-encompassing system might prove intimidating to some central bank customers. But OpenLink helps its users install its software and make the most of its functionality through a ‘land and expand' approach to implementation. This involves OpenLink sending consulting teams into every institution that adopts its software. "We have over a dozen offices around the globe," Wang said. "Typically we like to get our clients implemented and self-sufficient. We have teams deployed at strategic locations around the globe for any additional support and services."

OpenLink also organises periodic user conferences. Ahead of each conference it encourages the central bank users to get together - independently from OpenLink - and share their experiences of Findur with each other. A central banking client said the meeting is used as an opportunity to "chew through our issues" and identify ways in which central banks can support one another. "There is definitely a central bank club," he said. "Even outside of the conferences we are in constant touch."

One of these central banks overhauled a key element of its Findur software during the past year. The central bank, an OpenLink client since 1999, adopted a new methodology for measuring and attributing risk and, in turn, profits and losses.

OpenLink's software supports a range of different attribution methodologies for this task, as well as providing central banks with the ability to implement their own methodologies. Switching between methodologies simply involves some system configuration, according to OpenLink.

"It is a module that had been readily available, it was just never enabled," Wang explains. "They extended our system in the early days using a different approach to implement their methodology. More recently, as standard attribution models have evolved, they evaluated our module capabilities with our consultants, found it would meet their needs, and we helped them to roll it out in their environment."

OpenLink is already moving to help central banks to adapt to new requirements around collateral management - a critical element given the global increase in demand for collateral as financial institutions strive to meet more stringent capital and liquidity requirements. It is an area where OpenLink has already worked with at least one major central bank and an official at another central banking client in Europe stressed his institution is revisiting how collateral is processed in the back office.

A central banking customer said he has no concerns OpenLink will be able to help meet new collateral needs as the New York-based company's officials have a desire to "continually evolve" their systems. OpenLink also has an excellent track record of retaining its senior staff.

"We were a bit concerned at the time we chose OpenLink that we were going for what was then quite a small company," the official said. "We took a risk in going with a small company. We considered it a bit of a trade-off in that we would be able to influence the way in which the product was developed - and that has really worked out well."

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