Treasury systems initiative: Ion Treasury

Ion’s acquisition of Openlink in 2018 has boosted its central bank and agency clients to 65, with a new ECB contract being a ‘jewel in its crown’
Jerald Seti
Jerald Seti, Ion
Thomas A Kelly/Ion

For a technology provider servicing the official sector, not many entities would be as prestigious an asset in the client portfolio as the European Central Bank. As the central bank of 19 eurozone countries, it has a mandate to maintain financial and monetary stability across the region and to preserve its single currency, the euro. If a technology company can successfully meet the ECB’s needs, it should be in a strong position to procure other clients.

So when the ECB went to market for a new treasury management system in 2014, it naturally attracted widespread attention, with a large number of technology providers expressing an interest in the tender process. Ion’s Wallstreet Suite, which had been the incumbent system since the inception of the euro in 1999, bid to retain the ECB, but was ultimately beaten, as the contract was awarded to rival Openlink in June 2017.

Little did anyone know at the time that the ECB would actually continue to be serviced by Ion, as Openlink was acquired by the private-equity-backed group in March 2018. It is a curious twist of fate, but perhaps not surprising in hindsight, as the ambitious and acquisitive Ion now counts 39 central banks and 26 agencies among its clients. And while some realignment of expectations has been inevitable, the ECB stands to benefit from the tie-up as the implementation of Openlink progresses during the next two years.

Tasja Botha
Tasja Botha, Ion

“The beauty of having both companies under the same umbrella is that the Openlink consultants have a direct line into the Wallstreet Suite consultants without having to constantly involve the ECB in relaying messages. This has really helped to guide us during the testing phase, as they know the ECB so well – and it has given us access to historical data that should make the transition to Openlink smoother,” says Tasja Botha, Europe, Middle East and Africa director for Openlink at Ion Treasury.

Having used Wallstreet Suite for the past 20 years, the ECB had been obliged to retender its systems every 10 years, but this obligation was deferred after the financial crisis to avoid disruption to the ECB’s operations at a critical time. The central bank’s needs have evolved since it first contracted Wall Street Systems in the 1990s, and the introduction of large-scale asset purchase programmes in recent years has had a natural impact on its requirements.

“With such a sharp increase in the volume of transactions initiated since 2015, the ECB needed a cross-asset treasury management system that would support multiple functions across its fund management and foreign reserve management and position the ECB as a centre of excellence in the eurozone for other central banks to follow,” Botha tells Central Banking.

Openlink had strong credentials to win the deal, with long-standing clients including the Bank for International Settlements, the Bank of England, the Bank of Canada, the Reserve Bank of New Zealand and the Reserve Bank of Australia. What the ECB liked particularly about Openlink was the ability to take a proven platform and then customise certain components to suit internal workflows. The vendor’s extensive capabilities across front office, risk management, back office and accounting reassured the central bank that it was the right choice.

Ion’s approach is to create best-of-breed modules and make them available to all of its products. Openlink and Wallstreet Suite continue to operate as separate platforms, and [Ion plans] to enhance both through this approach

Jerald Seti, Ion Treasury

It is still early days. The contract was signed in April 2018. But Ion Openlink experts have been through extensive planning and scoping exercises, with the aim of matching the ECB’s requirements with the system’s capabilities at a granular level. The project plan anticipates that delivery will continue throughout 2019 and early 2020, with completion currently expected in the third quarter of 2020.

“We have broken the project down into manageable sprints that will be brought into production over the next two years. Transitioning 20 years’ worth of data and processes onto a new platform is a massive change, which is why proper scoping and careful planning will be critical to success,” says Botha.  

Best-of-breed

While the ECB will consume significant resources at Ion Treasury over the next two years, the company is not standing still. Wallstreet Suite and Openlink will continue to operate as separate products under common ownership, but both could benefit from the broader integration, with enhancements under way on both sides.

“Ion’s approach is to create best-of-breed modules and make them available to all of its products. Openlink and Wallstreet Suite continue to operate as separate platforms, and there is no plan to merge them, but rather to enhance both through this approach. This has worked well in corporate treasury, where Ion offers several products and each one serves its own niche market,” says Jerald Seti, vice-president of product management for Openlink at Ion Treasury.

Updates to Openlink have been driven by client requirements, and these tend to focus on specific issues, including security, collateral management and the transition to new interest rate benchmarks, Seti adds: “One of the biggest concerns of our central bank clients over the past few years has been over security and fraud, so our most recent Openlink upgrade included enhanced security, data encryption and messaging encryption.”

Separate enhancements have been made to Wallstreet Suite – whose clients include Deutsche Bundesbank and Bank of Greece – and the majority of Ion’s 65 government customers use this system.

The Central Bank of Chile is one such client, having originally contracted with Trema before it was acquired by Wall Street Systems in 2006, and recently upgraded to the latest version of the platform.

“Wallstreet Suite and before that Trema have been key partners for us since 2006 – we have been very happy with the resources, flexibility and performance of the system, which we have now expanded from international reserves and sovereign wealth funds to cover our front-, middle- and back-office requirements,” says Beltrán de Ramón, director of financial markets at the Central Bank of Chile.

While most vendors will naturally look to keep clients on the most up-to-date version of their platforms, some central banks face budget issues or other constraints that delay their ability to upgrade. “A number of recent and ongoing upgrades will yield benefits for our long-standing central bank clients in the area of enhanced functionality, compliance and reporting,” says Teemu Virtanen, director of Wallstreet Suite at Ion Treasury.

The Central Banking Awards were written by Christopher Jeffery, Daniel Hinge, Dan Hardie, Rachael King, Victor Mendez-Barreira, Joel Clark, William Towning and Tristan Carlyle

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