Danish SimCorp Eyes China Asset Managers

The enterprise software vendor believes regulatory reform will drive Asia-Pacific demand for its system among investment firms.

Relatively few Asian financial firms use front-to-back-office investment-management systems, especially ones that can cost between $1 million and $3 million to license.

However, Danish software supplier SimCorp does have some substantial client names based in Australia and is building a customer list elsewhere in the Asia-Pacific region. The target market is medium-size to large institutional investment managers, insurers and fund administrators, and the vendor is bringing new customers on board at a rate of one or two a year region-wide.

SimCorp’s main focus currently is Hong Kong and Singapore, and last month it added a regional sales manager for Asia in Hong Kong, Techee Cheung, who was previously at DST Global Solutions.

“Hong Kong is an interesting proposition in terms of how China regards it,” says Peter Hill, SimCorp’s Asia-Pacific managing director, “as some of the local [Chinese] fund managers are setting up there.”

SimCorp will be talking to those firms, among others, adds Hill, and its next step in terms of expansion may well be to open an office on the mainland, and probably one in India after that. As for the likely timescale for this, “expansion depends on ongoing market conditions and future regional opportunities”, he says.

Other vendors of buy-side software are also on the expansion trail in Asia, including Advent, Charles River Development, Paladyne, Sophis and Thomson Reuters.

SimCorp’s clients tend to be at the larger end of the scale. They include Deutsche Bank, the Monetary Authority of Singapore (MAS), Schroder Investment Management and, in Australia, insurance firm QBE and state wealth fund VFMC.

The MAS — with $203 billion under management as of June 30 — uses all the SimCorp Dimension applications, from front to back office, including accounting and settlement, as well as risk and performance.

Deutsche Bank runs the system out of Singapore to support the asset-manager clients of its fund-administration business across 10 countries in the region.

As for new business, Hill believes it will be largely driven by regulatory requirements, as has been the case in Europe, for example. This is where SimCorp can help, he suggests.

“Where [new regulations are] going to hurt will be the cost of compliance, due to the continuing demand for information and new reports,” he says. “Eventually firms will get to the point where the cost of compliance is so high that you need one system that gives you an easy view of information across the whole enterprise.”

Hill says the best-of-breed approach to technology — whereby a firm installs different systems for different functions, such as accounting, front-office and so on — “is often seen to be quite expensive and complex to integrate, maintain and keep current”.

SimCorp’s bullish outlook for its target market has been reinforced by survey findings it published last month. These showed that larger investment managers tended to outperform their smaller counterparts in the year prior to the survey. Around half (52%) of firms with more than 1,000 employees achieved at least a 6% increase in revenue compared to the previous reporting year.

The 2010 global investment management growth survey was based on 100 interviews with respondents from investment-management institutions around the world, including 24 in the Asia-Pacific region. The interviews were conducted during February and March.

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