IBS considers the progress of Swiss private bank Lombard Odier in marketing its IT infrastructure to other banks and investment firms. Four institutions now share the infrastructure. 

IBS first reported on Lombard Odier’s platform offering in July 2012. At that time, Petercam, an investment firm based in Belgium, had recently gone live with a hosting arrangement whereby Lombard Odier, a private bank headquartered in Switzerland, was responsible for Petercam’s IT (IBS, July 2012, Case study: Sleeping with the enemy). This raised eyebrows because the two firms were rivals in some ways, but the model has endured so far and Lombard Odier has since found another three takers of its platform. The new customers are Stonehage, a multi-family office, Deka Switzerland, a bank which manages investments on behalf of German savings banks, and Hottinger, a private bank in Switzerland. 

The case of Petercam in particular demonstrates that this model may be an attractive alternative to packaged core banking systems, since Petercam had initially attempted to implement… continues (login/subscribe).

IBS considers the progress of Swiss private bank Lombard Odier in marketing its IT infrastructure to other banks and investment firms. Four institutions now share the infrastructure. 

IBS first reported on Lombard Odier’s platform offering in July 2012. At that time, Petercam, an investment firm based in Belgium, had recently gone live with a hosting arrangement whereby Lombard Odier, a private bank headquartered in Switzerland, was responsible for Petercam’s IT (IBS, July 2012, Case study: Sleeping with the enemy). This raised eyebrows because the two firms were rivals in some ways, but the model has endured so far and Lombard Odier has since found another three takers of its platform. The new customers are Stonehage, a multi-family office, Deka Switzerland, a bank which manages investments on behalf of German savings banks, and Hottinger, a private bank in Switzerland. 

The case of Petercam in particular demonstrates that this model may be an attractive alternative to packaged core banking systems, since Petercam had initially attempted to implement Thaler from Callataÿ & Wouters (now part of Sopra) (IBS, April 2012, Petercam live on Lombard Odier system). Deka in Switzerland was previously a user of the Olympic core banking offering from ERI. Hottinger, meanwhile, had been a user of the Avaloq core banking system before taking Olympic from ERI in 2007 (IBS, February 2008, Hottinger opts for Olympic). 

Christophe Gabriel, Lombard OdierLombard Odier has responded to this progress by formalising the IT outsourcing division within the bank, to make it an independent profit centre along with the private banking business in Switzerland, the European and Asian networks and the investment management operation. 

The IT division can offer the same services internally to Lombard Odier clients and externally, depending on their business. For example, a typical private banking client will use Lombard’s portfolio management services for custody, reporting and trading, but if the client is in advisory, then the portfolio management is done directly by Lombard Odier. Lombard Odier’s global asset management clients are more likely to have appointed third party global custodians, but use the portfolio management and trading functions of the system. On the other hand, there are global custody clients who use Lombard Odier purely for custody and reporting but have their own portfolio management systems. 

As for third party clients, they can choose between the banking infrastructure option and the wealth management infrastructure option. The banking infrastructure option is aimed at clients which have banking licences and booking centres, such as Petercam. The wealth management infrastructure option allows management of assets which are deposited with third parties, and so is more suitable for family officers such as Stonehage in Jersey. However, being able to manage assets that are also deposited in their own booking centre is ‘quite unique and quite appealing to family offices,’ states Christophe Gabriel, head of IT and operations at Lombard Odier. The system can also act as a reporting tool for assets held at different third parties. 

Lombard Odier has one single infrastructure across the world for all of these customers. ‘We have one single platform, which has two important advantages,’ explains Gabriel. ‘If a client has accounts in London, Singapore and Montreal, they can see a consolidated account at the press of a button.’ Meanwhile, although the look and feel and the underlying software is the same everywhere, Lombard Odier is able to build on the local ‘clones’ of the system to localise the functions it offers depending on where in the world it is being viewed. 

The addition of extra users onto the system, known as G2, has not complicated the architecture, because of the aforementioned ‘clone’ concept. Each legal entity of each external customer has its own clone, and all the clones are connected by bridging software built by Lombard Odier. Petercam, for example, has four legal entities and four clones. Whenever a portfolio manager enters an order in the London clone, the trader has the option of executing the trade externally or within the group. Via the bridges, the order can be executed elsewhere in the system, say in Geneva, and the invoicing and booking in the London clone is automatic. 

The model has so far proved popular as it can save on costs compared to a packaged system. ‘We can combine the system and the services, rather than a bank needing systems as well as people to run the back office themselves,’ says Gabriel. The Lombard Odier offering is clearly a viable option for banks running ageing core banking solutions such as Olympic and Ambit Private Banking from Sungard, as well as smaller players which are attracted to the outsourcing model. The projects so far have taken under two years. They typically involve a period to define the target operating module, development of client-specific requests, systems parameterisation and implementation, historical data migration and user acceptance testing. 

The current version, G2 (G stands for Gestion, French for management), already has a modern architecture, states Gabriel. It has a distributed client-server architecture, and is written in a combination of Java and C++ on the server tier and Delphi and .Net on the client tier. It has an Oracle database. G3, the new version which Lombard Odier is working on, will see more features integrated. A white-label iPhone and iPad solution is in the works, plus a new CRM solution in the first half of this year. Lombard Odier has also made an agreement with a provider of news flows, to integrate this into the offering. ‘In the past, G2 was used to manage portfolios but not client relationships. With G3 the bank will be able to manage both,’ Gabriel concludes. 

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by IBS Intelligence
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