Challenger achieves productivity gains and scalability
The winner of an International Stevie Award for its visionary approach to information and technology, Australia's Challenger Financial Services Group is using SimCorp Dimension as part of its strategy to gain scale benefits, lower operating costs and improve customer service.
Challenger Financial Services Group Limited is a listed financial services company with three core business lines – Challenger Life, Challenger Wholesale Finance and Challenger Wealth Management – servicing the needs of financial intermediaries and their clients. The company administered assets and loans worth A$29.1 billion for more than 100,000 Australians at the end of March 2005.
Challenger aims to provide outstanding service with a low cost of operations through the use of a common technology platform and a common distribution base. This focus enables Challenger to generate significant scale benefits, achieving high growth on a technology platform that requires low capital intensity. In order to achieve this Challenger needed efficient administration and service processes, based on excellent technology.
In a first step towards achieving this goal, Challenger decided to bring critical financial systems, including its investment management system, back in-house after years of outsourcing.
Challenger chose SimCorp Dimension as its investment management system because of its ability to scale for growth, and because its modern and flexible architecture would allow Challenger to configure the system precisely to meet its requirements.
Challenger first went live with SimCorp Dimension in July 2004 after a six-month deployment period. The company completed the roll-out of the technology platform for all its securities processing activities in December 2004.
Challenger uses SimCorp Dimension across its life and wealth management businesses as well as its treasury unit. The platform supports 50 funds and calculates 60 daily unit prices. Its functions include investment decision-making, modelling and trading activities. The platform handles asset administration, performance measurement, compliance, reconciliations, settlements, securities pricing and data integrity functions, and processes all underlying securities transactions.
Moving to straight-through processing has enabled Challenger to 
move to T+0 unit pricing for equity products, in a market where competitors are still pricing at T+1 or slower, giving Challenger a lead in customer service, and accuracy.
Additionally, Challenger implemented SimCorp Dimension alongside a dedicated unit registry solution, OneVue. More efficient unit pricing has translated into major benefits for Challenger customers and the financial advisers who sell its products.
In a market where an advantage against rivals is often measured in a few extra basis points on the returns of financial products, real-time information about investment fund cash positions and securities holdings gives Challenger a significant edge.
Productivity gains and scalability
Challenger has reported significant productivity benefits and estimates that automated unit pricing will save around 4,000 hours annually.
The system has also proved highly scalable. In March 2005, Challenger acquired HSBC Asset Management (Australia) Limited, which managed over A$3 billion in funds in 44 portfolios with 78 active unit prices. Migrating these products onto the SimCorp Dimension investment management system took just five weeks, enabling Challenger to realise a significant acquisition synergy.
Challenger's open architecture meant the HSBC funds migration required minimal involvement from technical staff in the Information Technology department. It also meant Challenger staff could modify the platform to reflect regulatory changes, without assistance from the vendor.
Beating operational risk
By automating workflows, reducing manual intervention and eliminating repetitive tasks, Challenger has been able to mitigate operational risks and transform the company's approach to investment administration.
