The many changes that took place in the Israeli banking and financial market in recent years have forced these institutions to adjust their information systems. Matrix, the largest IT company in Israeli is well acquainted with the banking and financial market and offers banks, insurance companies, and organizations active in the capital markets a range of advanced services and solutions suitable for their changing needs. This case study describes two solutions for the management of mutual funds and securities.
In recent years many reforms were initiated and put into effect in the financial industry. Reforms in the capital market (the Bachar commission), taxation of the capital market, privatization of the banks, changes in the insurance industry, tighter control over the banks by means of new regulations, as well as new regulations and legislation in the global financial market have forced changes in the way banks, financial companies, and the insurance industry do business. Financial organizations needed to learn all the aspects of the changes and make structural changes, modify internal processes within their organizations, and reorganize in all areas having to do with information and computer systems, which are the cornerstone of efficient management in any financial organization.
Banking and Finance Division -- the Largest in Matrix
Matrix, the IT leader in the Israeli market, specializes in the implementation and integration of IT projects. Matrix employs 2,300 IT professionals. Its Banking and Finance Division is the largest in the company. The division carries out integration projects and provides consulting services to most banks, mortgage banks, capital market companies, credit card companies, and insurance companies in Israel. Dedicated software solutions developed by Matrix are implemented in many banking institutions in Israel, including Bank Leumi, Bank Hapoalim, Discount Bank, Mizrahi Bank, First International Bank, Eurotrade Bank, Postal Bank, Harel, Jerusalem Bank, TASE, Union Bank, Tefahot Bank, Bank Carmel, Industrial Development Bank, Phoenix, General Bank, Direct Insurance, Klal Insurance, Visa Cal, Leumi Card, Isracard, Pia, Psagot, ESOP, and more.
The Banking and Finance Division offers a range of available solutions to support banking and insurance activities, including a system for managing core banking activities, Bankware, a system for managing mutual funds, a system for managing trading in Israeli and foreign securities, a portfolio management system, CRM solutions for customer management and support for marketing, sales, and customer retention processes (especially important in the wake of changes brought by the Bachar commission), a system for the management of employee options, integration solutions, Internet banking sites, training and enrichment systems, and more.
Management of Transactions in Israeli and Foreign Securities
One of the solutions developed by Matrix for the operational management of capital market activities is Capital-M – a computerized solution for comprehensive management of transactions in Israeli and foreign securities. Capital-M provides a complete solution for the management of securities trading in real time and of back office processes. Capital-M is designed for use by banks, investment houses, and brokers; it provides complete business functionality to traders, transaction rooms, operations departments, and end users.
“Capital-M helps users be first to reach every deal, reduces risk levels in the capital market, and helps address a wide range of financial risks in parallel,” explains Riki Nachmia, manager of the Matrix’s Banking and Finance Division. “All the processes in the system are automatic. The system is operated through an easy-to-use back office, so that any user at any time can obtain a maximum amount of relevant information. Capital-M includes advanced mechanisms for monitoring and risk management that include trade activity, collaterals, and volume monitoring, activity authorization, and audit reports.”
CRM for the Management of Mutual Funds
An additional solution developed by Matrix in recent years is the CRM system for the management of mutual funds. It is an innovative and comprehensive system for the computerized management of trading activities and of the back office of mutual funds management companies. The last version of the system has been adjusted for the new 2006 tax regulations, for trading stocks, for reporting to the authorities, and more. The CRM system supports multiple fund managers. It features a high level of process automation and allows maximum checks and controls when orders are being forwarded. Fund books stored in the system are continuously being updated online and in real time with each new transactions carried out, making it unnecessary to separately update the books. The CRM system supports additional functions such as deposit management, the management of interest on checking accounts, records of foreign securities trade, records of trade outside the stock exchange, and more.
According to Shuli Golberg, manager of the Capital Market Department at Matrix, following the Bachar commission there is an increased number of organizations offering services in the area of mutual funds. “The CRM system supports all aspects of taxation required by law and provides the ability of calculating tax liabilities and tax reserves. It enables real time trading at TASE. In addition, the system handles the creation and redemption of funds. The system supports various types of mutual funds including regular, foreign, foreign resident, Shekel, foreign currency, closed, and more. The system also includes the tools for the creation of reports to authorities, trustees, and auditors.
The system for management of mutual funds at PIA
About two years ago, a CMR system was installed at PIA, a national company that manages mutual funds, under the ownership of the Leumi Bank since the 1960s. PIA manages about NIS 16.5 B worth of assets by means of 51 mutual funds. Following the recommendations of the Bachar commission aimed at reducing the centralization of banks in the capital market, PIA is intended to be sold to the Harel Insurance Investments & Finances Ltd. for an estimated amount of NIS 535M.
According to Miki Zibayer, CEO of Leumi PIA, at the core of the system lies the management of mutual funds, which the system handles from A to Z. “Not only does the CRM do all this, but it also manages the entire organization, its core and all its operational components.” In Zibayer’s words, the system manages the accounting, the marketing activities, advertisements, work with foreign entities, and legal consulting. In addition, it handles all the calculations involved in the taxation of securities. The system is updated online and can work with other online systems such as stock exchange updates, foreign capital market updates, option trading systems, and more.”
Zibayer adds: “The system executes many processes within the company that have been performed manually in the past. Presently, the change in company ownership and in methods of distribution, which allow PIA to work with several banks as opposed to working with a single bank, requires adjusting the system for work with multiple banks. We are currently implementing the changes in tax regulations and are adding the ability to work with overseas trading systems.”
“We maintain close ties with Matrix, which provides us with adjustments and the new developments necessary to accommodate the changing requirements of the financial market,” notes Zibayer and adds: “The system helps us to stay updated online with financial data. With the help of the system we will head toward the new ownership on a path of better performance and leadership in the market.”
Riki Nachmia sums it up: “Our message to the banking and finances community is: if you need knowledge, professionalism, extensive experience, and leading solutions suitable for capital market companies, Matrix is your partner. This is where the best specialists in Israel are. Many successful products and our customers who are at the forefront of the Israeli financial world can attest to that.”