KBC’s Life Insurance Unit Linked Funds Are Automated

In the financial market, unit linked funds, where the fund’s value is based on the performance of the assets held, are very popular. For KBC’s life insurance business, the management of unit linked business processes is of capital importance. The slightest discrepancies in timing and process can cause an operational risk for KBC. Process inefficiencies can rapidly generate a negative asset/liability difference, which increases the investment risk for KBC.

Until recently unit linked order creation was a complex semi-manual process, where communication and confirmation processes were routed via fax, adding to the risk of delays and mistakes. The whole process was difficult to manage and analyze.

Improving the unit linked business process, known as MAPPO (Matching Actief Passief Polaris), was a priority for KBC. There was a clear need for an outside view to assess and remedy the bottlenecks in this complex environment. In 2006, KBC partnered with CSC to design and build an automated system to handle the complex process flow of unit linked funds from order intake to final reporting.

A complex environment
In June 2006 CSC performed the initial assessment and sketched out the desired goal, gathered the necessary people within KBC and developed the overall architecture, which went live in November 2006. Because a significant number of KBC services are affected by MAPPO, this was a complex exercise. Insight into the information flow and in-depth financial processes were key. CSC analyzed the as-is process, developed a bird’s-eye view on the end-to-end flow, collected input and information from all KBC and external parties involved, and identified and clarified multiple roles and procedures. While CSC developed the concept and the architecture, internal ICT teams from KBC built and programmed the system.

In the system built by CSC and KBC, input from deposits, orders, transfers, and rates are processed and uniform output is quickly transferred to fund managers, finance and reporting. Reserve fluctuations are processed (matched) to detect and correct differences automatically. Two months after going live, more than 150,000 detail orders and over 3,000 global orders were processed for a total turnover of more than 1 billion Euros. The new system has an overall availability of over 97%, and is still improving.

Managing and delivering the strategy and processes were CSC’s main challenges. “This was a particularly tough and complex project,” says Johan Lamotte, director KBC Insurance. “From day one there was an excellent interaction and understanding between the CSC and KBC teams. Problems and issues were tackled immediately, communication and feedback were open and constructive. Without this interaction results would clearly have been inferior.”

“Now that the system is up and running, the results are even better than expected,” continues Lamotte. “We can oversee and control the operations of our unit linked business a lot better. Our ability to detect, analyze and correct anomalies has improved significantly. The impact of the various decisions and allowances along the process are now clearly visible and can be taken into account. The tool that was developed is user friendly and gives a very visual and understandable end-to-end analysis in a complex structure.”

Excellent interaction
Managing and delivering the strategy and processes were CSC’s main challenges. “This was a particularly tough and complex project,” says Johan Lamotte, director KBC Insurance. “From day one there was an excellent interaction and understanding between the CSC and KBC teams. Problems and issues were tackled immediately, communication and feedback were open and constructive. Without this interaction results would clearly have been inferior.”

“Now that the system is up and running, the results are even better than expected,” continues Lamotte. “We can oversee and control the operations of our unit linked business a lot better. Our ability to detect, analyze and correct anomalies has improved significantly. The impact of the various decisions and allowances along the process are now clearly visible and can be taken into account. The tool that was developed is user friendly and gives a very visual and understandable end-to-end analysis in a complex structure.”