Success Stories

KBC's Life Insurance Automates Complex Unit-Linked Funds

Client:

KBC, a Belgian bank and insurance company

Challenge:

Manage the timing and business processes of a complex unit-linked fund

Solution:

Build a new tool to transform unit-linked business processes from a manual to an automatic process

Results:

Input is quickly transferred to relevant managers and departments, and differences are automatically detected and corrected.

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, a Belgian bank and insurance company, managing unit-linked business processes is of capital importance. The slightest discrepancies in timing and process pose an operational risk for KBC. Process inefficiencies can rapidly generate a negative asset/liability difference, increasing KBC's investment risk as well.

Until recently, unit-linked order creation was an intricate 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, a project 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 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 Difficult 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 was key. CSC analyzed the as-is process, developed a bird's-eye view of 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 information and communications technology (ICT) teams from KBC built and programmed the system.

With this new system, input from deposits, orders, transfers, and rates is processed and uniform output is quickly transferred to fund managers, and finance and reporting staff. 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 percent, and is still improving.

Better-than-Expected Results

Managing and delivering the strategy and processes were CSC's main challenges. "This was a particularly tough and complex project," said Johan Lamotte, director of KBC Insurance. "From day one there was 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," Lamotte continued. "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."