Union Bancaire Privée

Union Bancaire Privée automates the production of client documents and deploys LexiFi’s integrated software solution for the management of structured products

Summary

Union Bancaire Privée, UBP SA and LexiFi partnered to automate the production and distribution of the documents delivered by UBP to relationship managers and structured product investors before and after a sale. The Bank’s strategy is to provide innovative investment solutions suited to the new market environment and the highest levels of service quality and transparency. With this solution, UBP is able to communicate up-to-date sales sheets and performance reports in a timely manner, without burdening the advisory team. More generally, UBP relies on LexiFi Apropos’ analytical and processing capabilities to automate the structured products advisory business and to better serve its clients.

Client presentation

Founded in 1969, UBP specialises in private banking and asset management. With a Tier-1 ratio of more than 20%, it is one of the most strongly-capitalised private banks.

UBP is committed to providing innovative investment solutions with the highest levels of service quality and transparency. The Bank strives to preserve its clients’ capital whilst maximising performance. It develops innovative product ranges, whether traditional or alternative, for both private and institutional clients. Its structured products are designed to meet the specific requirements of private clients, external managers and institutional investors.

UBP develops structured investment solutions either independently or in conjunction with investment banks. UBP’s open architecture gives it access to key counterparties and enables the Bank to provide the best solutions, at the best-possible price. UBP’s product range comprises static and algorithmic structures based on a variety of underlyings, including equities, currencies, commodities, interest rates, credit and hedge funds.

In late 2010, UBP launched a review of its structured products activities aimed at automating a greater portion of the business.

The challenges of communicating clear and up-to-date information to structured product investors

UBP has decided to automate the production and distribution of client documents.

The production and distribution of sales sheets and performance reports for structured products present a number of challenges:

  • Even for a single product family, data must be collected and organised to accommodate many potential product variations, including support for any underlying asset class; for a single underlying, a basket, or a list of underlyings or baskets (such as in worst-of products) potentially combining different asset classes; for cash settlement, physical delivery or a combination of the two; for different barrier types (continuous, discrete or final); and for schedules that vary in size depending on the product’s maturity and the frequency of observations and payments. In addition, certain data elements (such as the measure of the impact of future market scenarios on product performance) must be calculated using a precise definition of the product’s terms and conditions. Client documents also comprise external content such as text fragments managed by the legal department and market data, both historical and current, imported from a variety of sources. Moreover, data changes over time: documents must accurately present time-dependent data such as accrued interest amounts, and describe the consequences of life cycle events, including corporate actions.
  • The challenge is compounded for banks, such as UBP, who are managing a sizeable and diverse portfolio of structured products: document templates must anticipate the multiplication of product structures and variants.
  • An additional issue is that of document delivery, which may entail client-dependent language, contents and layout, technical format (such as HTML format for integration into in-house and external web sites, and/or high-quality paginated PDF format) and timing of delivery.
  • Finally, users must be able to store and retrieve generated documents.

Addressing these challenges with LexiFi

Given the challenges, the manual production and distribution of client documents was not an option. The Bank considered two other potential solutions:

  • either by organising and calculating data in one or more application(s) and using a document management system to produce sales sheets and performance reports;
  • or by implementing an integrated system that offers (i) product definition, management, valuation and analysis capabilities and (ii) document production and management functions.

After thoroughly researching the market for pre-packaged software and analysing the possibility of a custom development project, UBP opted for LexiFi Apropos. The Bank concluded that the joint availability of product and document management features in LexiFi’s integrated solution considerably reduced the costs and risks linked to the Client Documents project. It also offers the advantage of automating many business processes in UBP’s advisory and risk management functions.

UBP therefore chose to outsource to LexiFi the creation and maintenance of client document templates for structured products. A document template is a text file that defines the contents and layout of a document. Templates also describe how documents evolve through time in response to life cycle events, including equity corporate actions. LexiFi’s engineers designed a collection of templates that cover UBP’s existing product range as well as product variations that the Bank has not yet traded.

UBP’s templates comprise: static and dynamic text, including rules to retrieve text fragments managed by the Bank’s legal department; calculated data — such as accrued interest, impact of future market scenarios on product performance, realised product and underlying performance — that is presented in charts and complex data grids; data to inform investors about the consequences of key life cycle event; and images. Historical product and underlying prices are imported from UBP’s internal database while current product prices are retrieved from a Reuters data feed.

The production and distribution of documents is automated. A batch process generates documents periodically. LexiFi Apropos comprises control mechanisms to produce safe documents: when data due to appear in a document is missing, the system reports an informative alert but can still generate the target document. This allows users to produce early, though incomplete, versions of documents when needed, without the risk of sending such documents inadvertently to clients. If all validation checks are satisfied, documents are automatically published on the Bank’s intranet and immediately accessible by relationship managers and other internal customers.

Documents produced either in-house or by market counterparties are stored using relevant attributes — by type of document, language, indicative/definitive status, review state, creation date — for later retrieval within LexiFi Apropos.

The client experience in working with LexiFi

The partnership with LexiFi vindicated UBP’s choice of an integrated software solution for the management of its structured products advisory activities. The project aimed at automating the production and distribution of client documents demonstrated the need for precise and up-to-date definitions of structured products. Crucially, the same product definitions support the valuation and analysis needs of the advisory and risk management functions. From UBP’s perspective, LexiFi contributed two key elements: combining analytical and processing capabilities within one system and providing easy access to experienced and responsive consultants in all phases of the project.

According to Hans Peter Zbinden, Head of Structured Products at Union Bancaire Privée, “LexiFi helped us to face the difficult challenge of automating the production and distribution of client documents for structured products. We are now able to communicate up-to-date sales sheets and performance reports in a timely manner to relationship managers and investors, without burdening the advisory team. LexiFi’s experienced staff managed the project and guided us in a professional manner, at every step. We look forward to systematically exploiting LexiFi Apropos’ combined analytical and processing capabilities in order to increasingly automate our business and better serve our clients.”

Client Spotlight

“LexiFi helped us to face the difficult challenge of automating the production and distribution of client documents for structured products. We are now able to communicate up-to-date sales sheets and performance reports in a timely manner to relationship managers and investors, without burdening the advisory team. LexiFi’s experienced staff managed the project and guided us in a professional manner, at every step. We look forward to systematically exploiting LexiFi Apropos’ combined analytical and processing capabilities in order to increasingly automate our business and better serve our clients.”

Hans Peter Zbinden
Former Head of Structured Products
Union Bancaire Privée

Union Bancaire Privée