Versabanq
Versabanq Turns to Microsoft Technologies for New Business Opportunities
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Company Overview
Incorporated in 2006, Versabanq was created from the software development group at Pacific & Western Bank of Canada, and is headquartered in London, Ontario. Pacific & Western began operating in 1993 and, at the time, was the first bank to receive a charter from Canada’s federal government in 18 years. Today it’s the country’s ninth-largest chartered bank with nearly $1.5 billion in assets.
Business Challenge
In 2004, a new banking regulation was introduced: the Basel II accord. An international banking standard designed to ensure financial institutions have sufficient assets to help guard against collapses and deal with business risks, Basel II requires Canadian Schedule 1 financial institutions such as Pacific & Western to review their capital levels and coordinate reserve funding to ensure finances adequately cover business risks.
Pacific & Western was no stranger to risk assessments. Analyzing risk has always been particularly important to the bank’s business. “Pacific & Western mainly offers complex commercial loans measuring in the tens of millions of dollars to highly-rated corporations and the public sector,” says Neil Beaton, President, Versabanq. “Sophisticated risk assessments are crucial to our operation, because if any single loan went sour we’d need millions of dollars to cover the loss. Avoiding such a scenario is essential and our asset management system informs us of every process and procedure.”
Despite already having refined its risk analysis processes, Pacific & Western systematically investigated the requirements for Basel II compliance. The organization’s software developers worked with the heads of credit risk and finance to review the regulation, identifying new procedures for P&W’s asset management system and adding applications to the bank’s asset management system to meet the government rule.
By March 2007 the bank was Basel II compliant, well in advance of the November deadline, by which time all Schedule 1 banks in Canada had to comply with the regulation – but Pacific & Western was also in the unique position of having crafted a flexible asset management solution that other firms could use. The institution decided to commercialize the system and support it with a new business entity called Versabanq.
“That we were able to meet our own regulatory obligations and build a solution for others is credit to the flexibility of our business software and our development team,” says Steve Estabrooks, Director, Strategic Initiatives, Versabanq. “We standardized on Microsoft® software early, and that made a significant difference in our ability to address Basel II compliance for ourselves and others.”
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Solution
From its inception, Pacific & Western opted for a system based on PCs and servers rather than mainframe infrastructure. The organization also relied on Microsoft software, including Microsoft SQL Server® 2005. With mirroring and an integrated management console for configuration and maintenance, SQL Server 2005 helps provide a secure, scalable backbone for Pacific & Western’s internal asset management system. As well, the Microsoft-based infrastructure helped provide a level of flexibility that would come to support the new business of Versabanq.
“We started using Microsoft software when Pacific & Western began in 1993, and it just kept getting more powerful,” Estabrooks says. “We found it relatively simple to develop and connect new applications to the Microsoft infrastructure, and new hardware and third-party systems fit right in. We started out with a great platform, and every year it improved.”
Versabanq’s solution would also rely on Microsoft software. Versabanq’s Asset Management System (AMS) is a loan origination platform designed to handle a wide variety of lending products. The solution helps financial organizations attain Basel II compliance and gain better insight into their overall operations.
“Versabanq’s AMS is a full lifecycle loan origination and management system with a sophisticated amortization schedule, which allows organizations to easily accommodate everything from very small portfolios to the most complex commercial loans, leases and loan syndications,” says Beaton. “It also gives financial institutions the insight to evaluate business opportunities and manage credit more efficiently. That allows senior management to confidently pursue lines of business and strategies for maximum profitability, but always within the risk boundaries the institution is comfortable with.”
Leveraging flexible Microsoft software, Versabanq’s AMS is designed to enable financial services firms to take full advantage of their existing technology investments and infrastructure, including aligning their IT infrastructure with business processes. This coordination not only supports risk management and compliance obligations, it also supports top-line goals such as improving customer satisfaction, enhancing operational efficiency, and improving competitiveness within the financial services market.
As with Pacific & Western’s internal asset management infrastructure, AMS is built on SQL Server 2005, and employs a Windows®-based executable that runs on the user’s PC. “That makes it very easy to deploy,” says Tyler Beaton, Computer Analyst and Programmer, Versabanq. “You don’t have any heavy installation processes to go through, and it’s less of a burden for end-user organizations to support and upgrade.”
Business Benefits
Pacific & Western and Versabanq find that the flexible Microsoft infrastructure can be easily amended according to business needs. Both companies also benefit from superior return on investment. Today, Versabanq passes that advantage on to new customers
Flexible IT infrastructure
Pacific & Western found the Microsoft-based infrastructure easy to manage, which helped the bank adapt to the new regulatory requirements of Basel II. Now Versabanq uses the same software to address customer requirements. The flexibility of SQL Server 2005 allows Versabanq to easily customize the product according to customer requirements.
“We had one partner in the United States interested in the syndicated loan module of AMS specifically,” Neil Beaton says. “In just three weeks we extracted and adapted the technology to meet the customer’s need. The ability to provide a fully-functional demonstrator application in such a short period of time really impressed them.”
Reduced costs and complexity
Since so many application developers are well versed in Microsoft technologies, and since many of Pacific & Western’s application experts were familiar and comfortable with the Microsoft ecosystem, the organization never struggled to find the expertise required to manage its technology stack. As a result, Pacific & Western’s technology support costs remained low even as the underpinning software grew more sophisticated and powerful.
“Versabanq customers will benefit from the same low costs and sophistication that Pacific & Western experienced,” Estabrooks says. “The Windows-based interface is intuitive and easy to use, so training and support costs are low. And the back-end infrastructure is familiar, so our clients’ IT departments won’t have to invest heavily on the implementation.”
Superior return on investment
The Microsoft software infrastructure is constantly being strengthened with version updates, security patches and performance improvements. As a result, Pacific & Western, Versabanq, and Versabanq customers can look forward to new functionalities that will support their growing operations. This translates into a higher return on investment.
“Because Versabanq’s AMS interoperates with so many existing core systems on the market, our clients can leverage the infrastructure they’ve already invested in,” Estabrooks explains. “The technology keeps pace with changing business requirements.”
Extensive business intelligence
The flexible Microsoft-based infrastructure helped the bank attain Basel II compliance in time for the November 2007 deadline, when all Schedule 1 financial institutions were obliged to operate according to the new regulation. This further improved Pacific & Western’s already sophisticated risk assessment practices, helping the organization adjust its products and procedures to adequately cover risk and optimize returns.
“We’re bringing a similar level of asset-risk balance to other companies through Versabanq’s AMS solution,” Estabrooks says. “The system is designed to help organizations get a better understanding of their risk ratings. It not only addresses future compliance issues, it also addresses the competitiveness of the market.”
Microsoft Solutions for the Financial Services Industry
Financial institutions continue to seek cost-effective solutions that create rapid and sustainable competitive advantage while laying the groundwork for future innovation. Microsoft and its ever-growing partner community develop solutions that meet the industry-specific needs of banks, insurance companies, and capital markets firms worldwide, and help financial services customers realize their full potential.
For more information about Microsoft solutions for the financial services industry, go to:www.microsoft.com/resources/financialservices
For More Information
For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:www.microsoft.com
For more information about Versabanq Innovations Inc. products and services, call (519) 488 - 1280 or visit the Web site at: www.versabanq.com
