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Toward the future of finance


Technology, regulatory change, accelerated wealth creation, and user empowerment are fundamentally transforming financial services firms and markets globally. Liquidity is replacing inefficiency. Interoperability is reinventing stagnant systems. Flexible new structures supplant outdated business models. Before our eyes, the financial services industry is being reborn. Focused solely on financial services, Capco delivers services and technology solutions that dramatically enhance efficiency and profitability for our clients, ensuring their competitiveness in the new financial arena. We do this by integrating thought leadership with practical implementation to help form the future of finance. By tapping our reservoir of talent in finance, technology, strategy, and ventures, Capco has developed a substantial vision of our industry’s future. Our alliances with partners such as Microsoft allow us to deliver powerful technology that solves the industry’s most pressing issues and enables clients to capture new opportunities for profit. In turn, we manage and share our knowledge with the financial services community through the Capco Institute — the source of our quarterly journal of financial transformation and a collaborative book written with Euromoney Books entitled Forming the Future of Finance: Mapping Paradigms, Creating Strategies. What makes Capco different is that we work together with clients to translate great ideas into tangible results. Results that reveal unseen business opportunities, unleash new revenue streams, diminish operating costs, and rapidly advance business for our clients. It gives me great pleasure to present Capco. Working together, the future can be yours.

Rob Heyvaert, Chairman and CEO

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We continually nourish and leverage our assets, which work synergistically to enhance efficiency and profitability for our clients.

people Our values-based organization is our core asset. Our employees possess a broad understanding of financial services, technology, strategy, and ventures, as well as deep insights into each discipline.

thought Capco not only has a global perspective of the industry’s future, we invent and effect the ideas that propel its transformation. This twinning of thought leadership and practical application empowers clients to capture the opportunities inherent in the industry’s evolution.

ventures As an integral part of our business model, Capco is a global entrepreneur that forms partnerships with clients to build business ventures, which generate recurring revenues. Capco has access to capital through a strategic partnership with a major venture capital firm.

solutions We customize services and technology solutions so our clients can thrive in rapidly changing business and technological environments, maneuver more effectively against the competition, and reap the benefits of greater revenues.

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"Capco has the market knowledge and practical implementation experience to create client opportunities across the whole spectrum of the financial services industry." Patricia Lynch, Director of Securities Transaction Systems, Reuters


Toward efficiency and profitability By uniting financial services expertise, strategic consulting, technology development, and ventures expertise, Capco creates and executes solutions that solve today’s most critical challenges — generating new sources of efficiency and profit for our clients, enhancing their competitiveness, and positioning them as leaders in the new era of finance. We focus on three key areas of transformation — operational efficiency and technology, market infrastructure, and business innovation — carefully orchestrating our deliverables to meet the individual needs of each client. Capco delivers total solutions by combining our collective, dynamic view of the industry’s future with our broad portfolios of innovative ideas, skills, technology, and tools. We are a global entrepreneur with access to capital. And we lead the industry by living our mission: integrating thought plus action to help form the future of finance. The next pages demonstrate how the integration of thought leadership and practical application helps prepare our clients for tomorrow while solving problems today.

Capco’s solutions are designed for: Alternate trading systems Asset management Central clearing and settlement organizations Custodians Depositories Exchanges Financial industry services providers Institutional investors Investment banking Private banking Retail banking Wealth management Wholesale banking


mounting competitiveness of Alternative Trading Systems (ATS) are resulting in exchange consolidations that enhance liquidity. Economies of scale in people and technology that come with consolidation will be key as market participants yearn for greater efficiency.

Toward a new wave of liquidity by Shahin Shojai, Principal Consultant, Capco In addition to increasing market access, technology is making it possible for individual investors to derive value from previously illiquid or undiscovered assets like excess cable bandwidth, future earnings, and even ideas. Liberation of value from these latent assets will result in a new wave of liquidity that will transform the financial services landscape.

The banking industry can also benefit greatly from the economies of scale and scope that accompany mergers. Based on the findings of Gayle DeLong (2001)2, banks can save approximately 6% from mergers that focus geography and operations. Using these figures to analyze the potential savings from merging the top 20 banks in the largest 132 countries, we find that consolidation could generate US$7.3 billion a year. At a risk-free rate of 10%, these cost savings could translate into a NPV of US$73 billion.

Before value can be released, however, many frictions within the current financial system must be mitigated. The two major sources of capital markets friction are lack of mass liquidity and inefficient trade clearing and settlement. Lack of mass liquidity is predominantly associated with the proliferation of small, less liquid markets, while improving trade settlement and clearing will release assets that are currently tied up in the settlement cycle.

New operating models Individual investors are insisting on the best financial services and products and are increasingly sensitive to costs. Meeting these demands will require financial services firms to adopt new operating models, such as Business Service Providers (BSP), which increase efficiency by aggregating the management of business functions in specialized organization. BSPs will broadly change the competitive landscape because they force former competitors to collaborate to provide the best client service and experience.

Efficient clearing and settlement Every time an individual or institution trades, transferring ownership of the security can take a few days and involves many hours of manual data entry. During that time, the asset’s full value can be taken out of the market anywhere from four days (T+3) to six days (T+5), depending upon the exchange.

By reducing redundancies and concentrating intellectual and human capital, we estimate that financial institutions could save around 20% of their operating costs by outsourcing operations management to BSPs. This translates into a cost savings of about US$83 billion, resulting in a value release of US$830 billion. Most of these cost savings would flow into the market, creating a significant increase in liquidity.

Given that the two largest stock exchanges, NYSE and NASDAQ, alone experience daily transaction volumes in excess of three billion shares, the move to straight through processing and shortened settlement cycles could release several billion dollars of liquidity back into the marketplace each day. Shortening trade settlement cycles through straight through processing will not only increase efficiencies and decrease market risk, but using the results of a recent study by the Securities Industry Association, liquidity in the U.S. markets will increase by US$19 billion1 when trade cycles are shortened to one day. Applying the results of that study more broadly, the global securities industry could generate annual net profits of approximately US$3.2 billion1 by moving from T+3 to T+1. The net present value of efficient clearing and settlement is US$23 billion.

Conclusion A combination of these improvements, over time, could drive total global liquidity up by as much as US$872 billion, even without including the liquidity released through ASPs/BSPs. To prepare for this new wave of liquidity, the financial services marketplace should begin today to invest in strategic, operational, and technology solutions that make their business more efficient and customer service more effective. Direct profits will be derived for organizations associated with these improvements as the new liquidity ripples through the global economy.

Exchange and bank consolidation The growth of securities exchanges globally has gone nearly unchecked for decades. This has resulted in too many exchanges, many with close to zero liquidity. As the largest institutional investors grow, so does their need for larger, more liquid exchanges. Pressure from institutional investors and the

1 The Securities Industry Association, Capco, Andersen Consulting, 2000, "T+1 Business Case," Final report. 2 DeLong, G. L., 2001, "Focusing Versus Diversifying Bank Mergers: Analysis of Market Reaction and Long-Term Performance," working paper, Baruch College, CUNY.

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Toward the future together


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"In order for the U.S. financial services industry to move toward T+1 in an STP environment, it had to prove that such an environment meant reduced risks and that there was a business case for it. Capco developed that business case." Robert J. McGrail, Chairman, Omgeo


Operations & Technology Solutions


Straight through processing, the move to T+1, commoditization and disintermediation, new risk and capital adequacy regulations, and the threat imposed by burgeoning new entrants — all are placing heavy demands on today’s financial institutions and their operating systems. To give clients the agility to respond quickly to these challenges and operate competitively, Capco offers a modular suite of products and services designed to create operational efficiencies that release value by diminishing costs and driving profitability to new levels. Acknowledged for our thought leadership, Capco was called on by the Securities Industry Association (SIA) to develop a business case for moving the U.S. securities industry to straight through processing and T+1 trade settlement. Out of this work, we renewed our commitment to implementing the proposed industry-wide T+1 transaction processing model and to providing the solutions necessary to move the global securities industry toward straight through processing. This will shorten investment cycles and increase liquidity. Whatever a company’s scenario or level of transition, Capco delivers the services, technology, and skills that accelerate the speed of business evolution. Solutions that increase market and operational efficiency and drive more immediate profit results. Capco’s integration of industry knowledge and implementation expertise provides clients with a foundation for dramatic business growth and the power to magnify their position in tomorrow’s economic landscape.

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Singapore Exchange: industry-wide STP initiative The Singapore Exchange recognized the need to implement straight through processing (STP) to reduce operating and business costs, lower settlement risk, and provide more timely risk management information to participants in the Singapore securities market. Early in 2001, Capco helped the Singapore Exchange kick off an STP project that involved a business case and central pre-matching utility (CPM). The STP business case will provide the necessary direction and information to move the industry toward shortened trading cycles. This, in turn, will allow industry participants to comfortably commit to the move to STP, which is essential for making the transition a success. With a CPM utility, the Singapore Exchange will provide the cornerstone of the STP environment. By electronically matching settlement instructions prior to settlement and allowing market participants to communicate with other participants via the CPM, the industry is one step closer to achieving straight through processing. The solution will enhance efficiency of communications because the CPM is designed to aggregate messages from any participant’s system.

Redefining service in the market By taking the initiative to change the Singapore securities processing infrastructure, the Singapore Exchange will achieve two very important goals. First, at the domestic level, it will enable end-to-end STP for local market participants. Full STP will reduce manual intervention and late instructions, as well as mitigate risk of input errors, which will increase processing capacity and ultimately lower costs. Second, the CPM will become a communication hub for trade settlement between local and overseas participants. The Singapore Exchange will also become the first exchange in Asia to publish an STP business case and offer a high level of industry-wide STP services to the region. Capco developed the business case and designed the CPM utility that will help the Singapore Exchange realize its business goals.


Performance measurement and unit cost analysis

Goldman Sachs: understanding business and operational performance

Goldman Sachs turned to Capco to help it develop the analytical framework and system solutions to prioritize projects efficiently and improve financial and operational performance. During the year-long project, we partnered with Goldman Sachs professionals to:

In the past year, Goldman Sachs’ equity operations group has launched more than a dozen initiatives to address mandatory industry undertakings such as extended trading hours, decimalization, and shortened settlement cycles.

Support ongoing program management for all project initiatives in global equity operations, including project coordination and planning, progress tracking, project dependency analysis, and issue resolution.

At the same time, it is seeking to grow its business by investigating new markets, adding new products, enhancing e-business, increasing efficiency, and growing trade volume. However, budgetary constraints have forced the firm to prioritize strategic projects. To do this effectively, managers needed a way to measure and pinpoint inefficiencies in their operational processes, determine target areas for improvement, and implement strategic initiatives to address these improvements.

Provide detailed unit and organizational cost analysis to help management understand resource costs and operational capacity across the global equity operations division. Supply key performance metrics to measure straight through processing (STP) rates and operational performance in all regions. Conduct a ‘root cause’ analysis of the problems impeding STP, and target improvement efforts that enhance effectiveness and processing cycle time. Out of this partnership grew a better understanding of business and operational performance. As a result of the insight the firm gathered from this analysis, it is expanding the cost and profitability study throughout its global operations organization.

A comprehensive management reporting tool Capco is now helping Goldman Sachs understand its global business performance using our Cost and Profitability System (CAPS) methodology. Additionally, Capco has partnered with Goldman Sachs to implement a robust Project Management Office (PMO) platform, which provides ongoing program management by supporting multiple phases of a project lifecycle. Through the development of analytical frameworks and supporting tool sets, Capco has helped Goldman Sachs gain greater control over its equities operations projects, a more transparent understanding of its operational costs, and a better appreciation of the issues impacting operational performance.

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Short-term revenue and long-term growth by Joe Anastasio, Partner, U.S. market leader, and leader of Operations & Technology Solutions, Capco The growth of online trading and the introduction of new market liquidity threaten to create an infrastructure crisis with huge financial and opportunity costs for U.S. market participants. These costs will continue to mount until financial institutions begin focusing on long-term operations efficiency and savings by investing in their market infrastructure. In doing so, Wall Street will be better positioned for short-term revenue and long-term growth. Simply put, today’s securities settlement and clearing infrastructure is not strong enough to sustain capacity loads. Although trading volumes have skyrocketed, the infrastructure has not been significantly upgraded in more than a dozen years. To avoid potential disaster, it is estimated that brokers will need to spend US$100 per customer a year on technology. For certain firms that would equal a US$300 million investment. One broker has already spent US$100 million to ensure that users have access in times of high traffic. Without this investment and especially during times of economic anxiety, online brokerages will continue to experience outages, order execution problems, and trading that is prone to timeouts from a user’s dial-up connection.

Individuals become an even greater force Historical precedent indicates that Wall Street’s infrastructure changes are driven by investor crisis, not efficiency, and this seems to be happening again. In the late 1960s and early 1970s, the U.S. securities industry ignored the alarm bells of infrastructure stress and failure until the famous ‘paper crisis.’ The crisis was a result of our unwillingness to recognize the telltale signs of an overworked infrastructure. Private investors are waiting for economic developments, such as interest rate changes and tax rate cuts to take place, before they return to the market. When the market comes back, we will see increased volume dominated by a new breed of investor: one who trades and demands investor research 24/7 on the Internet. Online brokers are racing to build research capability and support for initial public offerings (IPOs) to compete more aggressively with traditional retail brokers. Enhanced online volume will further stress capacity. We are fortunate there is time to prepare.


Industry will meet the challenges

Priorities

With regard to infrastructure change and technology challenges, the industry has always had time to plan, time to think about, and time to convert to a new process or methodology.

We see four overriding priorities for operational risk managers:

Today, every additional execution brings our infrastructure closer to failure. Think about what happened on January 3, 2001, when there was a surprise interest rate cut; we saw volumes rise to six billion shares on the combined exchanges. What if the economy’s return encourages a resurgence of investment? Let’s be sure we have the reserve capacity to handle that type of prosperity.

Direct action and resources toward areas that would benefit most from qualitative measurement of operational performance.

Minimize losses from operational failures.

Undertake quantitative measurement to minimize required regulatory capital. Establish a dedicated operational risk management group.

Understand the process The first priority is to reduce actual losses by minimizing the chances of a problem occurring and mitigate the loss if the event happens. The starting point is a health check that will diagnose current internal process, control points, and systems. A health check will help identify stress points and recommend remedial action. Simulations of systems and workflows will give management a clear understanding of their operations and the consequences of failure. For all significant vulnerabilities, response plans are necessary.

Operating risk steps out of the shadows

Qualitative and quantitative measurement

by John Owen, Partner and U.K. market leader, Capco

Focused attention on critical areas is essential to proper management of operating risk. The attention can come in the form of increased monitoring, increased staffing, or the replacement of old, semi-manual systems. A dashboard of intuitive measures of systems performance, tailored to the operations and risks of the individual organization, can help management monitor systems.

The Basel Committee on Banking Supervision has recognized formally that operational failures are responsible for causing banks to suffer insidious and spectacular losses. As a result, the Federal Reserve Board and the Bank of England will adopt the committee’s New Capital Accord, which recommends that approximately 20% of a bank’s capital be set aside to explicitly cover operating risk.

The Basel Committee believes that increasing risk management sophistication and measurement precision will generally be rewarded with a reduction in the regulatory operational risk capital. Good risk measurement will reduce the required regulatory capital and allow management to allocate capital charges to the departments that create operating risk. This transfer pricing of risk will give the correct incentives to managers when deciding whether to upgrade systems and processes.

Banks are reacting in two ways. They have either taken a defensive reaction to regulatory pressures, industry competition, and the subsequent cost of capital. Or they have taken proactive steps to capitalize on the growth of e-commerce and straight through processing (STP). In any case, many banks have tried to approach operational risk with the same statistical tools they applied to market and credit risk, which are relatively well structured and lend themselves to modeling and statistical treatment. Operational risk, in contrast, is complex and unstructured. Some quantification of operational risk can be made at an institutional or business-line level, but the control of day-to-day risks must continue to be carefully managed.

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"Capco is flexible, smart, innovative, and conceptually strong - with professionals who have deep understanding of the financial marketplace." Tom Swayne, Executive Vice President and Global Business Executive, J.P. Morgan Investor Services


Market Infrastructure Solutions


Over the years, thousands of technology systems have been built to provide a myriad of trading, clearing, settling, and custody functions. Yet few of these systems typically talk to one another. The result is a chaotic, labyrinthine architecture that creates serious operational inefficiencies, erodes profit margins, and increases risk exposure. To enable divergent systems to behave more efficiently, Capco can provide a single entry point for all aspects of the underlying market infrastructure required to support trading systems, as well as the services to clear and settle trades and the connectivity between those services. Capco helps financial services firms assess their technology implementation options, identify the best solutions, and analyze related cost savings. We help our clients supply next-generation access and channels so they can rapidly deliver customized, new services to their customers. Based on a client’s current environment, we define and execute a migration strategy that leads to minimized risk, increased capacity, and compressed cycle times. The result is quicker implementation and lower costs plus greater flexibility, scalability, and quality. Ultimately, better efficiencies translate into capital gains and manpower that can be redirected into value-added investments, such as new businesses and enhanced customer service.

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Clearstream: a virtual domestic market Early in 2000 the London Stock Exchange (LSE) and Deutsche Börse announced their intention to form a joint market, which would be known as iX. It was intended that iX would go live at the end of 2000 and would offer seamless trading in both London and Frankfurt stocks. This was the first merger announced between two of Europe’s big three main markets. Large broker dealers hailed the proposal as a first step toward a true pan-European securities market. A consolidated exchange, however, only satisfied some of the requirements. For some time, multi-national broker dealers had been demanding cheaper settlement in Europe: cross-border settlement in Europe is 10 times more expensive than a comparable settlement in the U.S. Efficient settlement solutions existed for both individual domestic markets. In London, CrestCo settled all trades on the LSE. In Frankfurt, Clearstream settled all trades on the Deutsche Börse. The number of cross-border settlements between CrestCo and Clearstream was very small. The cost of cross-border settlements between the two central securities depositories would have been prohibitively expensive for the new merged iX market, and depending on the counterparty, two identical trades might cost different amounts to settle. Moreover, trading anonymity would mean that a participant would not know whether any individual trade resulted in a settlement. A cost effective cross-border settlement solution that could handle high trade volumes was needed. Because such a solution was seen as a key to the success of iX, both exchanges wished to remain involved. Perhaps the most obvious solution would have been to merge the two settlement organizations. However, this option was quickly ruled out. Clearstream needed a cross-border settlement solution between London and Frankfurt that could be implemented quickly and have settlement costs comparable with those for domestic settlements.

An innovative cross-border settlement solution Capco helped Clearstream develop a virtual domestic settlement solution. This involved Clearstream, CrestCo, and the central counterparties (CCP) for each country: the London Clearing House in Europe and Eurex in Frankfurt. The solution established the CCPs as the conduit through which each participant’s trades would reach CrestCo or Clearstream, regardless of whether the trade was domestic or cross-border.


The NASDAQ Europe initiative

NASDAQ: a pan-European exchange

NASDAQ’s major goal in Europe is to create the premier initial public offering (IPO) market, as well as provide a venue for high-growth European firms to access equity financing. In addition, NASDAQ wants to provide European and American investors with the opportunity to invest in internationally traded equities. To meet these objectives, Capco helped NASDAQ:

Corporate demand for new sources of funding has grown significantly in recent years as organizations have become increasingly global. At the same time, cross-border trading has dramatically increased due to advances in technology, access to market data, and the desire for higher portfolio returns. These factors have been particularly strong in Europe following the introduction of the European Monetary Union.

Define a unique hybrid market structure, supporting both quotes and orders for a pan-European exchange. Document specific business and technical requirements that define the exchange environment.

NASDAQ wants to create a truly global marketplace, which would help elevate its role as one of the world’s principal exchanges. As part of its efforts to expand globally, NASDAQ engaged Capco to create a fully automated pan-European stock market.

Review potential business and technology solutions, including partnering with one of Europe’s existing exchanges. Conduct due diligence on prospective solutions. Implement and integrate EASDAQ environment into new NASDAQ Europe environment. Ensure market structure and technology solutions are compatible with other NASDAQ regional solutions (e.g., NASDAQ Japan, NASDAQ U.S.).

Bringing a great idea to reality Capco has helped NASDAQ take its European initiative forward, from developing a target business service model to facilitating decision-making, and acquiring a majority stake of the EASDAQ stock market. Capco is currently helping NASDAQ to develop, test, and implement EASDAQ’s new trading system and operational infrastructure, as well as providing strategic commercial support. NASDAQ Europe will go live in the second quarter of 2001. Our next steps will include developing the second phase of NASDAQ Europe, as well as further establishing the foundation for linking NASDAQ’s other exchanges. This will allow NASDAQ to realize a truly fully automated global exchange.

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Internalization by Mark Reece, Partner, Capco Many believe that the introduction of an equity central counterparty (CCP) in Europe is necessary for risk management and largely beneficial to individual market operations. However, each market is establishing its own CCP, and there is limited effort toward adopting common standards. As a result, very large global market players are looking at internalization as an alternative. Internalization means keeping all aspects of execution and settlement within a single company, or group of companies. It is most successful for organizations that can offer execution, as well as settlement and custody. However, it is prompting others to consider expanding their capabilities. There are two key elements of internalization. They can be implemented separately but provide the maximum benefit when done together. The first is internalizing order execution: orders are examined and matched internally, within the constraints of timely execution. This could be through an Alternative Trading System (ATS) or existing trading desks. When periodic balancing orders are taken to the market, execution costs can be greatly reduced because exchange fees are paid only against the balancing trade. The second element of internalization is the settlement process. In this case, trade flow is sought from clients who use the organization as their custodian. When the trade is against a custody client, settlement can be achieved by book entry. This is less expensive than settlement at an external settlement agency. Maximum savings are realized when clients sign up for custody and order execution. By doing this, all trades that are crossed internally can go straight through to the settlement process, where they are settled by book entry. The only externalization occurs for the settlement of the balancing trade. To maintain timely execution, more than one balancing trade can be made per day. Rather than settling each of these, the new central counterparties net the trades and require settlement of just one net position. This greatly simplifies the remaining settlement process, and the external settlement rate is reduced to one movement of cash and securities per line traded. Internalization can be offered cross-border, along with a similar service for foreign exchange, by global financial services firms as a commercial solution to the common causes of cross-border settlement failure. With internalization, there is never a question of where the settlement will occur and, with reasonable integration of systems, the seller always has sufficient stock and the buyer sufficient funds.


Trade volumes Unilateral netting will massively reduce street-side settlements. The U.S., for example, has shown a reduction in settlements of greater than 90%4. Netting has two main benefits: it allows the system to handle more trades and reduces settlement costs. It should be noted that if an exchange charges a single clearing and settlement fee at the gross trade level, then the cost of each service is not transparent. Potential savings may not be passed on to the broker dealer, but kept by the post-trade organizations.

European counterparty revolution by Jos Schmitt, Partner and leader of Market Infrastructure Solutions, Capco In what is fast becoming a predictable annual event, the European stock exchanges have announced record trade volume. Their statistics show that global and European equity trade volumes are growing at an astounding 36% CAGR1.

Post-trade anonymity Post-trade anonymity is automatically established because the CCP is the counterparty for every cleared trade. With a universal counterparty, worries about settlement and replacement risk are effectively eradicated. The possibility of failure represents an increase in systemic risk. However, most risk managers believe that failure is less of a risk than dealing with an unknown counterparty.

However, this growth has been costly. Cross-border settlement is 10 times more expensive than domestic settlement in Europe or the U.S., and the failure rate of systems is on the order of 30%2. While trading patterns have changed, broker dealers are using outdated systems that require each trade to be processed individually. As volumes continue to grow, it is a matter of time before existing systems run out of capacity. Understandably, international broker dealers are crying out for greater efficiency and a reduction in settlement costs.

Larger broker dealers and settlement agents will be in the center of this revolution. By becoming General Clearing Members (GCM), these organizations will have a direct clearing relationship with the CCP.

Electronic trading also presents a risk dilemma for broker dealers. It provides pre-trade anonymity, a valued option in some instances. But anonymity may be a danger when market participants unwittingly deal with organizations they do not know or would choose to avoid.

As an example, the GCM will manage collateral placement to the CCP, as well as the exposure created by non-clearing members who trade via the GMC. To minimize risk, a CCP will require a GCM to place margin with either cash or securities. This is a new process in equity trading, but common practice for exchange traded derivatives. The GCM will wish to reconcile margin calls by replicating the CCP’s margining methodology. In this case, the margin can be seen as an extension of a broker dealer’s existing collateral management process.

Equity central counterparties (CCP) have given market participants a viable solution. Although CCPs are common in the derivatives market, their entry into the European equity market will trigger a revolution in trade settlement. A CCP stands in the middle of two broker dealers and becomes the counterparty to each side of the trade. It also guarantees delivery of the security or a cash equivalent.

Reconciliation, corporate actions, and fails management become more complex once settlement netting has been introduced. An audit trail between the original gross trades and the netted unsettled positions may need to be kept. Moreover, most GCMs will need to make significant changes to their internal procedures, processes, and systems – particularly in the areas of reconciliation, corporate actions, and fails management.

Equity CCPs address international broker dealers’ main concerns: Settlement efficiency One of the key features of a CCP is the introduction of multilateral settlement netting. As the CCP is now the counterparty to every trade, it need only make a single transaction for each settlement date and line of stock. In some models, each net stock settlement involves an equivalent cash payment. Potentially, netting can reduce the required payments to a single cash payment for each currency on each settlement date. In that case, DVP3, a settlement technique widely used to avoid settlement risk, is no longer required. With either model, the introduction of a CCP forces the market to adopt greater settlement discipline.

Although there is a cost involved in moving to a new model, a European CCP will yield considerable benefits for broker dealers. Processing increasing trade volumes will become simpler, and the cost of settlement will drop — more than offsetting any new costs associated with clearing.

1 International Federation of Stock Exchanges. 2 Capco research. 3 Delivery Versus Payment – settlement technique used to avoid settlement risk. 4 DTCC.

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"Capco helps business people understand new technology, define their requirements, and work on solutions for new businesses." Herald K. Schlawin, Managing Director, International Markets, HypoVereinsbank AG


Business Innovation Solutions


As the balance of power shifts to the individual, competition among financial services providers is mounting — prompting managers to set aside heady thoughts of another technology bubble and focus instead on core issues like market share, operational efficiency, and corporate strategy. In this more demand-driven economy, it is no longer enough to provide a branded Internet channel. Financial services companies today must focus on providing customers with the best experience, as well as the best products and services, quickly and reliably. Capco helps clients bring technology-rich new ventures, new distribution channels, and new products to market. We also infuse existing offerings with breakthrough innovation, infrastructure development, operational preparation, and execution. Our focus is on online banking, online brokerage, wealth portals, asset management, and insurance. We assess the feasibility of upscaling an aspect of a firm’s business, outsourcing certain business functions to drive efficiencies, or insourcing an aspect of someone else’s. This helps firms create a whole new operating model and, in effect, become a business service provider. Capturing market share in today’s financial arena takes more than revolutionary ideas. It requires the right expertise and tools to bring them to life.

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Omgeo: breaking new ground Recognizing that dramatic growth in trade volumes is stretching the global infrastructure for trade processing to its limits, Thomson Financial and the Depository Trust and Clearing Corporation have joined to form Omgeo. To enhance global industry efficiency, increase capacity, and shorten settlement cycles, Omgeo produces high-quality, commercially viable trade management products. This venture seeks to provide a complete trade management solution for global straight through processing. The goal is to mitigate the systemic risk and greater potential for settlement failure attendant to current trade management processes.

A new platform for a global workflow Together, Omgeo and Capco are developing, testing, and implementing the Omgeo Central Trade Manager, which will provide centralized, automated trade matching. In addition, it’s new platform and global workflow will provide a single entry point for managing the transaction cycle of multiple classes of U.S. domestic and cross-border securities. The platform is being created using new technology with an open architecture to ensure certain levels of interoperability with existing and planned systems worldwide. New workflows are being designed to support Codes of Practice and industry information standards. Because the project plan takes into account the Securities Industry Association’s requirements, Omgeo will provide a viable means of moving the U.S. market to T+1 settlement. This complete solution will be geared toward efficiency, reliability, scalability, and the preservation of investments in former Thomson Financial and DTCC products. A number of next-generation transaction, information, and performance measurement services are also planned.

Reducing operational and settlement risk For the first time, market participants will be able to turn to a single provider for a full range of post-trade transaction, information, and performance services. The Omgeo solution will enhance efficiency, increase capacity, and reduce operational and settlement risk in both domestic and cross-border markets.


Implementing a single, common technology platform

Société Générale: a new e-banking strategy

Capco was invited to build SocGen’s first e-banking solution from the ground up, starting with Europe and spanning 20 markets. The challenge was not only to build the solution, but to ensure that it met best practice standards. On November 1, 2000, SocGen introduced an online offering in Luxembourg, followed by a second functionally wider product and service offering. Four months later, the offering was introduced in the U.K. A single, common technology platform supports all markets.

At the end of 1999, Société Générale (SocGen) began to refocus on enhancing service to its private clients and customer relationship managers. At that time, the company’s private banking business made an important decision to enter the ‘e’ market by implementing an Internet-based product and service offering. SocGen aligned with a defensive implementation strategy due to the perceived volatility around the Internet delivery channel and client sensitivities toward change.

Other regions are planned to follow. Capco will help SocGen with a rapid implementation and rollout strategy supported by the new technology platform. In addition, because we developed an evolutionary object-data model and implemented scalable architecture, each of the offering components can be localized and customized.

This move was SocGen’s first step toward offering its clients timely, consolidated, and high-quality reporting on their portfolio holdings. SocGen’s online strategy for private clients had several other goals:

Clients, relationship managers, and agents have Intranet and Internet access to four main types of business functions: marketing and financial markets information, integrated portfolio reporting, order transmissions, and two-way secure mail messaging with their preferred relationship manager.

Provide online account management, financial information, and transaction capabilities. Increase client access to SocGen’s professional advisors. Reduce processing costs.

Forming the future of private banking

Cross-sell the bank’s products and services.

Although the Internet delivery channel is not the main channel for its private banking business, SocGen has formed the foundations of an open application server architecture. The platform is now available worldwide.

Create a center of competence around new technologies. Implement an expandable and scalable solution.

The online offering is considered a milestone in forming the future of SocGen’s private banking business. It enables the bank to enhance client segmentation and penetration, expand client coverage between different locations, retain existing clients, and acquire new clients. It is also helping SocGen win the war for talent by retaining skilled professional advisors and mobilizing internal technology skills around an innovative project. Transformed into an e-business, SocGen is very positive about the growth prospects of its private banking business. The company has implemented the Internet technology it needs to capture the business opportunities ahead.

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New operating models In the new age of finance, the battle will increasingly be for customers and the right talent to win them. With barriers to entry rapidly dissolving, competition is escalating from sources that could not even be imagined a decade ago. Companies that don’t adapt to the new market reality and fail to differentiate themselves risk staying on the sidelines while new entrants surge ahead. To thrive in the new economic milieu, financial services companies must deliver a truly unique customer experience, one that is difficult for competitors to duplicate. This requires steadfast focus on the core areas of excellence. At the same time, it demands quick response to customers’ insatiable appetite for information, innovation, and superior service. Financial services firms are recognizing that they simply cannot be the best at everything. Rather than dilute the power of their core expertise, firms are outsourcing the functions where they lack firepower and entrusting them to those who do: Business Service Providers, or BSPs. BSPs offer financial service companies powerful solutions in increasingly complex territories. Now firms can delegate parts or all of their back-office services to outside specialists at a fraction of the capital cost. BSP partners can create new market trading platforms and infrastructure, provide connectivity services, or design new portals to bundle products and services in a distinctive way. They can deliver business-processing services that increase efficiency, minimize costs, expand processing capacity, and elevate the overall level of customer service. Ultimately, BSPs allow firms to liberate their own time and resources and direct their energies toward cultivating more intimate relationships with their customers. And as they focus on what they do best, financial services companies can differentiate their brand further — catapulting the distance between them and the competition.

Re-engineering wealth management by George Feiger, Partner and leader of Business Innovation Solutions, Capco Managing the wealth of highly affluent individuals is arguably the most profitable and fastest-growing financial services business in the world. Not only are the U.S. and European markets growing at rates in excess of 10% per year, they are highly fragmented. Regardless of brand strength, no player has amassed even 2% of available assets under management worldwide. At the historical apex of the wealth management business, cost/income ratios are well below 50% for the leading Swiss private banks, and annual returns on regulatory capital are over 100%. Although there has already been a flood of investment into the wealth management business, more investment will be required in the next few years as its operational processes, technology, and internal culture are radically transformed. The traditional approach to asset management has been to provide highly personalized service to the truly wealthy, and tip-of-the-week brokerage to the rest. The fundamental reason is economic: a private banker with 25 to 125 clients creates deep losses in the $200,000- to $750,000 market because the business is rooted in manual and non-integrated processes and systems. The market is less willing to accept the traditional service model. This generation seeks more demonstrable financial acumen, transparency, benchmarked reporting, and customized dialogue around sophisticated tax, financial planning, and risk management tools. Not surprisingly, they also want anytime, anywhere access. So, the current practice of codified investment strategies and the idiosyncratic advice of brokers fails to meet expectations. Companies have attempted to add advisory content to their Internet channels by providing access to research, securities ratings, and advisory forums. However, only a small number of investors are truly self-directed. Most do not have the time, inclination, and skill to use these materials effectively. Moreover, they have hired financial consultants to manage the information flow. To meet the advisory requirements of the affluent market, a financial consultant would need to manage between 500 and 1,000 clients. Perhaps 20% of those would be active and require regular attention. This business model requires a different infrastructure and a fully integrated platform of real-time client


accounting, portfolio management, financial planning, and reporting tools that provide immediate recall, discussion, what-if scenarios, execution, settlement, and position updating with rapid precision.

Test and retest strategies The business intent of a new venture must be rigorously challenged and key questions must be asked. Does the proposition fit with the objectives of the organization? Are resources available to deliver? Is the idea acceptable to internal and external stakeholders? These may seem like simple components of building a business case. But all too often, the fundamental question of whether a new model is suitable, feasible, and acceptable is overlooked in the rush to build and implement an idea.

Several institutions have attempted with mixed results to build a proprietary solution. An unclear vision and lack of software components have thwarted most of these attempts. But because wealth managers will have no alternative to meeting this generation’s advanced requirements, we are confident that a solution will be available soon. Once in place, a comprehensive wealth management platform will take the middle office out of the private client businesses. Clients will require advisors with broad skill to use the tools and a central resource of system and product developers to create and feed the machine. A much leaner and higher quality business will emerge with much higher revenue and profit per staff member.

Empower the organization Successful ventures move quickly to implement strategies by empowering their organizations. Movement to an environment of speed through empowerment is a significant change for many. But empowerment is essential to the success of innovative organizations. There are three main characteristics of an empowered organization: Senior management manages risk and not process. Middle management replaces committee-driven processes with a culture of rapid decision-making and empowerment. The organization is prepared to identify areas of weakness and address them through internal or external means, creating new partnerships and shared service models.

How innovative organizations succeed

Institute decision-making discipline by Julian Wakeham, Managing Principal, Capco

Successful companies balance entrepreneurial flair with strong management. There is a recognition that managing multiple, parallel streams of work — from technology development and operations to research and marketing — in a dynamic environment requires exceptional project discipline and communication. And these factors are more important when the business proposition is inventive and is being continuously refined.

Innovative organizations not only handle new business concepts, they usually endure multiple interdependant workstreams, stakeholders, suppliers, and partners. Innovative companies are also highly dependent on technology and work in a constantly changing environment with limited timeframes. There is no blueprint for successfully bringing innovative ideas to market. But there are no prizes for failure. The time when customers and financiers flocked to new ideas just because they were ‘new’ has gone. In today’s world, innovation is essential, but selectivity is the name of the game.

Share knowledge and reward invention Successful organizations make knowledge management a functional priority. They create a culture with an insatiable desire to know. Innovation is rewarded, and all ideas are disseminated to the broader organization. This is not as simple as deploying knowledge management software. It is about changing the culture. In a truly innovative company, ideas are assets comparable to equity or real estate.

A study1 of the lessons derived from the highly public successes and failures of recent ventures point to one clear conclusion: templates for failure are more readily available than blueprints for success. Nonetheless, consistent patterns and recurring themes emerge from initiatives that have been successful. We find that innovative organizations:

1 Capco internal research.

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"Capco best serves our organization by delivering on its promise, remaining honest, and helping our management define a strategy." John Reed, Chief Operating Officer, Société Générale Hambros Bank & Trust Limited


Toward better solutions


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"Capco has experts from a diverse set of backgrounds – people who have held influential positions in the industry. Bringing them together gives you diversity, expertise, and authority with respect to many issues in the industry. You also have good listeners who can share their expertise." Geoffrey Sanderson, Chief Executive Officer, Kinetech International


people Capco’s core asset is a values-based organization that leverages our employees’ deep expertise and broad skills focused on the financial markets. We are united by shared values of commitment, integrity, and respect.


Values

Partners

Capco's strength is derived from deep industry expertise, broad skills in financial services, technology, and strategy, and a global team grounded in core values. Our professionals represent a rich variety of cultures and languages, as well as organizational and professional backgrounds. Capco’s core values of respect, integrity, and commitment are our lingua franca; the way we live these values is our common thread.

Michel Akkermans focuses on ventures. He also is a board member of a number of companies, among which is the publicly listed S1 Corporation, a specialist in Internet banking software systems. Previously, he was Founder, Chairman, and CEO of FICS. He also held various management positions at Econocom Expert, Continental Bank, and Morgan Guaranty Trust.

As a result, every dialogue we have is one of conscience. And the business value we add is predicated on the higher human values we share with the industry, our clients, and shareholders.

Joe Anastasio is market leader for the U.S. and leads Operations & Technology Solutions. He was formerly Director of the Board of J.P. Morgan Securities and Managing Director for J.P. Morgan’s North America Operations Group. He is a leading thinker associated with the NYSE, SIA, Clearstream, Euroclear, and the New York Clearing House’s Securities Policy Committee.

We have created a culture and environment that reflects these values. Ours is a well-defined and flexible organization that kindles entrepreneurship, teamwork, knowledge-sharing, and empowerment. Capco’s culture results in heightened value for our customers.

Michael Angus concentrates on Business Innovation Solutions, including personal financial services. His expertise was acquired at Gemini Consulting, where he led the firm’s financial services sector and directed its e-business strategy in the Americas. He also held consulting positions at Bain & Company and McKinsey & Co. David Bartoletti co-leads global technology products strategy. He was co-founder of Entropae, and a Senior Vice President at Fidelity Investments, where he developed and launched a webbased portfolio management and accounting engine. At TIBCO Financial Systems, David was Director of North American Business Development. He was also a branch manager at IBM. Dai Bedford concentrates on e-business development and major program delivery. He joined from Bossard Consultants/Gemini Consulting, where he was Vice President for the utilities sector, and previously managed the Warburg Dillon Read account globally. Prior to Gemini, Dai was Management Consultant for Coopers & Lybrand and a Business Consultant at Ferranti Computer Systems. Pascal Boillat specializes in designing and implementing operations systems solutions. Previously, he was Senior Manager, financial services consulting for KPMG Peat Marwick. He has also served as Vice President for treasury front-office systems, Vice President for European IT Services, Global IT Manager, and Manager of Telecommunications for Credit Suisse.


Eric Bohner, a Founding Partner of Capco, focuses on client relationships and specializes in providing clients with e-business solutions in Benelux. He was Head of Executive Operations at Cimad Group, Sales and Marketing Director at Cimad Conseil, and Business Development Manager at Cimad Consultants/IBM Professional Services.

Farzine Fazel is market leader for France and thought leader for asset management. He joined from Resources Informatiques Bancaires (RIB), where he was a Partner in charge of capital markets. Prior to RIB, he led major initiatives for Wang and ACT, where he was responsible for the rollout of its FX trading system throughout Europe.

Diederik Bostoen, a Founding Partner of Capco, leads internal communications and investor relations. Formerly at Bank Degroof, he was Director of Belgium’s Flemish region and member of the Executive Committee. Previously he was at Generale Bank.

Stuart Feffer is responsible for global clients in the investment banking, broker-dealer, and investment management sectors. His experience is drawn from Deloitte Consulting, where he was a Partner in the Securities Industry Practice. He was a product developer and development manager at the Sachs Group and in the Strategic Planning Group at Ernst & Whinney.

Michael Busch concentrates on Business Innovation Solutions, including personal financial services and ASPs/BSPs. For more than 12 years, he has counseled leading retail and investment banks, insurance, and asset management clients on core business and technology issues. Previously, he was Partner of McKinsey & Company and co-founder of its Business Technology Office.

George Feiger leads Business Innovation Solutions. He was previously Global Head of Private Banking outside Switzerland for UBS AG. Before that, he was Global Head of Investment Banking at SBC Warburg, and a member of the Group Executive Boards of both Swiss Bank Corporation and its successor, UBS AG. He is also a former Director at McKinsey & Company.

Wilson Davis focuses on delivery for market operations projects. He developed his experience at PricewaterhouseCoopers, where he was Partner and Practice Leader in the Banking and Securities Practices. He previously held positions at PricewaterhouseCoopers, Southeast Banking Corporation, and Eli Lilly & Co.

Richard Focken is market leader for Germany and specializes in Internet commerce. He was formerly a member of the Executive Committee of TIBCO Finance Technology, Inc., where he founded the firm’s business in Germany, Austria, Switzerland, and Italy. Previously, he managed the major accounts group at Dow Jones Telerate (now Bridge).

Erwin De Keyzer is market leader for continental Europe and Asia. He leads global execution of complex projects. As a Managing Director at J.P. Morgan, he led its Euroclear IT Division for over a decade and was member of the management board of Euroclear’s Operations Center in Brussels. He was also a technology consultant at Seriabel.

Philip Ghekiere leads ventures and capital transactions. He has extensive experience in corporate finance, capital markets, M&A, and venture capital. He developed his experience as a Partner with the law firm of Loeff Claeys Verbeke, where he was Head of the Financial Law Practice Group and member of the Executive Committee.

Michael Enthoven is President and Chief Operating Officer. Previously, he was Head of Global Technology and Operations and Chief Information Officer at J.P. Morgan. Other positions held at J.P. Morgan include Chairman of the Operating Risk Committee, co-Head of European Corporate Finance, and coHead of the Global Markets. He was also a member of the New York Clearing House Association and the Federal Reserve Bank Payments Risk Committee.

Devin Granback focuses on ventures. He developed his experience as a Vice President at Thomas Weisel Partners, where he was a member of the Private Equity Group. Previously, he worked in M&A at Thomas Weisel and Montgomery Securities, and in equity investment at First Union Capital Partners. Nick Hahn leads branding and marketing globally. He was formerly Global Director of Strategic Marketing for new and emerging brands at The Coca-Cola Company and Director, New Products/Business Development and Group Brand Manager at Johnson & Johnson.

Pascale Erseel focuses on developing financial services business and business innovation strategies. She joined from A.T. Kearney, where she was instrumental in developing the company’s portfolio of strategic and value-based management engagements. She also had a distinguished career as J.P. Morgan’s Head of Strategy for Asia Pacific.

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Chris Harvey directs and delivers e-business strategy projects. Formerly at Gemini Consulting, he was Principal and Global Head of Transaction Banking, Global Head of the Gemini Center of Excellence, and member of the Delivery Excellence Leadership Team for Europe. Previously, he was a sales and marketing associate at Eli Lilly & Co. Rob Heyvaert is the founder of Capco and has served as its Chairman and CEO since its inception in July 1998. Prior to Capco, he founded Cimad Consultants, where he was Chairman and CEO. Cimad grew to a staff of over 1,400, with annual revenues of US$120 million and became a wholly owned subsidiary of IBM in December 1995. At IBM, he was General Manager, Securities and Capital Markets Global Solutions. Marilyn Hignett specializes in solutions for T+1 and STP implementations globally. She developed her expertise at PricewaterhouseCoopers, where she was a Partner responsible for operations and technology projects. She was a systems manager at Lehman Brothers and Merrill Lynch, as well as Assistant Budget Director for the City of New York. Charlie Keeling leads human capital development worldwide. He developed his human resource expertise at PricewaterhouseCoopers, where he was a Partner and global human resource leader, European human resource leader, and a financial management consultant at both Price Waterhouse and Coopers & Lybrand. He also held positions at TI Creda and TI Russell Hobbs. Christopher Kundro develops business and operational strategies for major players in the securities industry. Chris has extensive management and consulting experience in both the institutional and retail sectors. He was previously a senior manager in the Financial Services Practice for Deloitte Consulting. He also held positions at First Union, Bankers Trust, and Salomon Brothers. Joachim Lauterbach focuses on client relationships and business development in the central European markets. He was formerly Thomson Financial’s General Manager for Central Europe and member of the European Executive Committee. Previously at TIBCO Financial, Joachim was a business manager for Germany.

Lim Choo Peng is co-market leader for Singapore and South East Asia. Previously, he was President and CEO of the Singapore Stock Exchange. Under his leadership, it became the first stock exchange in Asia to implement a fully computerized trading system without a trading floor. He served on the ProTem Committee to merge the SES and SIMEX and as a manager at Neptune Orient Lines. Tony Malaty directs and delivers our market offering on new operating models. He was previously an Associate Partner at Andersen Consulting, where he led projects for the London Stock Exchange, a major central securities depository, and several global investment banks. He was also a consultant for Systemhouse, covering global investment banking. Ed Marcil is CFO. He is retired from IBM, where he was involved in IBM's international M&A activities. Geof Master is General Counsel. He was previously International General Counsel for EDS, where he supported the development of global business transaction strategy and international legal affairs. He has practiced commercial and tax law as an associate at the law firm of Dewey, Ballantine and as a Partner at the law firm of McGinnis, Lochbridge & Kilgore. Pedro Matthynssens, a Founding Partner of Capco, focuses on client relationships globally. His consulting expertise was developed during his 15-year career as a business development manager at Cimad Consultants/IBM Professional Services and as a management consultant with Ernst & Young, where he managed major financial services client responsibilities. David Myers specializes in trading and market infrastructure. With Andersen Consulting, he was previously a manager in the Technology Financial Markets Division. He held other positions at Deutsche Morgan Grenfell, Deutsche BĂśrse AG, and the Swiss Stock Exchange Association. John Owen, a Founding Partner of Capco, is market leader for the U.K. He developed his expertise at Bankers Trust, as Managing Director and Global Head of Derivatives Operations. He also served as Principal at IBM, where he developed a global capital markets consulting business. Prior to that, he was Executive Director and head of Global Derivatives Support at Union Bank of Switzerland.


Jef Peeters leads commercial operations and strategy development worldwide. He was Vice President of Strategic Marketing and Vice President of Operations Development for Coca-Cola's business in Asia. Previously, he was a Senior Consultant for strategy and organization at PricewaterhouseCoopers.

Jos Schmitt leads Market Infrastructure Solutions. He was formerly President of the Belgian Futures and Options Exchange and Clearing House, Chairman of the Belgian Market Authority, and advisor to the Board of the Brussels Stock Exchange. As a Senior Consultant at Arthur Andersen Consulting, he set up an automated equity trading system for the Brussels Stock Exchange.

Roger Preece leads the Capco Institute and specializes in knowledge management and dissemination. He was previously Managing Director and Head of Business Development at Sumitomo Finance. He also was Head of European Product Development for capital markets at Bank of America and held positions at Andersen Consulting and NatWest Investment Bank.

Bart Schutte focuses on e-business thought leadership, particularly e-commerce technologies and Internet business models. Formerly an Associate Partner at Andersen Consulting, he led e-business strategy and implementation for its energy industry practice.

Luc Philippi, a Founding Partner of Capco, leads client delivery in the U.S. and global resource management. He developed his expertise as International Delivery Manager, member of the capital markets management team, and head of the Euroclear department at Cimad Consultants/IBM Professional Services. Prior to that, he was a senior management consultant at Ernst & Young.

Andy Stewart designs and delivers large and complex projects for financial services companies. As Vice President and Head of Financial Services at Gemini Consulting, he led client relations and managed extensive projects for leading international investment banks. He is co-author of the World Wealth Report and the U.K. Private Wealth Report. Gilbert Swinkels specializes in web portal technology for financial services, software components for market operations, and large IT projects. He was formerly Managing Director of Internet and e-commerce developments at J.P. Morgan’s Euroclear Operations Center in Belgium.

Deborah Phillips specializes in human capital and global compensation and benefits. She was formerly a Managing Director, Director of Human Resources, and Director of Global Corporate Compensation and Benefits at Bankers Trust/Deutsche Bank. She also served as Director of Planning and Administration at Booz, Allen & Hamilton.

Kurt Vandenberg co-leads global technology product strategy. Previously as co-founder of Entropae, he was the Chief Technical Architect for the re-engineering of a major Japanese bank. Prior to that, he was Director of European/North American Operations for TIBCO Financial Systems and a research scientist at Honeywell, Inc.

Mark Reece specializes in market infrastructure and technology. Previously, he was an Associate Partner at Andersen Consulting, where he implemented trading systems for a major European exchange and analyzed its integration options. He also led a feasibility study to create a secure network around the City of London and other major financial centers.

Lieven Van den Brande, a Founding Partner of Capco, is co-market leader for Singapore and a thought leader in market infrastructure. Previously at Cimad Consultants/IBM Professional Services, he was business development manager for capital markets. He managed projects for the Belgian Futures and Options Exchange, the Belgian central securities depository, and Deutsche Börse Clearing AG.

Paul Reyniers focuses on client relationships globally. He was Chairman and Managing Partner of A.T. Kearney’s European Financial Services Practice, serving as global practice leader for capital markets and financial risk management. Prior to that, he was Chairman of the Global Risk Management Practice at Coopers & Lybrand and a Managing Partner in the Global Capital Markets Practice at Price Waterhouse.

Danny Vogt specializes in strategic change and complex programs in the investment banking sector. Previously at Warburg Dillon Read, he led cash management and Nostro integration between UBS and SBC. At UBS, he was Head of Strategy Implementation for the Trading and Sales Risk Management Division.

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I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them. I think Capco’s area of exper-


"I think Capco’s area of expertise is their vision of the changes taking place in the industry and their understanding of how to tackle them." Ronald Everaert, CEO, Mercator & Noordstar


thought Capco is committed equally to developing a vision of the future and the practical means to leverage opportunities created by that future.


The Capco Institute was created to ensure that employees and clients benefit from the knowledge available within the firm and in the marketplace. Its knowledge management, training, and research infrastructure supports this mission. The institute is the conduit through which thought leadership passes in and out of the organization. Our extensive industry participation and interaction with experts from academia, business, and government provide us with access to all levels of market intelligence. The Capco Institute regularly publishes the quarterly journal of financial transformation, financial transformation papers, and a daily briefing on financial transformation. The institute also partnered with Euromoney Books to publish Forming the Future of Finance: Mapping Paradigms, Creating Strategies.

Knowledge management Knowledge is the cornerstone of everything we do. The Capco Institute promotes the growth of intellectual capital and manages our research and training. Fostering a knowledge-sharing culture is an integral part of our strategy and is reflected in the decisions we make about hiring, promotion, compensation, and other rewards. We have also built an operational model that embeds a true ‘need to share’ in everyone's work, encourages collaboration and networking, and provides time to reflect and learn. Through training programs and other services, employees develop their skills in a way that supports the firm's vision and brings added value to our clients. Our research department helps expand our employees’ knowledge by keeping us apprised of significant industry trends. By managing and using our knowledge effectively, we bring clients solid solutions based on the expertise of the entire firm.


Capco publications

Academic alliances

journal: The Capco Institute journal of financial transformation The Capco Institute, in collaboration with our board of editors, publishes journal. It is the first high-level scholarly periodical dedicated to the advancement of leading thinking in the field of applied finance.

Through publication of the Capco Institute journal of financial transformation, we have developed extensive affiliations with leading academic thinkers. These relationships allow us to refine our understanding of the sector and enhance our visionary thinking in the field of financial transformation. Our affiliations include:

To subscribe, visit us at www.capco.com/journal.html

Franklin Allen Nippon Life Professor of Finance, The Wharton School, University of Pennsylvania

thoughts: The Capco Institute financial transformation paper Capco's thoughts are white papers that provide a synthesis of the latest thinking of our experts. We publish thoughts to keep clients informed of the latest innovations in the financial services sector.

Nicholas Economides Professor of Economics, Leonard N. Stern School of Business, New York University Herwig Langohr Professor of Finance and Banking, INSEAD

To view our thoughts publications, visit us at www.capco.com/thoughts.html

Donald Marchand Professor of Information Management and Strategy, International Institute for Management Development John McGee Professor of Strategic Management, Warwick Business School

bulletin: The Capco Institute daily briefing on financial transformation The Capco Institute publishes bulletin, a subscription news publication. This daily briefing on financial transformation provides insightful commentary on breaking news in financial services.

Paul Willman Professor of Organizational Behavior, Said Business School, Oxford University

To subscribe, visit us at www.capco.com/bulletin.html

Forming the Future of Finance: Mapping Paradigms, Creating Strategies This book, written in collaboration with Euromoney Books, contains discussions on four visions for the future created by Capco and the implications of each on the financial services industry.

Affiliations As a result of our thought leadership in the financial services sector, our partners are frequently asked to participate on key advisory committees and industry boards. We believe that sharing our expertise with the industry will allow us to work together to lead and shape the future of financial services. Some of our current affiliations include:

To order your copy, visit www.euromoneybooks.com

Securities Industry Association (T+1 initiative, Advisory Committee) The Securities Industry Association brings together the shared interests of more than 740 securities firms to accomplish common goals. International Operations Association (President's Advisory Committee) The International Operations Association promotes the development of cross-border investment activities. New York Stock Exchange (Operations Advisory Committee) The New York Stock Exchange is the world’s largest securities exchange. Bond Market Association The Bond Market Association represents securities firms and banks that underwrite, trade, and sell debt securities, both domestically and internationally.

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"The idea of having a ventures operation as part of the whole group is completely different – Capco wants to change things, and to change things you have to do things differently." Richard Kilsby, Vice Chairman, virt-x plc [a pan-European blue-chip market formed by SWX Swiss Exchange and Tradepoint Financial Networks]


ventures As an intregral part of our business model, Capco is a global entrepreneur that forms partnerships with clients to build business ventures, which generate recurring revenues. Capco has access to capital through a strategic partnership with a major venture capital firm.


Building new finance ventures

Core business sectors

Capco’s successful business-building experience and thought leadership in the financial services industry allow us to partner with clients to build new ventures that help form the future of finance. By leveraging the firm’s industry expertise, world-class talent, global network, and deal flow, we work with clients to form industry-transforming financial services businesses.

Capco applies its venture expertise to financial services, technology solutions, and infrastructure services providers that have the building blocks to become leaders in their financial services segments and to capture significant growth opportunities. We focus on: Technology-enabled businesses: These organizations reinvent business and economic models to capture hyper-growth opportunities and achieve radically improved cost and service models. Businesses might include innovative distribution companies for financial services and products; next-generation brokerage, insurance, and mortgage providers; and STP-enabled trading mechanisms for exchanges and new financial instruments.

Capco has superior capabilities for identifying very compelling opportunities, attracting proven entrepreneurs and management teams, accessing global capital, and significantly accelerating the growth and earnings potential of portfolio companies. Specifically, we: Leverage the expertise and active relationships of Capco’s financial services, technology, strategy, and venture experts to identify deal opportunities. Partnering with our clients also sources business and deal opportunities. This allows us to quickly identify opportunities with significant potential and to shape their growth strategies toward market leadership.

Innovative technology providers: Enterprises that employ emerging technologies as quasi-standards and become leading, next-generation technology solution providers in the finance sector. These businesses might, for example, provide nextgeneration CRM solutions; rules-based, Internet-enabled backoffice solutions; knowledge management solutions; micropayment systems; and access and connectivity technologies.

Are highly attractive to entrepreneurs and management teams because we provide access to funding and coaching, as well as contribute a broad range of services, exceptional pool of talent, industry contacts, and global network.

Industry-wide infrastructure services: Providers that address today’s huge redundancies in the finance industry and take advantage of the rapidly increasing need for shared, collaborative services. For example, they might include payment utilities, STP factories, banking and insurance processors, crossborder trading networks, and global custody service providers.

Accelerate the growth of portfolio companies by playing a high-impact, post-investment role and by providing market and technology research, strategy, project management, solution delivery, partnerships, recruiting, sales and marketing, and legal and administrative assistance.

Cross-industry collaborations: These ventures implement new markets and customer-driven partnerships between financial services providers and the players of other industries. B2B commerce clearing and settlement facilities, and telecom/ finance collaborations for micro-payments are examples of these types of collaborations. Spinoffs from existing players: We identify entrepreneurial initiatives in our investment sectors where independence and entrepreneurial business-building approaches will expedite development and create value. For example, these opportunities might include derivative back-office service providers and alternative trading platforms.

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"Capco has the industry experience, knowledge of subject matter, and the ability to deliver practical solutions to real business problems." Ahmad Abu El-Ata, Managing Director, Head of Group IT Office, CrĂŠdit Suisse Group


solutions Capco offers end-to-end, flexible, and customized solutions that combine value-added professional services with scalable technology, including business service providers (BSPs).


Solutions

Tools and Technology Products

A solution is a core area of expertise that brings together our thought leadership and the practical application of services and technology products. We customize these elements into integrated offerings that help clients increase efficiency and profitability.

Capco provides expertise across a range of business challenges, from developing strategies and assessing new business opportunities, to performance assessment and improvement and IT-based solution implementation. Whatever the engagement, and regardless of whether our software or venture capabilities are involved, we are driven by a desire to help our clients lead change in our industry.

Capco specializes in three areas of financial transformation: Operations & Technology Solutions can help solve the financial services sector's most pressing challenges, including T+1 and straight through processing (STP), commoditization, and disintermediation, as well as the threat posed by new entrants and new risk and capital adequacy regulations. Market Infrastructure Solutions help organizations tackle the challenges of user empowerment, globalization, exponential transaction growth, regulatory change, and new technologies. We also help the industry adapt to the new infrastructure landscape including multiple execution venues, central counterparts and netting, new connectivity standards, and global trading. Business Innovation Solutions develop innovative business strategies, sources, and solutions, as well as implement programs that help our clients bring technology-rich new ventures, new distribution channels, new products, and improvements to existing offerings to market.

Tools Central Counterparts Benchmarking Methodology is a valuechain driven central counterpart assessment tool, which includes benchmarking against the world’s leading central counterparts’ best practices. Connectivity Solution Suite provides methods and tools to align the connectivity and corporate strategy, as well as introduce agility principles into connectivity system design, build, and operation. The suite specifically addresses standards such as ISO15022 and SIX. Cost and Profitability System (CAPS) is a set of tools that provides customer- and product costing and profitability analysis, as well as operational performance measurement across multiple dimensions. The CAPS solution set combines activity-based costing and profitability analysis with technology components that can be tailored to provide management with detailed financial and operational performance indicators on a one-time or an ongoing basis. GSTP Toolkit provides direction, leadership, resources, and vision on how to implement and profit from the change in modality from labor-intensive cross-border back offices to exception-based workflow management. The toolkit includes connectivity and infrastructure build-outs, application-level connectivity strategy, legacy application integration, workflow management implementation, and business process re-engineering. Knowledge Management is a powerful set of tools and frameworks to help clients achieve significant performance improvements by more effectively managing the knowledge at the core of their business. We have combined thought leadership, practical experience, and change management skills with our deep understanding of the financial services business.


Market Infrastructure Toolkit provides vision, expertise, blueprints, and methodologies to define, design, implement, and operate order management, routing, trading, clearing, settlement, custody, and connectivity solutions for both the capital markets and B2B industry. The toolkit includes thirdparty software benchmarks, strategic assessment techniques, buy/build/partner scenario analyses, business case development techniques and benchmarks, as well as the capability to define requirements and specifications for build, reengineer, and integration.

Strategic Brand and Marketing combines strategic and tactical capabilities to deliver solutions — from customer needs/wants assessment, targetmarket identification, brand positioning, brand communication, marketing plan, and new product development, as well as brand portfolio management. STP Solutions Suite is a transaction-processing model and a series of analyses to determine readiness, investment requirements, and an optimal timeline for straight through processing and T+1 implementation. The Business Case also presents the Ten Building Blocks that industry participants should follow to achieve T+1.

Netting Solutions Suite is a transaction processing model and a series of analyses to determine readiness, investment requirements, and an optimal timeline for netting implementation.

Technology and Operations Recovery Service helps our clients with rapid and structured resolutions of major technology and operations problems. We provide the project management skills, tools, and expert resources required to diagnose the problem, quickly stabilize the situation, and implement short-term and long-term solutions.

New Operating Models such as Business Service Providers (BSPs) are distinct revenue-producing enterprises that provide business processes and technology to multiple clients. By outsourcing non-core business functions to BSPs, financial services companies enjoy increased efficiency and more sophisticated product delivery.

Technology Products Operations Risk Control helps clients define and implement a risk management process from setting policy to daily risk management. We also help clients operate their risk management processes until they are able to develop an in-house risk control capability.

COBASS, a component-based software solution, helps clients manage continuous market changes and provides superior service in a timely and cost-effective way. Centered around a high-performance positioning engine, COBASS offers a wide set of business and technical components for clearing and settlement, securities lending, corporate actions, order management, etc.

Project Management Office (PMO) is a MIS tool that allows project leaders to report and create a dashboard on the status of a number of projects simultaneously. Our PMO offering provides a comprehensive view of all projects, which can be tracked by multiple inputs, including deliverable, cost center, department, team, and date.

e-STP helps clients acquire and merge data from an unlimited number of disparate sources. The technology enables STP when it is used for cleansing reference data, tracking operational events, and monitoring financial transactions. e-STP is the only product that merges and cleans data and client records without first establishing a standard delivery format with all suppliers.

Rapid Establishment Model balances entrepreneurial speed and creativity with structured program and project management through visioning, business case development, mobilization, planning, and establishment to help turn clients’ ideas into profitable market propositions. The model spans governance, go-to-market operations, and technology streams of work.

Financial WebSuite is Capco’s family of Internet-based offerings that allow financial services companies to rapidly deliver customer-facing Internet solutions such as online banking, brokerage, insurance, and personal financial services. Financial WebSuite provides a common framework and a customizable set of web applications built on industry-standard software tools.

Solution Centers are a global resource for developing end-to-end solutions for online financial services, clearing and settlement, order management, and STP/T+1. As centers of expertise in technology and innovation, they are Capco’s preferred approach to project delivery. Solution Centers harness our design and implementation experience to offer our clients swift, cost-efficient, and superior solutions.

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Business alliances When clients hire Capco, they enlist the expertise of our professionals, as well as the expertise of hundreds of the most knowledgeable people in the industry. That’s because we take an open-arms, collaborative approach to revolutionizing the financial services industry. At Capco, we have an insatiable desire to learn from our peers, our alliances, and from one another. This intellectual capital represents the genetic code for the evolution of the global financial services sector. And it allows us to deliver the best practices, next-generation technology, and inventive solutions our clients need. These world-class companies include: Algorithmics Creates risk management solutions and is a certified Algo Integrator. BEA Provides middleware for enterprise applications, as well as enhances our e-business and systems integration services. FTI Supports our innovative middleoffice offerings. Microsoft Partners with Capco on the .NET early-adopter program. Mint Software Technologies Provides intelligent middleware and enterprise application integration solutions focused exclusively on the financial services sector. Reuters Delivers integrated trading and technology solutions for major companies globally. Sybase Develops end-to-end business processes across legacy applications, Internet-facing applications, and financial networks. SeeBeyond Supplies enterprise-wide solutions for integrating applications, databases, and legacy systems in real-time and batch. Sun Microsystems Underpins all of our solutions by providing clients with the flexibility to respond to the changing market environment.

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Reuters Consulting: a partnership solution Reuters provides integrated trading and technology solutions for major global financial institutions and has a corporate vision ‘to make financial markets really work on the Internet.’ It has a rich portfolio of customers and products, many of which are leaders in their segments. During the course of 2000, the company decided to add valueadded consulting services to its delivery of integrated business solutions. Its goal was to move the center of gravity from an IT-systems project model toward a business improvement and integration model.

Enabling STP Early this year, Reuters Consulting was formed and began a working relationship with Capco on a number of customer projects. It was clear that Capco — with a corporate mission to ‘help form the future of the financial services industry’ — and Reuters have complementary visions, skills, and experience in the area of electronic straight through processing, system integration, and financial application. The partnership was made formal in April 2001.

Enhancing customer relationship management Together, Capco and Reuters are working with a leading institutional European bank to web-enable its customer relationship management (CRM) capabilities. The project is based on Capco’s deep understanding of the strategic direction and operation of the financial markets plus the strength of Reuters’ global reach, products, and technology. Capco is providing insight, experience, direction, program management, and strategic consulting on general systems integration and business transformation. Reuters is bringing the technology products and related professional services.

Breakthrough solutions The partnership has enhanced each of our firms’ capabilities while providing an inventive solution to transforming client businesses. Together, Capco and Reuters are implementing breakthrough business solutions that release profits and inspire customer loyalty.


Components are the mature and pragmatic translation of these analyses and design phases into real architectures and implementation. The focus on a coarse granularity, the emphasis on the interface definition, and the appearance of technology component models (J2EE and COM) boosted development efficiency and helped turn the software industry into an industrial activity.

Technology: foundation for the future by David Bartoletti and Kurt Vanderburg, Partners, Capco There is new perspective on the dependencies of application architecture that describes the evolution of objects, to components, to enterprise application integration (EAI), to e-services.1 The evolution from objects to e-services began with objects. Object-oriented thinking gave us a quantum leap in adequately describing the functional requirements of new applications. Its value lies in the analysis and design phase, with its core concept (data, method collocation), methodology (iterative development), and formalism (UML).

There are many challenges in outlining a services architecture that will allow EAI. Message-oriented middleware and an asynchronous, event-based communication model are the cornerstones of this new architecture. The Internet provided the information highway and universal communication network to glue all our different organizations and applications. Within the financial sector, the Internet initiated a revolution in business thinking and new applications. E-business is thriving. E-brokerage services, ECNs, payment services, new marketplaces for financial instruments, and new market infrastructures are appearing. Within the financial world, the B2B market industry is developing rapidly. Extended markup language (XML), and the protocol layers (HTTP and SOAP) will allow seamless web-to-web integration. The synergy of interface thinking (components), messaging (EAI), a common communications infrastructure (Internet), and self-descriptive data (XML) will cause a revolution in this marketplace. Straight through processing is no buzzword or visionary thinking; it will be enabled through the right usage of these powerful bricks. Capco has understood this from the beginning. Within our Solution Centers, we strictly apply object-oriented methodology. COBASS, which is component-based with J2EE technology, is a financial transaction processing framework and baseline platform for our clearing and settlement and order-management solutions. e-STP, a java-based data management and cleansing application, exploits the power of XML messaging to bring together disparate data sources. And portal and connectivity hub expertise are core to the web services debate. Capco has technology partnerships with the leading players in this field. We have agreements with BEA systems and Sun Microsystems (J2EE), SeeBeyond and Neon (Sybase) for EAI, and recently we signed with Microsoft’s .NET early-adopter program. Technology will remain the foundation of the future of finance. Increased use of component architectures, particularly J2EE and .NET, accelerates a move to ASP and BSP business models. These new business models, in turn, help to significantly reduce development time and cost, further driving change in the financial marketplace.

1 The Gartner Group, "Objects to E-Services: Best ‘E-Design’ Practices Emerging" research note, August 2, 2000.

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"I like working with Capco because their people are conceptually strong and have the practical experience necessary to implement the technology." John D. Panchery, Vice President and Managing Director, Systems and Technology, Securities Industry Association [SIA]


Clients AXA Bank/Banque Degroof Bear Stearns BNP Paribas Clearstream Commerzbank Credit Suisse Group Credit Suisse First Boston Deutsche Bank Dexia First Union Fortis Goldman Sachs HypoVereinsbank AG Instinet ING Group ING/BBL JP Morgan Chase & Co. Kustodian Penjaminan Efek Indonesia (KSEI) Kustodian Sentral Efek Indonesia (FPEI) London Clearing House Mercator & Noordstar Merrill Lynch NASDAQ Omgeo Pershing Reuters Royal Bank of Scotland/NatWest Securities Industry Association Singapore Exchange Société Générale S.W.I.F.T. Thomas Weisel Partners Thomson Financial ESG

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Investors From the outset, Capco has captured the interest of major financial institutions, private equity funds, and venture capitalists. Their investments have supported our focused and strategic growth over the past three years. Some key investors:

ABN Amro Baystar Capital Capco partners and employees Edgewater Private Equity Fund Fortis GIMV KBC LJH Private Capital Mercator & Noordstar (La Baloise) Thaler Bank Thomas Weisel Capital Partners Although Capco is not a publicly traded company, we are interested in hearing from institutions and other qualified investors. For more information, please contact: investor.relations@capco.com

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Offices

UNITED KINGDOM

BELGIUM

London Capco Clements House 14-18 Gresham Street London EC2V 7JE

Antwerp Capco Groenenborgerlaan 16 2610 Antwerp

T + 44 20 7367 1000 F + 44 20 7367 1001

T + 32 3 740 10 00 F + 32 3 740 10 01 UNITED STATES Louvain-la-Neuve Capco Parc Scientifique Avenue Einstein 2A 1348 Louvain-la-Neuve

New York Capco 120 Broadway, 15th Floor New York, NY 10271

T + 32 10 48 90 00 F + 32 10 48 90 01

T + 1 212 284 8600 F + 1 212 284 8601

FRANCE

San Francisco Capco One Market Plaza Spear Towers, 35th Floor San Francisco, CA 94105

Paris Capco 112, avenue Kléber 75784 Paris Cédex 16

T + 1 415 445 0968 F + 1 415 445 9173 Boston Capco Riverside Center 275 Grove Street, 4th Floor Newton, MA 02466

T + 33 1 47 55 30 90 F + 33 1 47 55 30 91

GERMANY T + 1 617 262 1135 F + 1 617 262 3711 Frankfurt Capco Messeturm Friedrich-Ebert-Anlage 49 60308 Frankfurt am Main T + 49 69 97 54 43 42 F + 49 69 97 54 49 21

SINGAPORE Singapore Capco 80 Raffles Place #36-01 UOB Plaza 1 Singapore 048624 T + 65 532 3383 F + 65 532 3382

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"In the financial world, Capco's reputation is made. The consultants ‌ are among the most highly regarded on the planet. And it rubs shoulders with the McKinseys, Accentures, and PricewaterhouseCoopers of this world." L’Echo, March 15, 2001


Colophon Capco Kristien Cornette, Nick Hahn, Lane Mitchell, and Roland Singer

Production Hilde Princen and Pieter Vereertbrugghen, Cypres

Design & layout Franky Claeys @ design.nation

Photography Young Photographers United

Prepress Prepress Xtensions, Belgium

Printing www.stockmans.be

Š 2001 The Capital Markets Company, N.V. All rights reserved. This book may not be duplicated in any way without the express written consent of the publisher except in the form of brief excerpts or quotations for review purposes. Making copies of this book or any portion thereof for any purpose other than your own is a violation of copyright law.

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Capco Corporate Brochure  

A corporate brochure for the boutique technology consulting firm Capco.

Capco Corporate Brochure  

A corporate brochure for the boutique technology consulting firm Capco.

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