Open Finance pioneer LUXHUB, together with  banking  and  insurance  software  leader  VERMEG,  are  today  announcing  a  new partnership around the collection and processing of custodian data, available to insurance companies. Custodix Hub, through the combined tech expertise and industry knowledge of both partners, facilitates the flows and financial data exchanges between custodian banks and insurance companies, in a trusted and secure environment provided by LUXHUB. The two companies also announce a successful POC (Proof of Concept) with a leading player in Luxembourg. 

Tackling the financial data collecting and processing challenges 

Nowadays, life insurance companies, as well as other external asset management companies, face  key  challenges  when  collecting  and  processing  data  from  custodian  banks. “Data collection represents a significant cost due to the multiplicity of custodians, the use of multiple formats and the volume of transactions or the number of failures that require corrections,” explains Eric  Bemelmans,  Director,  Digital  Transformation,  at  VERMEG.  He  adds: “Maintenance and scalability of custodian interfaces represents a significant fixed cost and heavy workload for internal teams”.

Another key challenge for insurance companies is the successful integration of increasingly complex  data  -  position  reporting,  securities  and  cash  transactions,  new  asset  classes, derivatives,  Solvency  2,  etc.  It  requires  functional  expertise  which,  through  the  innovative partnership and solution, is provided by VERMEG. Finally, technical expertise is crucial to master the multiple formats used by the custodian banks: Swift MT or MX files, proprietary formats, XML files, FIX, web services. 

“Often, the different custodian banks send information in theirown format. This requires life insurance  companies  to  execute  a  recurrent  and  often  manual  process  of  data  retrieval, formatting, reconciliation and injection into their Portfolio Management System.

“With this innovative solution, we are mutualizing the effort, for all insurers, and we will have more impact toward the custodian banks to request more automation. At the end of the day, insurers will be able to continue to focus on their core business,” adds Eric Bemelmans. 

A central Hub

Through  this  partnership,  VERMEG’s  innovative  solution  becomes  available  in  LUXHUB’s central platform, linking insurance companies and depositary banks. The Fintech, which was built by compliance and continues to be driven by innovation, offers a seamless flow and exchange of data, in a trusted, secure and proven environment. 

“Through the automatic data injection into the PMS, insurers will be able to use increased quality data while reducing their operational risks through an elimination of manual tasks. They will also gain in efficiency through automation, with a significant reduction of costs," underlines Claude Meurisse, COO, LUXHUB. 

Custodix Hub has actually been tested by a key local player over the summer, in a Proof of Concept (PoC) project. It proved to be efficient over this period, as it validated the vision and ideas of the life insurance companies, as well as LUXHUB and VERMEG’s ability to help the wealth management industry in its digitalization process. 

A win-win partnership – leveraging each other’s tech and business knowledge 

VERMEG is a leader in digital transformation with a business vertical approach, renowned experts, and ready to use digital apps. VERMEG has been offering custodian banks integration services and solutions for its existing clients in Luxembourg, and this for many years. 

“To offer the service and the solution with the right level of security and scalability, partnering with leading Fintech LUXHUB was the right and obvious choice. Together we bring more value to the insurance sector, as well as operational efficiency, service efficiency and innovation in an  "Open"  and  interconnected  world,”  highlights Anne Thiel, Regional Sales Executive, VERMEG. 

On the other hand, LUXHUB, with its PFS – Professional of the Financial Sector – status and its technical expertise in connecting the different stakeholders of the financial services industry,  provides a trusted platform and secure IT Infrastructure. 

“As advocated by LUXHUB since its very inception, it is the collaboration of specialized actors and mutualization of knowledge and efforts that will help with the rapid and very necessary transformation of the financial sector. 

“Eventually, the insurance sector could greatly benefit from this innovative partnership, by gaining significant time when collecting data from depositary banks, drastically improving the customer  experience,  and  pleasing  their  end-clients  with  a  unique  and  efficient  service,” concludes Claude Meurisse.