CIBC Wealth Management Moves Off Site

By inking an outsourcing agreement with an application service provider (ASP) to manage and host its wealth management business, Canadian Imperial Bank of Commerce is taking the burden of maintaining its retirement income fund (RIF) and life income fund (LIF) portfolios out of the hands of its back office processors at headquarters.

CIBC is underway in the first phase of a three-year agreement and a $2.5 million investment with Ezenet, a Toronto-based ASP, that includes all ASP service fees, development of customized software and delivery of applications at branch level associated with wealth management accounts.

Approximately 40 internal users will be live on the system in October upon completion of phase one, which includes setting up the account holding and order systems required to execute transactions. Phase two, scheduled for next year, will include creating an interface to deliver operations to CIBC's remote sales force of approximately 1,700 agents.

CIBC's 1.5 million wealth management customers will be given Web access to their wealth management accounts, which total 115,000 and comprise $163 billion in assets. "This platform will consolidate all customer accounts into one manageable relationship for us," said Mike Boluch, executive director and chief information officer of wealth management technology at Toronto-based CIBC. Ezenet's technology can be easily scaled to add new applications and capabilities as customers' needs grow, he added.

"We are positioning ourselves to manage all services, both from internal and external locations, via the Web," said Boluch. "To achieve this, we need a better platform, one that can be integrated with internal systems to deliver new services. This agreement will give us the diligence to do that."

An RIF-similar to an IRA, 401(k) or Keough account in the United States-is a tax sheltered vehicle for Canadian customers saving for retirement. An LIF is a pension product offered by Canadian institutions like CIBC. In the past, all accounts were processed at bank branches, batched and sent to headquarters where they were managed by corporate back office systems. CIBC back office processors monitored and maintained all account tax calculations and statements.

Through Ezenet, a Microsoft Internet Explorer browser will give users at branch-level real-time access to the application and accounts electronically, and all data can be updated immediately upon customer request.

"This new technology will enable CIBC to broaden the access of the RIF and LIF portfolios to more delivery channels, touching the customers where they want to interact with the bank," Boluch explained. "CIBC will better achieve this by relying on our outsourcer to host and support our RIF and LIF business."

Ezenet's transaction-driven architecture offers an enterprise view of the customer, holding all events-financial and non-financial-online. Transactions are automatically handled in real-time, 24 hours a day, seven days a week. Provided as a turnkey solution or linked to current legacy systems, Ezenet's modular architecture protects current technology investments.

The previous system-a DOS-based application called Financial Products Manager from an Ezenet subsidiary-was installed 10 years ago when the bank was managing less than 2,500 wealth management accounts, said Jay Cashmore, president and CEO of Ezenet. "The bank has significantly grown since then, and the system has hit a wall. It requires a high cost to maintain and COBOL skills are scarce. They need the capacity to move on."

CIBC and Ezenet declined to reveal cost savings or return on investment, but the integration of multiple solutions, including wealth management systems, is expected to provide a payback. "Systems originally siloed on an internal mainframe will be consolidated onto a centralized system that supports applications in multiple locations, thus offering a significant cost justification," Cashmore explained.