Toronto Dominion Bank, the fifth-largest in Canada, has entered into a multimillion-dollar alliance with Financial Technologies International for technology to consolidate back-office securities operations.
The software, using so-called open systems architecture, is expected to improve productivity at the $75 billion-asset bank.
While bank officials would not disclose the deal's value, W. Keith Gray, an executive vice president, called it a multimillion-dollar investment that is "one of the largest systems projects ever undertaken by the bank."
Toronto Dominion plans to bring operations for trust, brokerage, global custody, mutual funds, and investment management under the FTI software, called AMS/Open.
"You're buying an architecture to build a system on," said Mr. Gray. "The data model will provide one repository of customer, financial, and securities data."
The bank has set a three-year timetable for convening the five lines of business onto the AMS/Open system. The initial application, for global custody, is expected to take about 12 months to get up and running. Brokerage and trust are to follow.
Mr. Gray added that the open systems design will give the bank the option of choosing applications from other vendors. "We like what we see with FTI," he said, however.
Until recently, FTI, a 10-year-old technology firm based in New York, had made its mark by selling trust systems to regional and superregional banks. In 1988, the firm set out to build an entirely new system from scratch.
To develop the data model and applications, FTI has worked with a number of large domestic and international banks, including Northern Trust Co., Chicago, Wilmington (Del.) Trust Corp., Wachovia Corp., Winston-Salem, N.C., and Mees Pierson Holding, Amsterdam.
Chuck Lewis, FTI's president and chief operating officer, noted that development costs for the systems were in the $50 million range. "We are the only vendor of banking securities software that totally has rewritten software to take advantage of new technology" and changing business needs, he said.
Given the backdrop of a number of high-profile failures of complex trust systems developed by other vendors, Mr. Lewis said building an entirely new system was challenging.
FTI was able to avoid pitfalls, he said, by relying on the active participation of banks during development of each component.
"As each piece came out of the development cycle, it was built according to open design principles," said Mr. Lewis. "Each one of those results in itself is a finished product that the banks could use."
The decision to use the FTI technology came after a two-year search, said Mr. Gray of Toronto Dominion.
The bank had decided four years ago it wanted to reduce redundancies in the processing tasks for brokerage, trust, global custody, mutual funds, and investment management.
Further, he said, the old systems had "kind of grown like topsy," and "new systems were piled on top of each other."
When the new system is installed, Mr. Gray said, it should offer "significant new automation of our multicurrency accounting and reporting, transaction processing, information access, client service, and marketing functions."
Although the bank has been hiring recently due to increased volumes of business, Mr. Gray said, the new system should slow down the growth in staff.