A quick introduction into mortgage banks and covered bonds

Issuing covered bonds differs quite a lot from traditional banking. By Finnish law, the organisation that can issue covered bond is called mortgage bank and mortgage banks often form their own separate companies in the organisation of banks. Banks in Finland can also begin issuing covered bonds by having their existing licence extended to mortgage banking.

In Finland, mortgage banks even have their own legislation (Act on Mortgage Credit Banks 688/2010). According to the Act, a mortgage credit bank is a credit institution in the form of a limited company, the purpose of which is to grant mortgage credits and public-sector credits as well as to issue bonds with mortgage collateral and bonds with public-sector collateral as referred to in the Act. Bonds with mortgage collateral and bonds with public-sector collateral are also simply referred to as covered bonds. This law will actually be renewed soon because of the harmonisation of the EU covered bond framework. The new law is currently going through the ratification process in the Finnish Parliament.

To begin covered bond issuing requires that the bank or financial organisation has a sufficient amount of mortgage-backed consumer or housing company loans. Mortgage banks issue covered bonds which are secured by mortgage loans that meet business criteria (mores specifically, collateral is formed by the interest cash flows of the loans and by repayments of principal), which are offered to the financial markets as an investment target.

In practice, then, covered bonds are a means of raising funds for retail banks, enabling the bank to borrow funds from the financial markets (investors) more cheaply, in other words, at a lower margin than by using other types of collateral. Raising funds in this way is affordable because a covered bond is a highly reliable and safe investment for the investor. Normally, only institutional investors such as pension insurance companies and governments (e.g. the Bank of Finland) can invest in covered bonds. Private investors are able to participate in the investments mainly through trust funds. When the bonds are issued, the bank applies for a credit rating for the investment instrument from a credit rating agency. The received rating is typically very good.

A bank can either have a deposit surplus or a deposit deficit. Finnish banks mainly have deposit deficits, meaning that the difference between their retail deposits and loans to the public is negative. Covered bonds do not offer any notable benefits for a bank with a deposit surplus, since such a bank doesn’t necessarily have the need to seek funding from the market or have anything to gain from it. If there are enough of appropriate mortgage loans, covered bonds are by far the most profitable means of raising funds for banks which are showing a deposit deficit.

Developed by Evitec, Evitec Covered Bonds automates complex processes

The systems used to maintain the covered bond pool have typically been the banks’ own. Normally, they’ve been based on solutions such as reporting systems which are difficult to develop and maintain. In addition, these internal systems often turn the issuance of bonds and the maintenance of the pool into laborious tasks with a poor degree of automation. These manual processes are time-consuming and prone to error. When it comes to covered bond-related things, especially, drawing up reports for various parties, such as credit rating institutions and the financial supervisory authority, can be cumbersome and time-consuming.

Evitec Covered Bonds is a customised ERP system, designed to facilitate the mortgage bank’s maintenance tasks and automatically handle most of their work steps. Among other things, our product automates the regulatory assessment of loans, calculation and analysis of pooling and cash flows, alerts in problem situations and creates reports for business, authorities and credit rating institutions.

The advantage covered bond has over other bank funding instruments is clear: according to one of our clients’ calculations, the decreased costs of raising funds means that our system paid for itself in no more than 18 months.

Evitec Covered Bonds is Finland’s market leader in covered bond pooling systems. Over 40 per cent of Finland’s covered bond base is processed in our system. Financial sector institutions such as S-Pankki, Hypo, Oma Säästöpankki and OP are already using our product. In addition, we are running several sales processes at different phases of the cycle, both in Finland and abroad.

We haven’t rested on our laurels: we are currently modernising our system in order to be able to offer our covered bond pooling system also as a cloud-based SaaS service in the future. Earlier this year, OP issued Finland’s first green covered bond. Our covered bond pooling system ensures that the bond has a sufficient amount of green collateral on a daily basis. The Evitec Covered Bonds product can thus also be used in the pooling of collateral for green bonds, as long as the bank’s reasoning about the greenness of the loan collateral is correct. OP has done great pioneering work in Finland by analysing the greenness of housing collateral, and the results of this analysis are now being used in the pooling system. In the coming years, ESG will be a major theme in the financial sector, so it’s wonderful to be involved in promoting this important issue.

How did we get here and what have we learnt?

The idea of Evitec Covered Bonds saw the light of day in 2010 when the mortgage bank OP-Asuntoluottopankki (OPA) needed a new system for issuing covered bonds. The implementation of the system took a couple of years, and in 2013 OPA introduced the versatile new system which adapted to the intermediate loan model pursued by OP. When it comes to issuing covered bonds, OP is a different type of financial group, as it consists of independent member banks and the group’s central organisation with its subsidiaries.

Initially, the system was supposed to be customised for a specific need OP had, but it didn’t take long for us to realise that there could be a broader demand for the system in Finland. At the time, Finland still had many banks which had a deposit deficit, but which did not have a system for issuing covered bonds. We decided to invest in product development, and in 2016 the Mortgage Society of Finland (Hypo) became Evitec’s second covered bond pooling system client. Hypo was also our first customer to use the so-called own balance sheet model. Hypo extended the bank’s licence to mortgage bank operations and didn’t establish a separate mortgage bank.

After the implementation of Hypo’s covered bonds system, we carried out several implementation projects in a short period of time. The implementation project of Oma Säästöpankki was completed in 2017, and S-Pankki’s system was introduced in 2019.

The hectic years we spent working on the product managed to make the system the market leader in Finland. Simultaneously, the size of Evitec Covered Bonds team has grown from a development team of a couple of people to a financial organisation of more than ten experts. Evitec Covered Bonds’ development team is very familiar with issuing covered bonds, giving us a competitive edge in this business area, which is clearly different from traditional banking. Along the way, we’ve learnt a lot about bank financing and covered bonds.

For us, one of the biggest learning points has been the realisation that if you want to succeed, you need to trust your own vision and not be afraid of embracing new ideas. There was a market gap for covered bonds in Finland. There was no good system in place but at the same time there were several banks which were starting to realise the benefits of using covered bonds for financing. If Evitec had not filled the gap in the market, it would have been filled by someone else. In Finland, as elsewhere, significant system investments are often snatched by large international players, which does not benefit the Finnish economy in the long run. However, we have already set the ball rolling in Europe and have plans of launching Evitec Covered Bonds in the international market.

When an insurer plans a system renewal, the primary focus is usually on how the new system supports needs today and in the future. However, few insurance companies start from scratch. Especially within life insurance, policies may be older than 50 years. Therefore, the migration of run-off portfolios usually pops up at some point during the renewal project.

Older systems often have an “uncontrolled flexibility”, a feature that originally was regarded quite handy. Individual policy details could be modified in many ways, and not all information had a designated place or format. Thus, over time, users may have entered the same information in different places and, for example, dates in different formats. Older policies also do not always have all the information required by the new structure; in which case the policy information needs to be enriched. Not to mention file formats, which have changed over the years. There are certainly many more examples. And now, 15–20 years later, when this rather mixed data should be adapted to the structures of the new system, we are faced with a data cleaning task. The scope of a migration project can often be bit of a surprise, but luckily there are tools available to help.

The power of collaboration

In data migration the cooperation between the insurance company and the system supplier is key. The insurance company knows its old products and can foresee some of the challenges in the data structures. The system supplier on the other hand, knows inside out the logic and structure of the new system. When a mechanism for checking the quality and consistency of the data is created in between, even a difficult migration becomes easier.

The three phases of migration

Data migration can be divided into three phases. In the first phase, the migration is planned, and the portfolios are studied to the smallest details. First steps are taken with smaller test data and the creation of data mapping rules starts. At the same time, the insurance company often considers whether some product portfolios can be combined to simplify the management of portfolios in the future.

In the next phase, our conversion tool will take centre stage. It is used to check whether the data to be migrated is consistent and compatible with the new system. Rarely, if ever, is older data ready at once. The conversion tool provides feedback on differences and inconsistencies, such as data fields that cannot be matched in the new structure, missing data fields, or data in an inappropriate format.

This is where the actual data cleaning begins. The same data may be run through the conversion tool several times until it can be stamped as OK. Finally, a policy lifecycle testing will be done to ensure that everything matches in the future as well. For the work to progress promptly, the conversion tool is made available also for the insurance company. Hence, the actual experts of the portfolios and those working on data cleaning can independently test the changes and updates. All in all, a time-consuming phase, but the work is rewarded in the last phase.

The actual migration is often the fastest phase. When the old data has been processed and its compatibility has been verified, this is largely a technical routine, where the converted policies smoothly float into the new system. As a final check, the outcome is reconciled with the source data.

Extensive experience of migrations

In addition to the conversion tool, Evitec Life‘s accurate description of the data structure makes migration work significantly easier. The description gives the customer a clear view of which information is needed and in which format.

At Evitec we have carried out system migrations for several decades. We have converted nearly one hundred portfolios and hundreds of thousands of policies. So, it’s fair to say that our experience has built up over time and our migration process and tools have been put to the test in many demanding projects.

When I was watching the excellent Adam McKay film The Big Short originally released back in 2015, the first thought to pop into my head was: “Finally a movie that will explain to my parents why we make these systems for banks!” In the film, the actress Margot Robbie, soaking in a bubble bath, explains how the derivatives that launched the financial crisis in the U.S. in 2007 were based on covered bonds. The scene was an ironic take on the fact that few people would normally have the patience to listen to long winded explanations riddled with financial terminology. The product structure was so complex that it concealed as well as concentrated the underlying risks of the housing market.

In Finland, the situation has been better, but the fundamental mechanism is still the same. Our mortgages are mainly financed by foreign investors, not deposits. These investors receive mortgages as collateral for the money they lend. The interest rate on the money provided by the investors depends on the quality of the collateral. The better the collateral, the lower the interest rate. The quality of Finnish housing collateral has been good, but recently a noticeable risk has arisen especially in regions experiencing net outflows. This calls for transparency also in Finland in order to ensure that the collateral meets the investors’ and credit rating institutions’ criteria. At best, the nearly one hundred reports targeted at different agencies are generated automatically, at worst by dozens of people manually typing them into Excel spreadsheets.

The required transparency and quality of reporting is one of the reasons why the process needs a separate system. Another one concerns daily optimisation: Collateral is mobile by nature, as homes are sold and purchased and loans are paid back every day. Insolvency and credit losses are part of the lenders’ daily life. The handling of hundreds of thousands of collateral assets requires that the bank have a safety margin to ensure the availability of collateral. The smaller this safety margin can be made, the more the bank is able to obtain external funding.

Our Evitec Covered Bonds is an Enterprise Resource Planning or ERP system for a bank issuing covered bonds. According to our estimate, our system processes over 40 per cent of Finnish mortgages as it optimises collateral for covered bonds. Our users include OP, the recently listed OmaSp, S-Bank and Hypo (The Mortgage Society of Finland), the only credit institution in Finland specialising in housing. The reliability of the system and service thus has a great social importance, as is the case with Profit Software’s products more broadly. We have comprehensive expertise in mortgage bank IT systems that meet legal requirements. We are happy to help you launch or automatise your business or modernise your existing system.

Perttu Heinonen, SVP Consulting Financial Services, Evitec

When discussing a system renewal, hot topics are amongst other digitalization, automation, conversions, and migration. And nothing wrong with these, all important factors ensuring the new system operates as whished and delivers the expected benefit. But will a system renewal bring to the users something in addition to a new interface?

”We’ve always done it like this”

I’m sure we have all sometime come across the saying “we’ve always done it like this”. Same attitude can appear also during a system renewal. When the automatization level increases, the amount of routine manual work decreases. And the logic of the new system might differ from the old one. These factors automatically lead to changes also in work processes. Therefore, a system renewal should be seen as a more holistic renewal, not just a shift in technology. For the users this means getting used to both a new interface as well as new work processes and routines.

Technical and mental transformation

The project team members get to know the new operating platform stepwise. Demos of part deliveries and particularly testing phase are great moments to discuss the functionalities of the new system and listen to the system vendors viewpoints of different solutions. These are also natural moments for reviewing current processes and routines and when needed, form new ones.

Also, the trust in the new system and the rationality for the new work routines build up during the project. Project team members have plenty of time to get used to the changes and go through a mental transformation from the old to the new era.

When the launch approaches and rest of the organisation is brought along, the newcomers will not have the same timeframe for getting acquainted with all new. For them, the pilot phase is often their first touch point with the new system and work processes but as the pilot is a much shorter phase than the project, the rest of the organization needs to absorb all new much faster. Now the project team members have a new important role as the ambassadors of the new ear. They can support and rationalize the new processes and help to smoothen the transition. As the rest of the organization will most likely have same kind of questions as the project team members, so who is better to answer them than those who already have been through this phase.

Adjustable standard system

If some part of the deliverable system does not seem to quite fit into the insurers operations, customer specific adjustments are a good solution. Evitec Life is a standard system developed for life insurers for administering pension, savings and risk insurance policies and claims. Evitec Life has a parametrized product structure allowing a flexible product configuration. Additionally various system functionalities can be modified according to customer needs. Therefore, each delivery is to some extent customer specific, although the base is the same. We are our customers partners and system renewals are planned, tested, and implemented in close co-operation. By this, we can deliver a solution that supports the customers individual products, needs and procedures.

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Got interested? Contact sales@evitec.com

Payment Services Directive 2 (PSD2) and Open Banking opened a few years ago a whole new world for handling payments. Now at the cash register you can just flash your smartwatch and pay online shopping with just a few clicks. Open Banking brought new players alongside with the banks, focusing on handling payment transactions. The eagerness to jump specifically into this opportunity is easily understandable when considering that for example in 2021 Finnish pay cards were used 1,9 billion times. Already a small slice of these transactions offers a decent revenue.

For the financial market, PSD2 was the prelude for sharing information more openly than before. Now same topic is discussed also in insurance industry as “Open Insurance” seeks its’ form. But what does Open Insurance mean and what is it aiming at? There isn’t yet a uniform definition. European Insurance and Occupational Pension Authority (EIOPA) published in 2021 a Discussion Paper ”Open Insurance: Accessing and sharing insurance related data”, which is based on a very broad definition: “Covering accessing and sharing insurance-related personal and non-personal data usually via APIs”. EIOPA states increased innovation, competition, and efficiency as main goals.

What would sharing of insurance information enable?

When considering how information dense insurances are and how information generally today can be utilized for various use cases, it’s clear that open sharing of insurance information would enable many kinds of product and service innovation. Still, it should be noted that insurers cannot freely share information. In PSD2 the customer manages their information and decides what and with whom to share. This should push innovation to be highly customer centric and is a starting point for new competitive factors.

When the customer holds insurances in several companies, sharing would enable collecting the scattered information in one place. The customer would get an overall view of their coverage making it easier to get insurance guidance based on correct information and make it easier to ask for offers. Especially In Finland, collecting information of occupational pension and other pension saving in one place could be a very useful use case, Swedish minPension service being an excellent example of this idea.

Claims management is a critical point in client relationship and there are certainly many use cases for making that smoother. For example, what if my flight is delayed more than 4 hours, which is the threshold entitling me to a compensation from my travel insurance? Could the information about the delay go directly from the airline to my insurer and the compensation be automatically paid to my bank account?

Interfaces in key position

Interfaces are a prerequisite for sharing and receiving information, but they might also turn out to be road blockers. This was experienced with PDS2, different standards for interfaces and APIs complicate the development of fluent ecosystem. Let’s hope this experience is taken into consideration when the Open Insurance directive is taking its form.

Additionally, the aging IT infrastructure of the insurers will set its own obstacles. When interfaces and APIs play a central role in digitalization, influencing many processes already today, many insurers are pondering about the best solution in the long run. Continue building upon an aging technology, or has the time come to renew core systems and start capitalizing on the benefits of digitalization?

The future of information sharing

Will Open Insurance cause a same kind of revolution as PSD2 did for mobile payment? Probably not, as within insurance there is not one, even closely, similarly frequented transaction. Also, the Open Insurance directive seems to proceed rather slowly with EU.

There are still many question marks attached to Open Insurance. Even so, the directive will come to force at some point. Therefore, it’s good to start evaluating how and with what kind of solutions to prepare oneself for the possibilities Open Insurance offers.

Pensions seem to be a hot potato in the EU.

Last Autumn during the European Retirement Week Insurance Europe published the results of a survey on how EU citizens are preparing for their livelihood during retirement. The comparison between the 16 countries participating in the survey, revealed that only 40 % of Finns are privately saving for retirement. The overall average was 62 %, leaving Finns far behind. On the other hand, the Finnish national occupational pension system has been ranked as one of the best in the world in many studies, but will the base pension be enough for future pensioneers? A good question anybody should occasionally ponder on.

The same question has been raised in EU in larger scale. Within EU there are several undertakings aiming at encouraging citizens to private pension saving. PEPP (Pan-European Personal Pension) aims at lowering the barrier for starting pension saving, in addition to which EIOPA (European Insurance and Occupational Pension Association) recently commented EC’s proposal on how to increase EU citizens knowledge of their future retirement income level.

The proposed Pension Tracking System (PTS) would combine all pension saving, both statutory and private. This would give a realistic and up-to date view of the overall retirement income. Seven EU countries already have this implemented, amongst others Sweden and Denmark. The Finnish Pension record is a good start but as it collects only the information of the statutory pension, it should be extended to also compile the information of private pension savings. And although the many law changes regulating pension saving have practically halted the sales of pension insurance, many Finns still have such agreements from earlier days. These savers would certainly benefit of being able to follow-up on the overall situation.

PTS emphasizes on clarity and compressing the information to the most essential parts. Nothing odd, just basic information that can be found in a pension insurance administration system and which is easily transmitted from a modern system. Evitec’s Evitec Life policy administration solution is already equipped with numerous digital interfaces to various external parties, so adding one more is no big task.

But who in Finland would take the lead in developing a PTS? The occupational pension carriers and the Finnish Centre for Pensions administers the current Pension record, but private pension insurances are sold by life insurers. In Sweden the public and private sector have combined their efforts to develop the local PTS, i.e. the Minpension portal. Could similar willingness be found in Finland to promote a common cause?

In Finland Digital and population data services agency (DVV), which is the agency administering the registry of citizens, has already some time ago acknowledged the fact that the current method of forming the personal identification number (PIN) codes identifying individuals, isn’t sustainable in the long run. In addition, the structure of the PIN doesn’t comply with modern privacy protection.  

DVV regularly issues new PINs to individuals born for example in the 20th century. Usually it’s the case of a foreigner in need of a Finnish PIN. As some countries mark in passports all citizens birthdate as 1.1. or 31.12., the need for PINs especially for these dates is higher than average. This in turn means that the variations are running out for the 3 digit long individualising number. This needs to be resolved – very soon. 

In addition to this most acute challenge, there are also some personal privacy issues with the current method of forming a PIN. A PIN, which should solely be a data individualizing a person, reveals in its’ current form the persons birthdate and gender. These should be faded out to make the PIN unambiguously an individualizing data.  

Ministry of Finance initiated in 2017 a pre-study about the PIN renewal. The final report was published in Spring 2020. This has served as a base for the PIN renewal project, which the Ministry of Finance kicked-off in late 2020. But, already in Spring 2021 it was apparent that the time schedule outlined in the final report wasn’t realistic. 

The magnitude of the change is rather evident. PIN tentacles are far reached, and they have often touchpoints with society critical functions, implying that the change will require actions from numerous instances, both officials and the private sector. As many instances are also inter-connected, this will require a good amount of coordination. This, and on the other hand the DVV’s more pressing need to find a solution for the individual number series, is not a straightforward quick fix. Therefore, the full-scale transformation of the PIN will be implemented in phases and in the first phase only the sufficiency of PINs will be resolved.  

For organisations faced with the changes, introducing the changes in phases is slightly annoying. Although a change process is often more controlled when performed in phases, it unfortunately usually also comes with a price tag. Therefore, already while planning for the first phase, it would be beneficial to grasp the final goal and strive to anticipate the following changes right from the beginning. For the PIN change at least three changing factors are already known, middle mark (indicating the birth century), birthdate and gender. When these change, also the method for checking the PIN changes. How well you hit the bulls’ eye with these (assumptions), remains to be seen.  

At Evitec we’re waiting for decisions, as the flexibility of Evitec Life system can in this situation again be demonstrated. None of the currently identified changes are critical for Evitec Life, as PIN is already used as only one dataset identifying a person. Take for instance the birthdate, which often is meaningful in an insurance policy, in Evitec Life it is a separate data field. But, as Evitec Life has extensive integrations and REST services to surrounding instances, dependencies between these will need to be carefully monitored to ensure a smooth change transition.  

Written by Annika Karppinen

Who still remembers the time when a money transfer between two parties took several days? Even between two banks operating in the same country, money transfer was by no means a straight highway but rather a local train, stopping several times during the process. In Finland this was put to history over 10 years ago, when euro countries moved to SEPA payments and ISO20022 standard enabled faster money transfers. Since then, also Evitec’s Evitec Life Payments has supported the ISO20022 format. 

As Nordic countries form a unique market area, there is on a daily basis a significant number of money transfers within the region but the speed of those resemble that of a local train. Within the region there are several payment systems in use, many built on outdated technology, which slows down the money transfer process. In addition, there are several providers for clearing services which all use different standards. Goes without saying, this isn’t cost effective, neither for the service providers nor for the users. 

P27 Nordic Payments Platform was established to deal with this challenge. Six Nordic banks are behind the project: Danske Bank, Handelsbanken, Nordea, OP, SEB and Swedbank. The goal is to create a payment platform which enables cross-border real time money transfers in multiple currencies. As ISO20022 is fast becoming a global standard, it’s self-evident the project is based on the same. 

P27 got in July 2021 EU approval for merger with the Swedish Bankgirot. By this, P27 can start actual work and as a first step batch payments in Swedish Kronas will be renewed. The fact that all Swedish mass transfers are handled by Bankgirot gives a good understanding of the scope of the renewal.

Evitec Life Payments is prepared for the new era for Nordic payments 

Evitec Life Payments supports P27 Nordic Payments. Extending the PLP Payments solution based on existing SEPA and ISO20022 support was a straightforward process. In Sweden Länsförsäkringar is using PLP Payments for outpayments of pensions and insurance benefits, making the operational reliability of the system critical. It’s great to see P27 taking hold in Sweden and gradually taking over the market. 

Do you remember those, sometimes hilarious, examples from school classes, where teachers tried to bestow on us the importance of using the correct punctuation marks? For example, how the meaning of a sentence is completely transformed with the cannibalistic difference in “Let’s eat, grandma” and “Let’s eat grandma”?  Or whether you have “thirty five-euro bills” or “thirty-five euro bills”.

Our everyday work is filled with information from many different sources. It comes especially apparent in the insurance and banking business, where we need to consider the business needs, the customer experience side, all the technical aspects, and not the least, the legislative demands. It’s not just punctuation we need to be attentive of, but all kinds of terms and terminology we use when we talk about our customers business, likewise internally as with the customers. And sometimes it gets complicated. It might feel like splitting hairs, but it all matters and makes a real difference, a bit like all the rules with commas and such.

Customer identification vs. identity verification

Take for example one of our recent realization, when we were faced with the difference between customer identification (FIN: asiakkaan tunnistaminen) and identity verification (FIN: henkilöllisyyden todentaminen). Especially in Finnish as the words, tunnistaminen vs. todentaminen, sound and feel so alike, it leaves you wondering where’s the difference. Still, the former is less rigid a procedure than the latter, and the difference in the process is significant. These come from the Anti-Money Laundering Act (AML Act) and when one word in the legislation was changed to the other, it had major impact on the outpayment process for savings and life insurance benefits. And while figuring out the system solution to support this, quite a few of us, including myself, came to realize rather concretely what a difference one word can make.

The impact of getting even the small details right, it isn’t just a legislation driven task dictating what our customers need to get done and how our systems must facilitate those needs. It’s much more than that.

The ability to speak our customers language is an important factor when building credibility and the customers trust. It’s also about showing respect to the customer and their business. But even more importantly it’s vital when making sure that things are understood in the same way and everybody is thereby aiming at the same outcome. At Profit Software we are proud of our eagerness to closely listen to our customers, to understand their business, the needs, the challenges… and occasionally tackle the comical or infuriating consequences occurring when talking about “man-eating chicken” instead of “man eating chicken”.

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Read more:

FIN-FSA: Customer due diligence in Prevention of money laundering and terrorist financing

In this blog I will give my views on the Swedish occupational pension, what are the drivers for core system changes and what Evitec is offering to the Swedish life insurance companies.

Swedish occupational pension

Swedish occupational pension was introduced to the labor market as a safe complement to the national pension (folkpensionen) back in 1913. The occupational pension’s importance for the total pension have increased over time and will be even more important in the future. Occupational pension is also getting more relevant for the younger audience due to the last years news and discussions about the pressure on the pension system and the need to start saving for your own pension early on in your career.

Drivers for core system changes

Insurance companies are facing pressure to be fast and agile in order to deliver modern and digitalized customer services. When adding new customer services, which in itself can be quite small projects, it might lead to long and complex, and in many cases, very expensive IT projects that in the end is impossible to do. The reason for this is in many cases caused by the old and outdated IT systems. The IT systems were built for decades ago and are lacking API’s (application programming interface) and real-time transactions for modern online services. Another challenge is the constant demand from regulators and authorities that eats up a large portion of the IT budgets. Then, there’s internal demands on improved efficiency and lower cost of operations.

When it comes to new technologies the insurance companies need to look at an arsenal of technologies as; blockchain, AI, machine learning, Big Data analytics, robo-advisors and IoT. These technologies are drivers for extended user experiences and services. Customers are getting more tech savvy and they are demanding an increasing level of tailored services and fast answers to their questions.

The digitalization agenda with the increased demands for new services and fast go from market launch of new insurance products are already today heavy and will most likely increase further in the future. In order to satisfy the current demands and to be prepared for the future, the insurance companies need to clean up their IT stack and renew their core systems. If not, it will be a never-ending story with IT patchwork and a spaghetti IT architecture that just make it even more challenging to handle with increasing operational expenses as time goes on.

Evitec’s offering to the Swedish life insurance companies

Evitec Life is a life and pension insurance solution for the Swedish occupational pension market. Evitec Life includes support for key business processes including insurance product management, sales, digital services, claims and claims management. The solution includes services, tools and mandatory system integrations to effectively run an insurance business that meets the regulatory requirements.

Evitec’s advanced solutions are the result of faithful and sustainable work in the financial industry since 1992. We understand our customers’ needs and adapt our solutions to build world-class IT-systems. We continuously renew and develop our working methods and our product range.

Read more about our Swedish occupational pension offering.