Stefan Zuber: "CORE has been part of the DNA of our passive offering from the start"

Stefan, CORE began 15 years ago on a piece of paper. What was it like back then?

We were tasked with developing a new application to manage the index solutions that had just been added to our offering. So, Roman Maxymchuk, Martin Schwarb, and I sat down at a table and designed the first data model for this application on a blank sheet of paper. The tables and terms we put on paper back then have remained – today, they are firmly embedded in the vocabulary of ZKB Asset Management.

And did you already know that the new system had to be called CORE?

We decided that back then as well. The name was meant to refer to the core-satellite concept commonly used in asset management for portfolio construction, where index solutions typically serve as the core. Thus, CORE has been part of the DNA of our passive product range from the beginning. Scalability, efficiency, and security – all requirements crucial for passive investment products – remain defining characteristics of the application to this day.

The index solutions marked only the starting point of a continuous expansion: today, CORE is the integral portfolio management platform for the entire ZKB Asset Management. How did your team manage to integrate the satellites – all the active investment solutions – as well?

The big boost in this direction came with the acquisition of Swisscanto in 2015. The decision to use CORE as the application for the entire asset management was reaffirmed during the Swisscanto acquisition. All existing active portfolios and the new Swisscanto products were migrated to CORE, and the missing functionalities were built. Since then, we have always tried to represent the best of both worlds of active and passive investing. Shortly before this time, the management of ZKB Asset Management under Iwan Deplazes had already tasked us with consolidating the system, services, and process responsibilities for the entire asset management into a newly created area. To meet this challenge, we founded the new Systems & Services area with the three teams that still exist today: Processes, Platform, and Services.

That was a decade ago. How much has the platform grown since then?

Compared to 2013, we manage an impressive five times more portfolios, follow five times more benchmarks, have three times more users, and execute eight times more trades. In 2010, our team consisted of three business engineers and five developers. Today, we have twelve business engineers, 26 developers, and twelve people who manage the platform's content and are responsible for billing and the production of over 17,000 reports annually.

The CORE platform in numbers

The system is now often described as the heart of Swisscanto's investment process. How and where do portfolio managers benefit from the system?

CORE provides portfolio managers with an always-updated view of their portfolios, the so-called Daily Portfolio. This view includes current positions and risk and structural analyses, which are directly measured against external and internal investment restrictions. This investment restriction control also includes an early warning system to detect potential violations early. Together with the very high data quality ensured daily by our integrated Data Quality Framework and the CORE Data Managers from the Services Team, portfolio managers always have a solid data foundation for their next investment decisions.

The portfolio managers are at the center?

Complex data constellations require proximity to the specialist areas, such as portfolio management or product specialists. Only through this proximity and unique collaboration can we jointly meet the very high data quality standards. The annually negligible mistrade rate confirms our approach. We all are CORE, that's our understanding. That's what makes us strong.

So, CORE is an important tool for risk control.

Absolutely, and these functions have been part of the system from the beginning. With the establishment of our independent risk management area, many control functions – such as stress testing of various risk scenarios – have been added.

CORE: at the heart of ZKB Asset Management's investment process

But before portfolio management even takes a trade risk, can it practice it on CORE, so to speak, in a dry run?

Exactly, that's what the so-called Rebalance Case in CORE is for. This module includes various optimization and simulation functions. This allows you to play through in advance how a portfolio would look after a trade and whether any investment restrictions would be violated. If the simulation is satisfactory, the actual trade can be triggered in the Trade Order Management module. In this module, we have a direct FIX interface to the trading desk. This ensures that portfolio managers have a real-time overview of the status of their orders and their executions. With pre- and post-trade analyses, this module also supports portfolio managers in defining appropriate trading strategies and reviewing executions.

For portfolio managers in ZKB Asset Management, does this mean they wake up with CORE in the morning and go to bed with CORE in the evening?

(Laughs) It is true that one of the first actions of the workday is to log into CORE. Nowadays, portfolio managers can no longer operate without the system. And they are not allowed to. Every trade must go through CORE.

And how does this streamlining reflect in the quality and efficiency of the investment process?

For example, there used to be numerous different ways to place orders with the trading desk. Today, however, CORE offers standardized interfaces for almost all securities. This has led to a significant increase in quality and efficiency not only on the asset management side but also in trading and settlement. Thanks to CORE, we no longer have a fragmented system; it covers the entire investment process.

You mentioned the important interface with the ZKB trading desk. How well is CORE now integrated into the entire bank?

The platform currently has over 45 interfaces within and outside of ZKB. Besides trading, the connection to the custodian bank and the Swisscanto fund accounting is of great importance.

However, Swiss competitors often rely on external offerings for their investment processes, including those from abroad. What are the advantages of the in-house developed solution?

With the in-house IT solution, we have created a decisive competitive advantage. ZKB Asset Management occupies a unique position in Switzerland precisely because it has developed its entire IT platform independently and comprehensively in Switzerland. This demonstrates competence and strengthens ZKB's image as a professional asset manager in the market. The move towards a proprietary solution required courage and great trust in our team, which implemented this vision. The fact that we made the right choice is now evident in the shared success story of CORE.

But how does this unique approach with the platform benefit the customer side?

CORE is a unique selling point for ZKB Asset Management – by implementing and operating a platform of this complexity ourselves, we support the perception of ZKB as a professional asset manager in the market. This is always very well received by customers during due diligence processes, we find. Customers benefit the most from the quality achieved thanks to the system.

Speaking of the cloud: where do you store all the data that CORE produces daily?

All data is stored in Switzerland and on ZKB's standard infrastructure. This way, we benefit, among other things, from the IT security standards of the entire bank. This protection is more important today than ever.

One of CORE's in-house innovations is the Sustainalyzer, launched in 2024 – a tool that allows the evaluation of securities based on sustainability criteria. How did you start with it?

Very well. With the Sustainalyzer, we create a user-friendly application in asset management that allows us to provide sustainability data and knowledge of the entire bank. This is done through a service and a user interface that presents the data in an appealing and easily understandable manner. Currently, users can analyze various sustainability aspects of companies and countries with the Sustainalyzer. From mid-year, it will also be possible to analyze entire portfolios thanks to the portfolio analysis module. We are currently developing an interface to integrate data from the Investment Solutions and Structured Products areas and integrating the fund splitting of various third-party funds.

What do you expect from this?

These extensions enable the mentioned areas to analyze their portfolios, including the breakdown of Swisscanto and third-party funds, based on the same data and criteria as asset management. With this step, we create another important foundation for the harmonization of sustainability in the investment business, as anchored in our bank's sustainability roadmap.

Building an application like CORE requires very different job profiles than those typically found in asset management. How do you find this expertise – and how do you compete in the job market against companies like Google & Co.?

We are very successful in attracting the right talents. The search sometimes takes a while, but when we find a suitable person, we can almost always hire them. As we are currently set up, we combine young, highly motivated employees with very experienced seniors – and the spirit is sensational. That's one of the reasons I enjoy coming to work every day.

What argument can you use to win over candidates the most in a job interview?

I think we exude a bit of a startup vibe within a large bank with CORE. We can shape a lot and are directly connected to the product: this closeness fosters identification and is, in my opinion, very meaningful. I try to convey this during the recruitment process. Another strong argument is, of course, that ZKB is an excellent employer.