Technology vendor of the year: Murex

Risk Awards 2020: Firm bets heavy R&D spend will keep it ahead of shifting client needs

Maroun Edde

If they were to compete in the Olympics, big, incumbent tech vendors would be weightlifters, not gymnasts – more equipped for feats of power and endurance than flexibility and precision.

Getting a gold medal from their clients today, though, requires a little of both.  

“When we look at the current market trends, we see organisations have reached a point where they have no choice but to simplify their IT landscape,” says Maroun Edde, group chief executive officer of Murex, which has been a leading provider of technology to the capital markets for more than 30 years. “What is attractive to banks is the idea that they can unify their data, creating a single source of truth for positions, market data, models and calculations, and share it across the enterprise for sales, trading, P&L, risk, accounting and reporting.”

That’s the weightlifting bit of the analogy – a vendor with scale can help banks bring together their siloed datasets and parallel systems, removing complexity and cost. Murex has the heft to pull it off. Due to its longevity, the firm has deep roots at many clients and – in MX.3 – it has a cross-asset, cross-function, front-to-back-office platform that could, in theory, perform the unifying role banks seek.

But incumbency and an existing platform is not enough, says Edde. A successful vendor must also be supple enough to support a bank as it evolves and changes its own business – to be a gymnast.

“Last year, we invested €108 million in research and development to enrich our platform at many levels, including functionality and underlying technology,” says Edde. “That represents around 20% of our revenue, which is a larger share than many big tech companies invest. And we have done that year-on-year for the last 10 years.”

As a comparison, Google’s parent company Alphabet spent roughly 15% of its revenues on R&D in 2018.

Investment at Murex included support for incoming market risk capital rules – the Fundamental Review of the Trading Book – and initial margin calculations. More recently, the company put together a global taskforce to analyse the impact of Libor reform, adapted its multi-curve framework to handle the change and developed transition mechanisms for new benchmarks.

In terms of underlying technology, Murex has focused on adapting its applications for the cloud, including moving to the Linux operating system and adding support for Amazon Relational Database Service. The company is also developing new ‘cloud-native’ functionality, claims Edde, although it’s keeping the details under its hat for now.

When we look at the current market trends, we see organisations have reached a point where they have no choice but to simplify their IT landscape

Maroun Edde, Murex

While Murex has the deep pockets to outgun many vendors on R&D, it still needs to roll new developments out to users. “One of the challenges we have is how to make sure we deliver innovation to our clients and make the upgrade process easier,” says Edde.

To this end, Murex has embraced a DevOps approach – a modern method of combining software development and operations to shorten the development lifecycle, deliver code continuously – rather than in infrequent version releases – and ensure its quality. The company has reinforced this with a set of tools for automating testing, system configuration and operational environment management.

So far so good, but rival vendors have noted that clients can be attached to their in-house tech, and therefore offer them modules and extensions to supplement that infrastructure, rather than replace it. Approaches such as microservices and application programming interfaces (APIs) make it relatively easy for banks to plug in extra bits of functionality, these vendors argue.

Edde’s rebuttal is that a patchwork quilt of services and systems requires more reconciliation of data and calculations, making it harder to achieve the goal of a single, primary record.

By tightly coupling critical functionality across trading, back office and risk, Edde argues it’s easier to achieve consistency of trade data, market data, models, interest rate curves and other essential elements. Beyond these core functions, there is a legitimate argument for looser coupling, he acknowledges.

Where activities such as trade reporting, margin reconciliation and portfolio compression take the output of the core functionality, or where close co-operation between counterparties is required, Murex is opening up access to MX.3 through APIs to allow clients more choice. The company is also enabling clients to create digital services for their end-users off the back of the platform.

“Clients are becoming more interested in monetising their technology assets,” says Edde. In an initial step along this road, Murex is evolving its API framework for banks to distribute prices to sales and digital portals. The company is now talking with clients about other ways to exploit the platform.

A more recent challenge is from vendors that aim to give organisations the core technology of a capital markets platform plus a development toolkit with which they can create their own functionality. Edde says that while Murex offers some capabilities in this area, “this is a smaller part of the overall equation”.

“Our strengths are the ability to unify data and to integrate business processes. Following that, we are bringing as much flexibility to the platform as we can,” he says.