A Global Transfer Agency Platform Story

Richard Clarkson
Head of Solutions, Transfer Agency

My colleagues Tushar and Swapnil have begun looking at the Myth or Reality of Global Transfer Agency here and I now dive deeper into the choices Global Transfer Agents face when looking at solutions for servicing multi country Mutual Fund clients

Chapter 1 – Fantasy Land

Once upon a time in a land of joy and wonder an Asset Manager woke up in the morning and glanced at the news knowing that their Investors were happy and content with the service they received.  They did not need to worry about their Transfer Agent partner as they knew that were happy investors across the globe.

The Asset Manager was assured of seamless interactions with all Investor types, through whichever channel or medium the Investor choose.  The Asset Manager also knew their clients were looked after irrespective of the region of the world in which they lived.

At the same time, on the other side of town, the Transfer Agent woke, well rested from a night of perfect slumber, realising that there had been no alerts overnight.  They knew that the Asset Manager too would be happy as their clients had received the service that they had expected.

BANG! Reality bites as both the Transfer Agent and Asset Manager return to reality and the year 2020. 

Chapter 2 – Reminiscing the good ol’ days (TA 1.0)

However, they both remember the early days of Transfer Agency, a process that had grown from a small and fractured beginning.  A simple requirement to record investors and transactions has evolved into a critical piece of the Financial Services industry.

Transfer Agency was formed for the need to always have that book of record for each investment made by an Investor in a Fund.  Funds were initially employed by a small group of institutions and individuals.  Fund Product ranges were comparatively simple with choice limited.

As a result, Transfer Agency was seen as part of the Asset Managers competency.  Initially it was seen that the use of basic tools such as Access and/or Excel was sufficient as this could manage the records.  Service to Investors was maintained by the Asset Manager and their colleagues to those that had invested in the found.  Oh how, the landscape looked like back then!

Chapter 3 – Regulatory relaxation & Technology growth (TA 2.0)

Then, Governments keen to expand people’s savings profile for retirement and to leverage the pools of monies in Funds, loosened saving tax regulations, encouraged investment & opened the doors to a new wave of Investors.  Suddenly, investing in Funds became ‘normal’ and the cottage industry of Transfer Agency had to grow up fast and a new range of products evolved to meet the wide spectrum of Investors

As well, regulators redefined the framework of how funds could operate from which it was then possible to create a wider array of Fund Products distributed globally.  The success of the UCITS brand that launched went far beyond the expectations of all in the Industry.

At the same time Technology made strident leaps forward, particularly with the birth of the Internet.  Data creation (& its capture) and public consumption of information entered a new age.  The Asset Manager now needed to focus more on Fund Product & Distribution Models, and, as a result, they looked for a partner who had the technology & scale to provide the Transfer Agency service.

At the same time Service Providers recognised they could bring Value to the Asset Manager as they had the scale, knowledge and technology to support Transfer Agency.  The Asset Manager could focus on the Front Office whilst the Service Provider cared for the Back Office of the Fund.

Chapter 4 – Spaghetti (TA 2.0)

As technology continued to evolve both the Transfer Agent and Asset Manager knew they had to keep their systems modern, scalable & robust and secure.  Asset Managers and Transfer Agents alike moved into new Product lines and new markets.

This, though, led to a divergence as Asset Managers required tailored solutions to cater for their unique proposition in each market whereas Transfer Agents played catch up to find solutions that could continue to deliver to the Asset Managers ask.

Over time Transfer Agents found that they had a myriad of systems to answer each market and product ask of the Asset Manager.  Systems too had not evolved easily with legacy platforms requiring tactical approaches to address demands from Asset Managers & Regulators.

The tactical approaches became embedded and so running the business, making change and delivering quality requires significant investments for little or no return.  Then, after years of under investment, the nest of platforms has become so nested and entwined that no one is certain how to simplify the ecosystem and get it future ready.

Data and digital engagement will drive the successful Asset Manager, and by extension the successful Transfer Agent.  Those Transfer Agents that can offer a rationalised, single solution approach for their clients will reap the benefits of their early adopter process.

Other Transfer Agents may find solace in either their legacy but functioning platform (focusing on a single market) or in their tangled web of platforms that provide a pseudo pan regional solution, but their client will not.  Masking the problem with even more tactical solutions will eventually lead to a collapse of the house of cards.

Chapter 5 – Investors to change the TA paradigm (TA 3.0)

Addressing the need for Digital requires an honest appraisal of where the Transfer Agent and Asset Manager want their partnership to go.  The evolution of the Transfer Agency model has meant that they now act as the Asset Manager’s point of contact with Investors, and not the Asset Manager.

However, Asset Managers are seeing that Investors are now more discerning and are keen to tap into a wider range of Products (eg Active; ETF; ESG etc) which are offered within the same Management firm.  Therefore, the Asset Manager wants to simplify the relationship and minimise painful and potentially redundant processes (KYC, Relationship Anchors), whilst also ensuring that Private Data (eg PII) is well protected.

As Investors have a more global outlook, they will expect the same service from the Asset Manager irrespective of the region of the globe they are in.  Currently, this places huge demands on legacy TA systems & processes to present themselves as Digitally ready and available.

But do not feel the pressure of legacy, the utopian opening that we started with is actually not that far from reality.  Digital Investor demands are growing, and as the demographics move to the nomadic digital native (& beyond) Asset Managers need to speak to their future market. 

Chapter 6 – Can Fantasy become a Digital reality? (TA 3.0)

Digital will continue to disrupt the industry however it seems that Asset Managers still find it hard and costly to fulfil the Transfer Agency process.  Therefore, Asset Managers are keen to get it done through their TA partners in the most cost-effective way.

But how, when Transfer Agents have a myriad of platforms that make up a ‘solution’.  The answer is might seem too obvious to be true, but it is; and that is to work with Transfer Agents that have a single solution approach (1 system, 1 instance, common IT/Operating model, 1 experience to Investor/Asset Manager partners of TA).

This can happen where solution simplification is considered and undertaken by the brave Transfer Agent. Taking an honest assessment of the current ecosystem with its multitude of platforms can force the Transfer Agent to course correct and work with technology partners that can provide them with a true solution to address their needs across the globe. 

Modern Transfer Agency solutions, such as Oracle FLEXCUBE Investor Servicing, will have the capability to support out of the box Digital channels with open APIs; Blockchain connectivity options and data points to help with Machine Learning.  With a robust solution it helps to ensure that the above is delivered in alignment to Regulatory compliance (GDPR, PIPA et al) and more importantly deliver to the emerging True Global TA Service Expectations.

Chapter 7 – Renewal (TA 2.0 or TA 3.0)

And so, in 2020 we have seen, with the Covid 19 pandemic, a step change in how the world operates.  The changes that occurred were unforeseen, quick and profound.  This has driven a new assessment of what best-of-breed means and looks like.

How then to move forward in this brave new Digital world for Funds?  Are Transfer Agents supporting Asset Managers on their Digital revolution? Can TA’s provide a truly scalable Global solution that is market agnostic, digitally enabled and on the Cloud?

Both Transfer Agents (with their overly complex eco systems) and Asset Managers (with the urgent need to be Digitally native) are recognising that a true Global system is required.  However, renewing existing platforms may seem to offer instant benefit but longer term returns are not certain and existing perceived benefits lost.

Oracle FLEXCUBE Investor Servicing can help to make the digital change that can be Cash flow neutral, enable pointed cost reduction and provide uplift in value with its unique support of true Global Transfer Agency and offering choice of on-premise deployments or on the Cloud.

Therefore, ask yourself – do I stay in TA2.0 with my Spaghetti nests and constant renewals of my patchwork solutions or do I move to TA3.0 based on an Open Architecture, API enabled & Cloud based solution that caters for local, regional and Global Transfer Agency and Fund Distribution?

Smart Transfer Agents and Asset Managers have started the move, can you afford to be left behind?

For more information, please visit:
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