SS&C recently released a white paper discussing the drive for a global transfer agency model. With this in mind, what are the main drivers for a transfer agency model?
Transfer agency and broader investor servicing is our business. Transfer agency is a big part of that, but we also service virtually anything where you are servicing the end investor, such as wealth platforms and retirement/brokerage accounts.
When we think of global transfer agency or global investor servicing, there are two elements to it: global in terms of geography; and global within a country along different business lines. Therefore, we go across these aspects by incorporating both the geographic horizontal and in-country vertical.
According to feedback from multiple different clients, who are typically large global asset managers or universal insurance/asset management companies, they are looking to see where they can forge links in places where, traditionally, they had different solutions for different products.
In terms of the main drivers, if you asked each of the ten largest global asset managers we are currently interacting with what their main driver is, you would probably get at least six or seven different answers because the drivers really depend on who they are. It can range from wanting a streamline of their providers to a consistent digital solution across all the different propositions, to having a single customer view across different investors in different products. Some of them may also be looking more at gaining a global view of the distributors, as they will typically be distributing their products through banks or wealth platforms. This is a trend we have seen around data aggregation, providing analytics and distribution analysis.
SS&C products such as SalesConnect and WalletShare provide distributor support so that businesses can see, both internally and relative to their peers, where they are selling their funds and how their sales performance compares on an anonymised basis.
Overall, we have seen different drivers and work with all of our clients to determine their individual strategic vision. That is what prompted us to come up with a solution that we are proud of.
How can a consistently good quality global transfer agency model be achieved without making unreasonable demands on time and money?
Some of that depends on your definition of unreasonable—our clients outsource the transfer agency and investor servicing to us and have an expectation that we drive these sort of things as part of that service. The commercials around our model clearly vary depending on exactly what people want.
Our approach is slightly different from others: some advertise their solution in the market by offering the same underlying register in every country. But it costs a huge amount of money to establish one system that can meet different regulatory requirements across different geographic jurisdictions.
Our solution is to provide the best underlying register in each country that is designed to meet those individual requirements. We provide a consistent digital layer with a data layer on top of that so that our clients can reap the benefits. In terms of speed-to-market and cost, that makes much more sense than doing it the other way round.
Are there other obstacles for a global transfer agent service in today’s mutual fund world, aside from time and money?
The obvious obstacles are that, while there are drivers towards globalisation, there are equally different regulatory regimes in each country. Each country has different standards and regulations as to how they want to work, which is why we don’t think one underlying system fits all.
The other reason why we built the solution is that we are very consistent. We recognise that what an asset manager may have as a range of funds now may not be the same range they have in two years time.
If your solution is to have the same system in every country, the first thing an asset manager has to do is check that their transfer agent can go and support their decision to operate in a specific country. With our model, you don’t have to do that. You are able to choose the best transfer agency that already has a presence in that country. We will put our data digital layer on top of all that so that the end customer gets the same experience regardless of who is operating the underlying register.
Are there potential interim solutions for achieving a good quality transfer agency model which increases efficiency over time?
There are multiple solutions out there that can do that. We are the largest transfer agents in the US and UK and have a significant presence in Ireland, Luxembourg and Canada via our International Financial Data Services (IFDS) joint venture with State Street. We are looking across different jurisdictions for the best practice with the most efficient synergies.
There are many opportunities around technology, whether that’s the use of robotics to automate commoditised processes, or looking at things like artificial intelligence (AI). Obviously, you’ve got emerging technologies like blockchain, bitcoin and distributed ledger technology (DLT).
Now, all of those are going to incrementally change the model and make it more efficient over time.There are lots of opportunities out there to drive the whole industry forward.
What should be considered in the longer-term?
None of us know how the world is going to evolve. There are obviously uncertain things out there, Brexit being the most obvious, along with regulatory changes.
In this environment of uncertainty, our job is to provide our clients with optionality, whether that’s launching cross border funds via Luxembourg or Dublin then distributing those globally, launching local fund ranges, or going direct via a digital solution. It’s all about providing this optionality rather than closing yourself off to it.
Your most recent whitepaper discusses how a common order-routing and settlement process spanning Europe, let alone the Atlantic, is a distant prospect. Why is this?
This global industry has grown up from individual countries, each of which has evolved their own market practices, standards, systems and regulations. I would not say that one country or region is more advanced than others, merely different. Our job is to make those systems consistent. In the white paper, we state that you could try and engage with industry bodies to drive this forward, and we’re definitely doing that, whether with the Irish fund industry, UK investment associations or Luxembourgian industry bodies.
While we recognise there will be differences in each country, putting in place that consistent digital layer, investor experience and data aggregation will neutralise that point. We will build our solution to bring everything together regardless of underlying differences.
There are a lot of people out there saying they have their own blockchain solution. Everyone is good at the ledger part, but they forget about the distributed part. It is an oxymoron for a company to say they have their own blockchain solution because the whole concept around blockchain is that it is comprised of different chains and nodes interacting with each other. The industry will evolve so that organisations have to work closer together, and this does play into the settlement process spanning Europe.
To build our solutions around that, we are working with the likes of Euroclear, Clearstream and custodian banks to drive that focus, because it’s going to require everyone to work together rather than everyone fighting with each other. As an industry, we need to work on operating in a more architectural way. We see this as our responsibility to drive the industry forward.
How do you see the relevance of global transfer agency models growing in the next five to 10 years?
I’m bound to say this because of the business I run as a transfer agent, but I would say if you’re an asset manager, wealth platform, distributor or insurance company, the most important group for you is the end investor.
Transfer agency or broader investor servicing is servicing the end investor; increasingly, there is a focus on what we as consumers care about. For example, we invest in funds that we think will have good performance, but equally, want good electronic service. Therefore, transfer agency or investor servicing is absolutely central and will become more relevant as we evolve over the next five to 10 years.
What’s in the pipeline for SS&C for the rest of 2019? What projects are you currently working on?
Our solution around this is live now; we’re up and running, talking to people about it. We are focused around adding different regions and countries into the model, and that’s what we’ll evolve over time. We are also doing more and more on the digital side, as we want to become more real-time.
We’re embedding AI into everything we do, whether it’s data security or data accuracy. It’s our job to be front and centre on this aspect of driving the industry forward.
← Previous interview
Deutsche Bank
Emma Johnson and Mike Clarke
Next interview →
Meritsoft
Daniel Carpenter
Image: Shutterstock 
