Looking back over the last 18 months, to what degree have transfer agency priorities changed since the start of the pandemic?
The biggest change caused by the pandemic has been increased support for remote working in a way that would never have previously been possible.
The pandemic tested contingency plans but they withstood the test and as a result we now have a new way of working. However, there are still core activities and operations that require a strong degree of office presence in order to function optimally.
One industry-wide change resulting from the pandemic has been an increased acceleration of digitalisation in general. While it was always there to some degree, the process has become more accepted within hybrid or partially remote-working environments. Digitalisation is front of mind with clients as well as for us — clients have digital solutions and capabilities that align to our own strategic vision for our business. Some barriers remain, but these are legacy behaviours that the industry needs to work together to address.
Is digitalisation driving an evolution or revolution within transfer agency services?
Currently the digitalisation process is largely evolutionary. A good example is the evolution underway with regards to data exchange and reporting. We already had a strong digital portal offering, and we are constantly developing analytics solutions that give clients oversight of their day-to-day activity.
The traditional reporting activity — where a report can be extracted from the core system and sent by an operator directly to the client via email or another method — is now moving into the control of clients. Through this new analytics solution they are able to log into the portal and decide what data fields they require.
The potential for a revolution within transfer agency (TA) services lies with investor onboarding, currently a very manual process.
There are tools available in the market now that can really streamline this process.
This is an important area of improvement that can benefit fund managers and, above all, investors. When TAs are able to digitise the onboarding process, it will be a significant step forward for the industry as a whole.
Do you think the digitisation of data is where it needs to be for the best levels of data efficiency? What has already been achieved and what more needs to be done?
Within the industry, (referring to asset managers, TAs and distributors), the levels of data efficiency could be higher. This is mostly due to the distributed nature of the industry value chain. Many TAs have invested in developing the requisite infrastructure and foundations for greater digitalisation.
At RBC, we have developed a new digital layer to our platform over the last number of years that enables us to leverage data into analytic solutions that are meaningful to the client, as well as making application programming interfaces (APIs) available to support real-time data exchange.
Fund managers have an obligation to oversee outsourced operational activities. Is that oversight role changing? What does this mean for transfer agencies?
The oversight role is changing, and this is being driven by both fund managers themselves, and regulators. It is not enough for fund managers to tell regulators that they have outsourced TA, as regulators want asset managers to demonstrate that they retain control.
This is leading to increased demand from asset managers to provide them with more data and insights which can be used to exercise control and demonstrate that control. Our tools and services are evolving to meet this demand and it is an area we expect to continue to build on in the future.
RBC I&TS has its own transfer agency platform. Which direction are your clients taking you in terms of refining this service?
Our clients are outcome oriented — they want a quality service delivered by an expert team backed by strong digital and technological capability. From a platform perspective we are continuing to move towards a distributed architecture and micro services-type approach.
Rather than using a single TA platform, or a single piece of technology to complete investor onboarding, trade processing fees, commissions, dividends, and so on, we might adopt a particular tool that is tailor-made and built specifically for a particular process which can be integrated into our core platform.
In terms of in-house and vendor provided solutions, we have moved more towards a hybrid model where we retain our intellectual property in-house, while at the same time bringing in the best external offerings to meet specific capability needs. This approach allows us to deliver the outcomes our clients expect.
What are the current major regional differences in terms of clients demands for transfer agency offerings?
The majority of differences relate to either regulatory or market practice. In Canada for example, we have a platform that meets the very specific needs of that market. For other regions we have deployed an in-house platform that is highly scalable from a processing perspective but combines broad product and functional capability to accommodate market differences and client needs. The goal is still to have one platform that works for all jurisdictions and markets but that is a complex journey given local market needs and limitations around legacy technology architectures.
What do you think will be the main areas of focus for the transfer agency sector over the next 18 months to two years?
Certainly over the next 12 to 24 months, the industry will continue to move towards a digitised environment.
The benefits for all market participants, from a finance, experience and service perspective, are significant so this has to be a key priority for all participants.
We are keen to see evolution around the digitisation of investor onboarding, from a TA capability perspective, to drive a higher quality and more digital investor experience overall.
We also expect to see more asset managers looking to launch tokenised or digital funds, and it will be interesting to see how that area of the market evolves and how asset services develop their offerings to support this innovation.
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