Since being founded in 1995, Multifonds has grown its software business across more than 30 regulatory jurisdictions and includes seven of the world’s top ten custodians and many top-tier asset managers as clients. The company currently provides processing for funds valued at over $3 trillion.
Bill Hunt, a former vice chairman at State Street, recently joined the company’s board of directors to help grow its influence in Asian markets. Hunt had joined State Street in Japan in 1994 after working in various securities and investment management roles before returning to Boston.
AST: What brought you to Multifonds?
Bill Hunt: It was an easy decision on my part. They have an exceptional product, and there is also the strong leadership of the company – Bertil Rouveure [executive chairman and founder] on the technical side and Oded Weiss [CEO] a former McKinsey partner on the financial side. That combination has given the company a deep vision. The arrival of Summit Partners in 2006 with financial backing as well as additional management experience was also important. Looking at those three, it was quite easy to say yes. The role they have asked me to provide is to add some additional insight into the needs of potential and existing clients, in the US, but particularly in Asia, because that is where much of my experience lies.
AST: What are some of the trends you are seeing in the industry leading you towards this?
Hunt: We have been asked about the economic prospects in Asia versus the US and Europe and what that might mean for Multifonds. My perspective is that Asia will continue to grow faster for the foreseeable future than the US and Europe.
There are developed markets in Asia that Multifonds can tap into, like Japan, where I think the potential is quite vast for the kind of software that the company has developed. But there is also opportunity in other markets that are developing, where investment products and vehicles are changing rapidly, as is the regulatory environment. That presents an opportunity for the software portfolio accounting and transfer agency product that Multifonds has in terms of its functionality, its flexibility, and its cost efficiency. So in terms of growing markets, there is quite a bit of opportunity in Asia.
The flipside is that the US and Europe have slower growth, a downturn potentially, so the question is how can Multifonds really move forward there? I think that there are many ways. One of the things we will see in the next 12 to 24 months is continued consolidation of fund administrators, custodians and fund managers.
AST: Can you elaborate on how that plays out for clients?
Hunt: Picture the consolidation of two large fund administrators that have been operating systems that get the job done, but are different. Not only are they different systems, but they have different combinations of software patches and customisations. To bring those two together is complicated, whereas Multifonds offers a single platform with multi-jurisdiction, multi-asset class capabilities, and so offers a tremendous advantage. The merged company should stop and say, “OK, let’s forget the last 20 or 25 years. If we are going to evolve or deploy a fund accounting, portfolio accounting and transfer agency software for the combined entity, how should we best do that?”
If you take it at a high level, it seems that by this point in time, everybody should have that kind of system – single platform, multi-currency, multi-asset class. But the fact of the matter is that many financial institutions don’t, because although there are systems which do the job quite well, they have been developed over decades and companies have not had the opportunity, given fast growth, to step back and redesign, or start from scratch, with new state of the art software products. Multifonds has done that, so now the question is how we can help those clients to serve the needs of their end customers.
AST: Can you give us some insight on the Asian market that Multifonds is seeking to tap into?
Hunt: Again, Asia is growing very rapidly. Over the last several decades many of the cues in the financial services sector in Asia were taken from the West. It is interesting to see how that develops going forward, but clearly those markets are growing rapidly and in markets such as Japan, the accounting treatments and some of the conventions there we might describe as non-standard or non-traditional. I think the Multifonds system is able to adjust to those kinds of requirements and adjust to those systems quickly, and very cost efficiently. Using Japan as an example, this bodes well for the company should they choose to enter that market.
AST: Is there any particular area within global regulation that you see as advantageous from a vendor’s perspective?
Hunt: There are regulatory reforms across the board and there are two pieces to that. One is the need for flexibility to make those systems adjustments within a given country, and the other is to have that on a single platform so you can pull it together and look at it from a global perspective.
I know that the UCITS initiative is a very important one in terms of master feeders; there are a number of new regulatory issues being driven from the US, such as the FATCA implementation; and in Asia there are a number of others which will be added. The strains on the financial system will likely result in calls for more regulatory changes, and more demands for additional reporting in the short term. This all bodes well for software providers like Multifonds.
At the same time, the increasing complexity is not just in regulation, but in cross-border activities. Back and front offices need to work hand in hand and where they don’t, that is also a problem that Multifonds can help to fix.
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