Funds are getting more complex. Hybridisation of the open- and closed-fund worlds continues as traditional managers and hedge funds tap opportunities in private markets, and private market firms seek to ‘democratise’ access with vehicles targeting high-net-worth investors.
Regulatory compliance responsibilities are intensifying (not least with the global uptick in anti-money laundering requirements and Securities and Exchange Commission’s push for new private funds rules). Pressure on fees and costs is increasing. Fast-changing investor service expectations are driving the need for end-to-end automation and digitisation.
Together, these forces are having a clear impact on fund administrators’ technology needs. Many have built up a hotchpotch of standalone, disparate investor servicing systems to handle different business lines and functions, or as a legacy from previous M&A transactions. Today, the onus instead is on an integrated, multi-asset class and multi-jurisdictional transfer agency infrastructure that can support their entire book.
Benefits of a single TA solution
Manifold factors are at play, not least:
- Cost – The more systems a fund administrator uses, the more licensing fees, contracts, system training and upgrade schedules it has to deal with. Having one vendor streamlines that expense.
- Efficiencies – Using multiple systems leads to ‘swivel chair syndrome,’ forcing support teams to log in and out of different platforms. Response times and service levels suffer, while manual data re-keying heightens the risk of data input errors.
- Automation – Different systems format data in different ways, and follow idiosyncratic rules and processes. Creating seamless, end-to-end automation flows requires sophisticated APIs so systems can talk to each other, and the data each produces and consumes to be sanitised and standardised. A single platform strips out that complication and maximises the potential for process automation.
- Data hygiene – Cleansing, normalisation and consolidation are key to effective data management. That is much harder to do if the effort must be multiplied across numerous systems. With a single TA platform, once the data has been verified and standardised it can be used to populate downstream processes, records and reports with confidence.
- Investor onboarding and ongoing servicing – Investors increasingly expect a digitalised, seamless service experience. Legacy systems and processes tend to be heavily paper-dependent, especially in the private equity world. AML and KYC checks during onboarding require multiple, manually-sent documents and much back and forth. Subscription documents can be hundreds of pages long. Information often has to be re-keyed and replicated in different systems. And that workload multiplied across the client base. A digital portal integrated into a single transfer agency system can alleviate that hassle, effort and error-risk. Information input by the client in the front-end can automatically populate the back-end, which in turn can automatically populate communications out to the investor.
For the world’s fund administrators, consolidating on a single platform ultimately offers the potential to service clients better, faster, at less cost and with less risk. That’s a compelling competitive proposition.
ABOUT DEEP POOL
Deep Pool is the #1 investor servicing and compliance solutions supplier, providing cutting-edge software and consulting services to the world’s leading fund administrators and asset managers. Our flexible solution suite, developed by an experienced team of accountants, business analysts and software engineers, supports offshore and onshore hedge funds, partnerships, private equity vehicles, retail funds and regulated financial firms. Deep Pool is a global organisation with offices in Dublin, Ireland, the United States, the Cayman Islands and Slovakia. For more information, visit: www.deep-pool.com.