The 5 Big Shifts Taking Place In Transfer Agency Today

Transfer Agency
Alison Boswell

The transfer agency is a critical component of traditional fund administration. Its services support fund managers by ensuring investor transactions and details are kept up to date and recorded and filed in accordance with regulatory requirements; further, that investor mailings and dividend and interest payments are distributed timeously.

In the past, the Transfer Agency was achieved by manual processes, leading to a measure of potential error. In recent years it has however evolved to become a leader in best-of-breed technology, embraced a changing regulatory landscape, introduced innovative automation, and created new opportunities for specialist careers. Here are the five big shifts taking place today.

  1. Recruiting for an automated function

The switch to robotics, systems and process automation in recent years has been a game-changer, developing a new generation of specialists for bespoke services and reporting needs. Back in 2000, 80% of the workforce was made up of administrators and 20% specialists. Today, many processes are automated, and the workforce is now comprised of 40% administrators and 60% specialists.

In Transfer Agency today, financial transactions are critical but happen in the background. In the early days, hard copy instructions were sent physically via fax. Somewhat bizarrely, this is still in place today at some European competitors. In South Africa by contrast all transactions are received electronically by most transfer agency players.

The exciting shift to automation has led to the ability to create more bespoke solutions. Specialist careers can be developed to align improved reporting and a greater level of regulation in tax and anti-money laundering (AML).

  1. Delivering global solutions from South Africa

Onboarding investors in the offshore space is incredibly complex. Government AML requirements are an onerous process requiring a high level of support and the right partner. Yet it is possible to service Transfer Agency clients in South Africa on the right systems, supported by a deep understanding of the jurisdictional requirements.

Creating a centre of excellence in South Africa creates an economic solution for global clients while creating employment opportunities in South Africa.

  1. An increase in women leaders

Once Fund Services was traditionally a male-dominated environment, industry technical user groups often had few female representatives. While a change in this technical space is still to occur, it is pleasing to see things are shifting in the operational space.

  1. Big new players in the marketplace

While there are those that perform Transfer Agency services in-house, many look to independent third-party providers to deliver efficient record-keeping.

The biggest shift in South African market players in recent years is the introduction of FNZ, a global technology company offering investment platforms to large fund managers. A few years ago, FNZ started approaching various asset managers and players in the market looking to migrate to their system and more recently, in late 2020, acquired the Silica platform from Ninety-One (formerly Investec). This move will see a large migration from the Silica platform to the FNZ platform.

  1. Introducing blockchain to SA’s market utility

Finswitch, SA’s core market utility, is currently being upgraded by FNZ to a future blockchain solution. Finswitch provides a transaction flow between product providers and investment managers. We will look to the industry to further develop a solution to create a golden record registry for industry stakeholders. Historically, big players do not tend to agree and interpret regulations differently with significantly varied operating models. The big challenge for the industry will be to collaborate and design a system to accommodate the variants and bespoke requirements in the market, while still retaining their competitive advantage.

What’s next in Transfer Agency?

We expect to see evolution for bespoke solutions around what clients need, with players adopting a more flexible approach. Maintaining a high level of engagement with clients will create opportunities for the Transfer Agency function to continue to evolve in an environment that demands product innovation, regulatory reform, compliance and an excellent end-user experience.

  • Maitland Group South Africa Limited is an Authorised Financial Services Provider
  • Alison Boswell, Head of Transfer Agency at Maitland Fund Services


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