The pandemic and its aftermath pose a unique set of challenges – and an opportunity to change the TA model for the better
The landscape has changed dramatically since the COVID-19 outbreak. Nearly every area of our lives has been affected, so it is no surprise the Transfer Agency sector has been impacted as well.
While change is rarely painless, not every change is negative, and many can in fact be welcomed. We’re seeing digitalization roadmaps being expedited, for example, paving the way for long overdue automation projects, the adoption of investor web portals, and public cloud technology. Increased reliance on – and acceptance of – online tools and services can also drive important behavioral changes in the relationship between transfer agents and investors.
Let’s look at five areas where the pandemic has affected transfer agents and end investors – and how TAs can make the best of a challenging situation.
The pandemic has triggered a global recession, which means the TA industry will see a major increase in trading and demands from worried investors for instant access to up-to-date financial information. This poses multiple challenges, not least because many in the TA workforce are working from home.
Providers of TA services must ensure that their teams have access to the right tools and can access and share information with investors, clients, and overseers without delays. Higher trading volumes imply the need for efficient, watertight processes. Timing is critical, as missed trades can have severe economic and reputational impact on the TAs – and their clients.
Investor reporting has evolved in recent years as investors expect faster access to better information. This has been driven by lessons learned from past market crashes, with investors demanding greater transparency, and regulators tightening the requirements put on administrators. Every economic downturn or crisis leads to a spike in daily reporting demands, so TAs must ensure their reports are distributed accurately and efficiently using automation tools and web portals.
The good news is that the pandemic should provide the push TAs have needed to stop mailing reports to investors. Posting paper reports is another outdated manual function in the industry. Transfer agents should strongly encourage investors to access reporting via email or web portals, for efficiency and sustainability reasons.
Investor Web Portals
While we’ve lived in a digital world for some time, COVID-19 has dramatically accelerated the move online by forcing us all to use the internet for banking, shopping, medical consultations, et cetera. The same is happening in the TA space, where investors want instant access to their information, along with the ability to place trades and amend contact details using the “self-service” tools provided by some web portals.
"Providers of TA services must ensure their teams have access to the right tools and can access and share information with investors, clients, and overseers without delays."
There has been an upsurge in portal usage as older investors have embraced online channels. This will force some administrators that had investor portals on their medium-term roadmaps to bring them forward. TAs that invest in user-friendly portal technology now will differentiate themselves in terms of client service and 24/7 information access, while reducing the administrative burden on their operational teams.
The public cloud has been on many transfer agents’ roadmaps as it promises to reduce IT costs, support scalability, and provide access to complementary cloud-based applications that drive greater efficiency and data integration. Plus, with TA personnel now working from home, office boundaries have been expanded beyond the local office network, and access to business applications must be seamless and efficient.
This can be a headache for administrators’ IT departments, as essentially, they are dealing with multiple “mini offices”. Moving to a cloud-based model can lessen this pain while helping to contain costs and enabling a future-proof technology model.
"TAs that invest in user-friendly portal technology now will differentiate themselves in terms of client service and 24/7 information access, while reducing the administrative burden on their operational teams."
Automating TA processes has never been more important, with the dual challenge of remote working and increased trading volumes due to the recession. Straight-through processing of trades and investor data is critical for service providers to do “less with more”.
The increased use of automation tools also implies the need to ensure that data is accurate, and tools and processes are scalable. There will be a greater push for investors to send their transaction data via portals or electronic formats so we can get away from another outdated task, i.e. trades sent manually via emails, mails, faxes, et cetera.
The pandemic will likely force transfer agents to speed up their digital roadmap, but this should be embraced. If done correctly, the benefits for TAs can include greater automation leading to lower costs and reduced operational risk, as well as better client service through the ability to provide accurate, real-time information to investors.
"The increased use of automation tools implies the need to ensure that data is accurate, and tools and processes are scalable."
Increased digitalization will also enable TAs to provide better investor data to their asset manager clients, which will in turn enable the creation of better investment products. Now is also a great opportunity for transfer agents to push back against the use of manual forms of communication, such as faxes and emails, for trades, investor details and reporting.
The world has changed. It’s time to get true automation in the TA space.
About the author
Justin Hayes Global Product Manager for Linedata’s transfer agency solutions. Linedata is a vendor of asset management solutions for the front, middle and back-office, including transfer agency. Justin has been with Linedata for nearly 15 years, having previously worked in fund administration with SEI.
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