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The digital transfer agency of the future – challenges and opportunities


by Stan Drasky
Managing Director

Stan Drasky, Managing Director at Elgin White

Transfer agents are responsible for managing the transfer of fund units and shares, maintaining shareholder registers and records, and providing a critical service to asset managers and the financial services industry. They are key players in creating and maintaining funds for asset managers. They provide an essential service for the healthy management of the investment markets, and their services are essential to the efficient functioning of the financial system.

Challenges that are hindering progress

The transfer agency (TA) industry faces a variety of challenges as it attempts to keep pace with the changing landscape of the financial services sector: manual dealing, customization and bespoke reporting, technology, regulatory change, and reporting. To remain competitive as service providers, transfer agents must address these challenges and capitalize on opportunities to innovate and improve their processes and business models.

      • Manual dealing
        In the age of digitization and modern technology, you would find it strange that there is still telephone and fax dealing happening within transfer agency operations. Faxes are one of the most unreliable technologies still in use by TA providers and investment banks. Even the most advanced character recognition software can find it hard to distinguish between a 5 and an S. It takes just one phone line or paper printing issue and accuracy levels reduce dramatically, leading to manual phone calls to confirm the value and details of the trade. This leads to manual re-keying by TA personnel and drives up the costs for processing subscriptions redemptions, transfers, and switches in the funds industry.

        Manual and telephone dealing continue to create ongoing challenges for transfer agents, for example information controls such as dual keying, where the same information is keyed in twice to double-check the accuracy of information. All transfer agents have been pushing toward online and digital straight-through-processing (STP) to mitigate these challenges, but culturally, this remains a difficult challenge. We also find that the US market has higher digital STP rates of well over 95%, whereas EMEA and APAC rates remain low – in the 70% range.

        • Bespoke reporting
          All primary transfer agents realize that less than 25 key reports are required to run the business end to end, but still, there is a constant push to provide more flexible reporting, especially in the cash flow and complex fee calculations space, as this directly affects reporting and cash. These cash flow reports affect downstream processing and always require an up-to-date view of cash flow. This continues to drive flexibility requirements, as well as the bespoke reporting required by the client. Consumers of these reports generally combine the report data with internal data to create a complete, up to date view.

          The complexity of the data is further compounded by the number of systems involved in processing transactions, the level of re-keying between systems, and the fact that some markets investors and fund managers still prefer to send a fax that is free rather than use STP options, such as portals and messages that cost cents.

          To seamlessly deliver investor communications all the systems, people and processes need to come together in harmony with no failure, especially reporting, as this is at the end of the value chain and most visible to investors.

        • Technology
          Technology remains the battleground for the digital TA as they attempt to keep pace with the rapidly changing landscape of the financial services sector. Transfer agencies must try using up-to-date technology to process transactions and manage shareholder records. This is like playing a Jenga® stack game where the core systems are at the bottom, and all the regulation reporting and other changes stack on top of that.

          There is often tension between regulatory changes versus keeping the technology up to date, and we have seen 20-35% of the change pipeline blocked by regulatory changes that need to be incorporated first. As with Jenga it then becomes tough to replace systems at the bottom of the stack, like the core systems. This leads to core systems that are over 20 years old and have seldom been updated for traditional transfer agents due to the levels of economies of scale delivered by this stacking.

          The ’digital twin’ concept is relatively new in the transfer agency or custody space. The ability to have an open book of records like blockchain technology is still a bleeding edge for digital securities, but is starting to push the boundaries in terms of future digital transfer agents. Data warehouses are still the norm to assist distribution channels, mainly driven by the complexity of regulations and a lack of trust that there can be one version of the truth for investments for registered transfer agents. Each book of record must be maintained separately with a clear separation of duties.

          Clients of transfer agency services are looking to combine their data in real-time with the golden book of records of the TA, especially for mutual funds. The next-generation TA will be able to do this seamlessly and provide a well-integrated investor servicing experience (like an investor portal) as well as API to expose this underlying processing data. We still see this need for feeds from third-party administrators, not adopting APIs and feed data but relying on manual confirmation, and calling rather than using live data feeds directly.

          • Regulatory Change
            A global transfer agency that deals with investors and investment funds from all around the world must comply with an array of global regulatory changes across the US, EU, Middle East, and Asia, depending on where the funds are set up and administered. These regulatory changes create an administrative burden and underlying cost to transfer agents as these are usually compulsory.

            To ensure due diligence with ever-evolving regulations, transfer agents must have the necessary systems and processes in place for investor data and they must stay abreast of the latest regulatory developments. This is no easy task; however, transfer agents must remain vigilant to comply with regulations, protect their client’s investors, and maintain or grow market size.

        Opportunities for transfer agencies to innovate

        Despite the challenges facing transfer agencies, there are also opportunities for transfer agencies to leverage, to improve investor experience. 

            • The Cloud
              Transfer agencies should embrace innovations offered by Cloud computing. This enhances investor and agent portals by providing the necessary infrastructure to process transactions quickly and deal with large spikes in demand that can overwhelm the TA systems of today. Current TA systems have typically been designed with maximum fixed transaction or processing capacity in mind, whereas these new cloud-based solutions can now be set up in an auto-scalable way, removing these limitations for portal or investor-facing capabilities. 

            • Artificial Intelligence (AI)
              Machine learning can help identify suspicious transactions, investors, and peak-volume predictions. 

            • Enhanced reporting
              New data-sharing technologies like Azure Synapse or Snowflake enrich reporting by making data more accessible. This will help transfer agencies provide accurate and timely reports to their clients, which is a significant step in unlocking actionable insights by enhancing the overall value chain for investors and ensuring that all reports comply with current regulations. 

            • Smart automation
              Intelligent process automation can improve procedures and create a competitive advantage because faster processing times and increased accuracy enable operators to focus on the exceptions for asset management.


          To tackle the challenges transfer agencies face in moving to a digital TA model, and to remain competitive and improve the value proposition, they need to take a strategic review of their systems, applications, and processes to ensure they are up to date with current trends and technologies. This process should include the rationalization of existing systems and the potential migration of books of business to one new platform that meets 80% of their needs. Additionally, transfer agencies should also consider the potential sunset of legacy systems and the need for increased agility and flexibility, to adjust to changes in the market. Executing this successfully opens a huge opportunity to progress your business, when done right.

          Next Steps

          Transfer agencies should review their existing vendor risk analysis and consider the potential of new players emerging in the market to provide more competitive and up-to-date technology solutions. Finally, transfer agents should work to ensure they have the agility and flexibility to adjust to any key market drivers

          To get more information on how Elgin White is helping financial institutions with transfer agency transformation, or to connect with our subject matter experts contact us 

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          Jeremy Hurwitz

          Managing Director - North America

          Based in Los Angeles, California, Jeremy founded InvestTech Systems Consulting LLC in 1990. As President and Director the Enterprise Data Management and Architecture Practice for more than 25 years he managed over 50 large investment technology, strategy, and implementation projects for many of the largest global investment management firms. Following the acquisition of his firm by Accenture in 2017, Jeremy remained as Managing Director, Asset Management Lead.

          Jeremy joined Elgin White in 2022 to lead the firm’s launch into North America. He is recognized throughout the North America asset management community as a thought leader and innovation architect in the design of enterprise data, analytics, and reporting platforms. His deep knowledge, broad buy-side network, and extensive experience deploying business-outcome-focused technology solutions successfully has accelerated the growth of Elgin White in North America.

          Stanley Drasky

          Managing Director

          Stan joined Elgin White in 2020 following an impressive 30-year career working predominantly for world-class buy-side financial services firms in North America and Europe. He is a renowned buy-side technology leader with a reputation for designing and delivering large-scale transformation initiatives at scale and pace. Currently, Stan is especially active leading infrastructure (cloud and managed services) transformation projects.

          His most recent roles prior to Elgin White include Chief Information Officer (EMEA) at State Street and various senior positions during his eight-year tenure at Northern Trust Corporation, including Head of IT & EMEA/Global Director of Fund Administration Technology, Global Director of Asset Management Technology, and Director of Trade Execution Technologies. Stan has also held senior Operational and Technology roles at Nuveen Investments and BNY Mellon.

          Throughout his career Stan has been a strategic client or partner of every major front-to-back office technology vendor including SimCorp and Charles River Development.

          Erik Schutte

          Managing Director

          Erik founded Elgin White’s consultancy practice in 2019, which transitioned the firm into a full-service buy-side consultancy and resourcing business. He is an experienced front-to-back business transformation professional and has held several senior management positions during his more than 30-year career in the UK and his native Netherlands, as well as Asia Pacific.

          Previous roles include Head of Professional Services at SimCorp, Director at PwC UK, and Managing Director for Wealth & Asset Management Services at Accenture UK & Ireland.