The fiduciary services sector has lagged behind other financial services in using tech to meet client needs. This gap needs to be closed, and fast, this author argues.

While private banking and other wealth management sectors have started to embrace technology solutions, the fiduciary services business remains stuck in time. This needs to change, because tech can help organisations overcome a variety of challenges, argues Amit Taylor, group managing director of Trust Corporation International. The views expressed here are those of the author and not necessarily those of this publication but it is pleased to share these insights. If readers wish to respond, they should email the editor at tom.burroughes@wealthbriefing.com

There is no doubt that systems will continue to revolutionise the way in which people work, whatever their business may be.

The trust industry, prevalent in the offshore islands, has been somewhat slower to embrace technology than other financial services sectors, such as funds or banking. However, that is now changing as fiduciaries strive to become twenty-first century service providers.

In the past, many firms have been resistant to putting technology at the heart of their businesses, fearing that this will somehow undermine their service-orientated culture. However, this seriously misunderstands the opportunities that systems can provide; on the contrary, using technology appropriately can support and enhance the client relationship.

Until recently there has also been a relatively limited choice of systems available to trust companies compared with those that exist for other financial service sectors. However, in recent years we have seen a significant advancement in systems, as vendors have recognised the market opportunity and are providing solutions to the trust sector.

One difference between the trust world and other financial services sectors is the sheer weight of paperwork involved in trust and company administration through the need to document appropriate governance around decision-making (board agendas, papers, minutes etc). But the need for quite the amount of physical paper could be greatly reduced with the right systems in place.

The days of dusty offices with piles of paper, large filing cabinets and paper checklists should now be firmly in the past.

The role that modern solutions play is to challenge the need for so much paper while enhancing the client relationship by having documents a click or two away, not just for the fiduciary but potentially for the client also. When a client on the phone starts talking about the documents in front of them, instead of having to physically search for the paperwork, highly skilled staff should have the relevant information at their fingertips, ultimately improving the service offered.

More channels
New technology will continue to open more channels through which to service the modern client, offering a more tailored service for existing clients and winning new clients against other firms struggling to meet their needs. 

One of the key benefits of the more intelligent use of systems in the fiduciary sector is the creation of more time for “clientivity” – client activity that adds real value to the client and differentiates the provider from the crowd by reducing the time spent on basic or routine administrative tasks that can be fully or partially automated.

Another benefit is that technology can play a big part in supporting growth through more scalable (automated) processes and utilising workflow in an appropriate way - facilitating growth but keeping the important controls that allow management of risk.

At Trust Corporation we’ve hired a specialist to oversee something much more than a systems upgrade - we’re strategically investing in a platform for the future that can support our continued growth.

Given the peculiar requirements of the trust sector, there are some fundamental requirements from a system. Firstly, it needs to be intelligent - to do far more than act as a virtual filing cabinet. In a process-heavy business it must be able to anticipate actions that may be required as a result of the input of new information. It must be able to produce non-standard analytical reports.

It needs to be able to send and receive information to external systems securely, for example to automate the input of banking, payment and accounting information. The system should be user-friendly, without unnecessary fields and it should be smart – this means understanding clients better and ultimately offering them a better service.

For example, historically, to distribute funds to a client, a payment form was completed manually, compliance was proved manually, it was manually signed, manually sent to the bank, manually actioned by the bank, and bookkeeping manually entered into the accounts. A considerable amount of administrative work can be streamlined by making these processes electronic.

In particular, modern systems can have a deep impact on the organisation when it comes to proving compliance to the relevant regulator.

A whole new industry is now thriving to help labour-intensive compliance departments, trawling through mountains of paper, to prove that they are actually compliant. Some organisations are repeatedly asking for proof of identity or residence as they have no reliable way of knowing what they have on file. By modernising their systems they can now efficiently connect documents to data and save time and inconvenience for themselves and the client.

It is good to challenge technology to prove that for every client there is evidence of who they are and where they live. Processes can be changed to capture documents and data correctly so that proving compliance can be done at the click of a button and audits completed without the need to trawl annually through endless papers.

Similarly, client reporting will only be as good as the data collected and, with legacy systems, has in a lot of cases resulted in staff manually creating more complex reports outside of the system. New technology allows firms to question what is produced manually for the client and what can be automated. It will take away the unproductive elements of producing client reports, leaving the fiduciary to add value by writing expert commentary on what the report is saying.

From the client perspective, today’s technology is opening up new channels to communicate with their trustee, enabling the trustee to enhance the services they offer. What clients will notice is an improvement in response times to a variety of requests, from an action to make a payment to providing a complex report.

Today’s ultra-high net worth client is changing. They have expectations around technology that are different to clients of 10 or 15 years ago. They may even have generated their wealth through technology and younger beneficiaries have grown up not knowing a world without touchscreen devices and instant information. They will expect their trustee to communicate via email, transact electronically, use tablets and smartphones and, being globally mobile, they require up-to-date information that they can access wherever they are in the world. To deliver a modern fiduciary service to these clients, a provider's technology must support these needs or risk being overlooked for providers who can.

The fiduciary sector can no longer play King Canute and hold back the tide of efficiency and value that good systems can provide. This message is now being heeded and will ultimately benefit all parties.