The past year has seen the beginnings of a long-awaited move from concepts and use cases to real-world systems. The new generation of fund distribution solutions are up and running and the way ahead is becoming clear. 

Here we look at the three areas where investment fund distribution is moving to the next level.

Making the first step easier

Investor onboarding is the essential step that all others depend on. If it is too expensive, too onerous, too time-consuming and not fully connected to the rest of the chain, then whatever changes are made in later stages will have less or even no impact.

Much of the existing duplication and complexity is unnecessary. KYC and AML information can now be leveraged across all actors from a master record, centralised with FundsDLT. Furthermore, adding to a growing ecosystem are the specialized fintech partners for onboarding as well as tools for greater automation, such as automation to ensure that AML documents are maintained and up to date. Use of these tools or partners, allows for the support of client-specific risk-based approaches.

The entire investor onboarding experience is now much more streamlined and efficient for all, including the investor. With this single-source-of-truth approach, distribution actors are better control of the process.

Future-proofing for high volumes

Since investor onboarding is easier for all and there is continuing pressure to open up funds to more retail investors, distribution actors such as transfer agents should expect to see more transactions.

Whether they have the capacity to deal with high volumes of trading instructions depends on what they put in place. With next-generation models in place, transfer agents can avoid manual processing and move to exception- based management.

In a world of greater direct retail participation in funds, rules-based, multi-channel trade reception is in order. Automatic rules can be put in place to, for example, restrict investors of a certain type or from a certain country from investing into certain share classes or to trigger trade confirmations

For investors, the rise in use of APIs and front-end apps means that there is more self service and investors can input their trades directly.  Dealing operators can now operate under high volumes – with minimal manual intervention –  and monitor activity and allocate additional resource when are where needed.

Better investor servicing

Investor expectation have grown and fund distributors, distribution platforms, banks, insurers, and asset managers all need to step up their game.

In response to this, the single-source-of-truth solution has been expanded to covers all possible areas. This means a single source for register information, trading information, fund static data, fund legal documentation and application forms.

Distribution chain actors can be in a position to answer all fund life cycle queries from investors (and distributors) easily

Investor onboarding, trade management and investor servicing will become much more efficient and cost effective. When will this happen? It will certainly be gradual process but the solutions to make it happen are already in place and are active for a few companies.