Like all back office functions, the role of the transfer agent (TA) is changing. For a long time, asset managers regarded transfer agency as a necessary, but not overly interesting, administrative task to maintain the register of their investment funds. Over the last couple of years, however, transfer agency started playing a prominent role in conversations between administrators and asset managers.
Industry veteran Steven Caluwaerts, Director, GDTA (Global Distribution & Transfer Agency) at HSBC Luxembourg, says the role of the TA has grown significantly in importance due to the services they provide. “Transfer Agents provide the infrastructure for the asset manager to distribute their funds, i.e. sell their products to end consumers. As such, a strong transfer agent can help an asset manager grow their customer base. To better serve asset managers TAs are extending their range of services.”
Asked why the transfer agency is in a state of evolution, Caluwaerts pinpoints the changing expectations of the shareholder as one factor.
Generations Y and Z, who have largely grown up with technology, exhibit little patience for a cumbersome account opening process. “They also expect instant confirmation of the execution of their order.” explains Caluwaerts. “Hence TAs are expected to provide innovative ways to reduce the time required for AML (Anti-Money Laundering) and KYC (Know Your Customer) checks. One solution is to offer a self-service portal, empowering these shareholders to onboard themselves.”
On his aptitude for sourcing solutions Caluwaerts offers an insight into his background before moving into TA: “I am actually an engineer.” he says. “I have two engineering diplomas. I love solving problems, finding solutions and finding better ways of doing things. That's really what we are doing as product managers.”
Artificial Intelligence (AI), data mining, the internet of things, digital ID’s and blockchain offer opportunities for TAs to rethink their operating model. They allow Transfer Agents to reduce costs, enhance the shareholder experience and offer new types of services. KYC is a perfect example for Caluwaerts. “KYC is something I’ve identified through my career within the TA as one of the biggest challenges. It is very complicated, risky and generates a lot of cost and client dissatisfaction as well.”
When he was an engineer Caluwaerts wrote a thesis around AI. Since then he has maintained the possibility of AI contributing to products such as KYC becoming more efficient. Although, he adds, for that to work you need an organisation open to change.
For Caluwaerts, that organisation is HSBC. After 20+ years in the funds industry, his move to HSBC in 2019 re-energized his passion for TA and his energy to get things done. One of the reasons for moving to HSBC was the fact that the Group has the largest TA footprint in Europe and Asia.
“The whole asset management industry will need to shift attention from gathering wealth from US and Europe to gathering wealth from Asia. The global TA model we're constructing at HSBC does that. It allows the flexibility of the asset manager to shift its focus to Asia without neglecting the European base.” he says. “I like to work with global asset managers because they are the ones challenging the existing model and dictating the way that the industry will be moving forward.”
Looking to the future, within 10 years Caluwaerts believes banks such as HSBC may find themselves competing to sell financial products against large technology companies, but for that he has a solution.
“Whilst technology giants might excel in managing data and interfacing with technology-savvy consumers, they are wary of heavily regulated services such as payments and AML. Banks such as HSBC can provide the link between distribution networks and the financial infrastructure and be the safeguard of personal data.” says Caluwaerts.
“HSBC is ensuring the technology model that we're building is flexible enough to plug into different types of distribution networks, which might be governed by these technology providers in the long term.”
Being a TA product manager is one of the most interesting roles within the bank says Caluwaerts. “As an engineer, I am looking for results. In a role like this, you get to see progress. When you design a solution and it works, it keeps you going. You see results every day of what you accomplish. I’ll never be bored.”
To find out more about a career at HSBC Luxembourg please visit our website: https://www.about.hsbc.lu/hsbc-in-luxembourg