The Irish Government is keen to embrace the FinTech revolution as is evidenced by its IFS2020 strategy for International Financial Services, which aims to create 10,000 new jobs in the IFS sector by 2020.
One particular area of innovation underway in Ireland is the emergence of regulatory technology or ‘RegTech’ with a plethora of start-ups now operating out of Dublin. Part of the reason for this is that sell-side institutions and fund management groups, burdened by the weight of regulation, regard outsourcing as an attractive option because regulatory operations are effectively a non-competitive differentiator.
This thriving technology ecosystem is benefiting Ireland's service providers such as Apex Fund Services, which has two of its 33 offices situated locally and a total group AuA of USD45 billion globally.
"Currently Apex is listed as one of the top 20 largest administrators globally but we are looking to break in to the top 10 over the next few years and ultimately become the single largest independently owned fund administrator. We think there are M&A opportunities that could provide good synergies with respect to regulation technology and reconciliation technology," explains John Bohan (pictured), Managing Director – Europe, Apex Fund Services.
Bohan believes that unless fund administrators heavily invest in the right technology and systems they will not be at the races and will lose market share.
"Unless administrators employ robust processes, from a technology perspective, for taking data and repackaging it into the correct format, they risk losing out on the inevitable revenue stream it presents," says Bohan, adding:
"It is important that the multitudes of HNW investors out there are tracked in an efficient way. Utilising fintech solutions to deliver accurate and instant tracking and reporting, whether it be on the tax side (FATCA, CRS), the risk reporting side, or the regulatory reporting side (Form PF and Annex IV), is becoming essential in the current fund environment. Service providers need to employ these technologies to remain competitive and deliver the levels of responsiveness and support expected by managers".
The Apex Ireland offices are currently in the process of becoming paperless, such is the level of automation they are introducing to their operating model. The Apex group as a whole is working toward calculating all fund NAVs online and in PDF format, with Bohan confirming that they are also looking at introducing auto-reconciliation technology "across the majority of funds".
"At each of Apex's 23 operational centres around the world the staff will see, when they come into work, that their client's portfolio has already priced overnight, properly reconciled and any transfer agency activity already input.
"The construction of a NAV for clients used to be like producing an audit file yet as the industry has evolved, with respect to the squeeze on fees and demands on clients for additional reporting, a firm's survival is dependent on embracing technology; for fund administrators it means generating paperless NAV's that are auto-reconciled, reducing the time needed to put together a full NAV file, or using spreadsheets to print off brokerage reports, etc. Those who continue doing that will likely not survive," asserts Bohan.
Once Apex has completed rolling out its paperless office across the group, the ability to fully automate the NAV production should help improve its business margins