Depending on the service model you expect, having key services supplied by different providers might not be the most effective or cost-effective approach. The same is true for private funds, which have the regulated overlay.
Ideally, your depositary and custody bank partner can accommodate other necessary responsibilities within a collaborative-team solution. When that’s the case, bundling services from appropriately regulated entities within the same overall group of companies presents a much more efficient alternative than engaging multiple disconnected firms.
Here are six reasons why you should, whenever possible, opt for having all your European fund servicing handled by a single, multifunctional team working on the same systems under the same organisation.
1/ Cost advantages related to economies of scale
A key benefit of bundling services is cost efficiency. This results both from economies of scale and from your ability to negotiate fees with a single group versus numerous stakeholders.
“From a provider’s perspective, it’s more efficient for them (meaning more cost efficient for you) to perform their duties when they already have all critical onboarding, static and dynamic data within the group,” says Breda Sullivan, head of Depositary Custody & Banking International for U.S. Bank. “They’re able to seamlessly source information from within their own organisation, rather than creating and maintaining channels to communicate with third-party service providers.”
2/ Point-of-contact efficiencies
Using a single provider significantly reduces the amount of work clients put into managing the partnership.
Consider how much easier it is to engage with just one set of contacts in an organisation. And contrast that with the complexity of establishing and navigating multiple relationships with multiple stakeholders at different service providers in different time zones.
At U.S. Bank, we can provide a principal service team in your time zone supported by staff of specialists in the jurisdiction where your product is domiciled. That way, it’s easier to schedule conference calls, manage projects, handle client onboarding and navigate other administrative tasks with a single integrated contact team instead of many.
3/ Uniform data output and reporting
Different service providers have different fund accounting and transfer agency systems, so using multiple providers often means receiving output in a variety of formats. It often takes a fair amount of effort to normalize data from different formats and channels, then standardize and reformat it all per regulatory (or other) reporting parameters.
Even on the most basic level, differences in something as minor as country codes, for example, can require an enormous amount time and energy to make uniform. Predictably, the cost of normalising and reformatting them gets passed along to the client. By contrast, a single provider will naturally process all the daily values in the same format – eliminating the need for costly data normalisation efforts.
4/ Time zone flexibility
Only a small portion of business hours for U.S.-based clients overlaps with the Central European Time workday, which can create significant lags in response time. But by working with a single provider with a global footprint, the impacts of this issue can be reduced.
“At U.S. Bank, we’ve built a framework where we’re able to handle necessary responsibilities in-region in Dublin or Luxembourg,” says Breda. “We can easily access information from our partners in other time zones – for example, the loan administrator to private funds.”
5/ Consistent service standards
Another advantage is that clients know exactly what to expect in terms of service – the same standards apply across the board.
“If you appreciate the high-touch approach you receive from your depositary team for example, you know that’s the same quality of attention you’ll receive from all your teams – given we’re all part of the same organisation,” says Breda. “The quality of service driven by our culture will be the same across the board, and you eliminate a lot of the variability of working with different providers with varying standards of service.”
6/ Cross-functional expertise
By using the same provider for multiple services, clients access their wealth of institutional expertise. Providers with broad capabilities have deep insight into market trends and a unique view into multiple sides of the investment industry.
“At U.S. Bank, we’ve got operations in numerous jurisdictions,” says Breda. “We’re the same organisation – in Ireland, in Luxembourg and elsewhere – offering the advantages of bundled services under one roof. That’s a lot of individuals bringing a lot of unique perspective to our organisation and our clients.”
For more information on our European fund servicing solutions, contact us or visit our website. You can view this article in its entirety here.
