The era of tech-enabled process optimisation has just begun

The era of tech-enabled process optimisation has just begun

Cliff Pearce, Global Head of Capital Markets, Intertrust Group

Cliff Pearce, Global Head of Capital Markets, Intertrust Group

Businesses quickly realised the benefits of agile, client-centric technology during the pandemic – and this trend is only set to continue

In a year of unprecedented economic and social disruption, one thing is clear: technology hasn’t just come to the fore; it’s been elevated further up the value chain. Already profoundly affecting business processes and societal behaviours long before the pandemic, the resilience and tangible benefits of tech-enabled solutions have become even more central to success and growth, particularly in the context of outsourced services and achieving more streamlined operational efficiencies.

Almost every business is focused on the development of agile and client-centric solutions that deliver significant scalable benefits and efficiencies through automated processes – as well as smart’ technologies such as machine learning and artificial intelligence (AI). Cloud-based applications, already firmly embedded in many day-to-day processes, will very likely escalate in a post-pandemic world.

The capital markets industry is at the forefront of this shift. Process optimisation is delivering far greater levels of service and enhanced efficiencies to investors and clients, increasingly through outsourced relationships and platforms that can cut administrative burdens and enhance regulatory compliance.

The distressed-led activity has been a signature theme for 2020, and this trend is expected to continue into 2021. IntertrustGroup has seen a rise in demand for outsourced capital market services as clients seek to capitalise on the opportunities distressed debt will present and to support them in the administrative and operational duties. Our capital markets division reported strong revenue growth in Q3 this year, driven by restructuring solutions and a higher level of outsourcing.

Streamlining operations

This year, we automated our loan administration, cash management, and facility agent services, integrating our platform with a market accredited software provider. We can help our client base to accelerate the possible by providing a more efficient and streamlined service to facilitate the administration of syndicated loans, direct lending, and other structured deals from origination through the whole lifecycle of the asset. Clients are being increasingly drawn to solutions offering high levels of flexibility, automation, and operational efficiency. With the rise of debt funds and increasing concerns around bank syndicate member independence, we can now add real value to a capital markets loan transaction.

“We automated our loan administration, cash management, and facility agent services, integrating our platform with a market accredited software provider”

Furthermore, our loan administration solution has seen strong interest, in particular from mid-cap entities – often funds with smaller teams that don’t have the staff numbers, expertise, or budgets to sufficiently manage tasks in-house. Overall, in the past six months, we’ve seen a near 50% increase in participation in the platform and expect similar demand going forward.

Artificial intelligence (AI)and machine learning continue to offer exciting business solutions. These tools are already being used to radically reduce the administrative burden needed to address the legal and contractual challenges of the phasing out of the Inter-Bank Offering Rate (IBOR)at the end of 2021. The IBOR repapering exercise requires significant manual and legal oversight to ensure that all necessary documentation is updated accordingly to reflect new benchmarks. This can entail checking tens of thousands of separate documents, a major task for any institution. By using modern, tried-and-tested canning technologies and AI processes that substitute key phrases and references, this process can be dramatically simplified without risk. We at Intertrust Group are very much at the forefront of helping clients to navigate the complexities and challenges that IBOR presents and are on hand to facilitate and implement new riskfree rates (RFFs).

Unleashing potential

As we look forwards to 2021 and beyond, and a world that’s looking to normalise in the wake of the pandemic, the focus on tech-enabled process optimisation will not diminish. Indeed, several themes and developments will catalyse further take-up and focus on technology as a key business enabler.

Distributed ledger technologies such as blockchain are starting to be used more widely in business processes, albeit in closed as opposed to open networks. Likewise, there’s more confidence in the long-term future of crypto-assets and more regulatory focus on both an international and national basis. Firms have been also become increasingly reliant on regulatory technology – or ‘RegTech’ – solutions as a result of game-changing tax and regulatory regimes such as GDPR and DAC6 coming into force. As third-party providers are providing more cost-effective and expert solutions, they’re fast emerging as the favoured RegTech partner for banks, asset managers, and corporates.

And Environmental, Social and Corporate Governance (ESG), perhaps the most significant wider business trend as we look ahead, will require greater use of technologies to reduce waste and deliver better, even more, efficient outcomes for stakeholders.

Certainly, we’re still on a learning curve – and we should be careful that this shift towards online collaboration doesn’t stifle creativity or strategic thinking. But there’s no doubt that these tools are here to stay – and this is just the tip of the iceberg.

Weekly Brief

Top 10 Capital Market Tech Solution Companies in Europe - 2020
Top 10 Capital Market Tech Solution Companies in UK - 2020

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