A passion for technology shone through from early in the discussion when Bob Currie talked to Stephanie Miller, chief executive officer of service provider Intertrust, about its ambitious plans for the decade ahead.
Since Intertrust’s initial public offering on the Amsterdam Stock Exchange in 2015, the Netherlands-based company has embarked on a major programme of investment intended to reinforce its position as a leading, technology-enabled provider of investment fund, corporate, capital market and private wealth services.
The firm’s strategy, in pursuing this goal, has employed a blend of acquisition and in-house development projects to extend its hand across new markets and product areas.
Intertrust last year announced the completion of its purchase of ABN AMRO’s escrow and settlement business, providing a front-row position in the market for cash escrow, settlement and paying agent services in the Netherlands, UK and Germany.
Eye on innovation
Intertrust has an acquisitive appetite and this is the seventh company takeover it has completed in the past five years. This includes the purchase of Elian, a private equity, real estate and capital markets administrator, for €557 million in 2016, and the addition of US- and India-based fund administration and technology specialist Viteos for €294 million last June. Since joining as chief executive in January 2018, one of Stephanie Miller’s many responsibilities has been overseeing the integration of these new business units and smoothing out the challenges of technology assimilation, transfer of personnel, and the cultural realignment that an M&A transaction commonly requires.
More than this, she has also had a mission to inject new sources of innovation into Intertrust’s four main business lines.
“Foremost in our growth strategy are plans to digitise our core services,” she explains. “Many of our services – whether this involves managing books and records, cutting a net asset value, preparing an investor statement or tax return – result in submitting a report, either to an investor or asset manager, a financial regulator, the fiscal authorities or a combination of those parties.
“In previous times, much of that reporting was paper-based, but our intention is to promote digitalisation across our business wherever this can be applied.”
With more than 20 years of experience in investment fund and corporate services, Miller is well equipped to drive technology renewal within the Dutch-based company. Previously, she oversaw a digitalisation initiative at alternative investment administration specialist SS&C, where she was managing director, and prior to this she was at the heart of technology and business process innovation as managing director of the fund administration businesses at JPMorgan and Citco Fund Services.
The blueprint for Intertrust’s technology regeneration has been defined in an ‘IT roadmap’ that has been in place for just over two years.
“The programme will involve migrating our data management into the cloud, retiring legacy technology and delivering greater efficiency to our applications within this ‘cleansed’ framework,” she says.
An important milestone in this transformation journey was the launch of a new client portal, Iris, released in January 2019. This Iris platform allows clients to view their full portfolio of business with Intertrust via a single portal, minimising the need for multiple interfaces and logins for different business lines.
“Many elements of the Iris platform are being adapted and reapplied across our different business units,” says Miller. “When we require this internal customisation and flexibility, this is when it makes sense to build internally.”
To supplement its internal expertise, Intertrust completed the acquisition of Viteos in June 2019. Established in 2003, Viteos is a noted fund administration provider in the US market, delivering end-to-end middle- and back-office and technology solutions to alternative investment managers. Miller explains that Viteos’s expertise in artificial intelligence, distributed ledger technology and robotic process automation are important elements in the technical tool box that it brings to Intertrust.
With regulatory changes reshaping every corner of financial services – and forcing a watchful eye on transformation and compliance costs – it is unsurprising that regulatory applications are central to their plans for this technology.
“We have 49,000 corporate clients and, in practice, we are administering more than 100,000 accounts across this client base. Use of robotic process automation can substantially improve the efficiency of this task, minimising human touch points and enabling our staff to focus on exceptions.
“We also recognise the potential value of distributed ledger technology applications in streamlining record-keeping and reconciliation requirements by supporting these on a blockchain.”
So, where is the appetite for expansion from Intertrust’s client base? “Real estate and infrastructure are key areas,” says Miller. “For real estate allocations, clients are requesting detailed analytics extending down to property level, as well as property-level reconciliation and reporting.
“For example, clients want to view occupancy ratios, default ratios, to view IRR [internal rate of return] on their property holdings and how this is evolving over time.”
Business growth is also being driven by new areas – for example, by requests to support administration services for non-performing loans, aircraft leases (particularly out of Dublin), bank loans and structured products.
More broadly, the marketplace for alternative investment fund (AIF) depositary services has changed substantially over the past ten years, particularly with the implementation of the Alternative Investment Fund Managers Directive (AIFMD) in Europe that was designed partly to inspire more confidence in alternative funds.
This has changed the liability and costs applicable to the asset servicing function for alternative assets – and Miller believes this is generating new opportunities for Intertrust, which has AIFM depositary licences in Luxembourg and Dublin and which she says has seen a boost in demand for its management company - or ‘ManCo’ - service in these locations. Customers are also seeking support for their business into new markets, says Miller. Intertrust currently has 41 offices locally and has assets under administration (AuA) in excess of €420 billion globally.
Since becoming chief executive, Miller has overseen the company’s expansion into Australia and the United Arab Emirates and expects to be opening new offices around the world on a quarterly basis during 2020.
The US is close to the top of the priority list. Intertrust already supports a sizeable portfolio of US corporate clients for their international activities outside of the US – and Miller is confident this will be key to winning their custom as it extends its service capability into the US market.
In a world where digital transformation and globalisation have been a strategic focus for the 2010s, Miller anticipates these will be an important point of differentiation as Intertrust prepares itself for competition in the 2020s.
“Many of our closest competitors are niche players offering regional coverage, whereas we are globalising our service provision, giving us the capacity to support clients as they extend their business into new locations and product areas,” she says.
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