Technology has fundamentally shifted the landscape of the investment industry and, as players in the Cayman Islands embrace this progress, the adoption of these innovations is bringing with it a plethora of benefits.
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Technology has fundamentally shifted the landscape of the investment industry and, as players in the Cayman Islands embrace this progress, the adoption of these innovations is bringing with it a plethora of benefits.
“Given the remote nature of the Cayman Islands as an offshore jurisdiction, the integration of technology grants operators here increased efficiency, real time access to data and analytics while encouraging greater communication and collaboration with clients,” says Benjamin Reid, co-founder and co-managing partner at The Catalyst Group.
Further, making full use of technological advancements has improved reporting reliability and accuracy, reduced the need for storage and shipping of physical documentation and simplified the investor onboarding and AML/KYC processes.
“Technology also has the power to reduce the challenges associated with firms expanding their portfolio, allowing them greater opportunity to focus on quality and innovation,” outlines Reid. Historically, firms struggled with scaling their business, in terms of increasing the quantity of clients, funds or assets, while simultaneously maintaining and enhancing the quality of their service offering. Thus, adopting new technology solutions can help ease this pressure.
Reid says Catalyst fully embraces this concept and the team is tasked every day to question, ‘how can we do things better against ourselves’. “Too many firms are constantly looking at how others are doing things. At Catalyst, our team members are driven to compete against ourselves and look to improve on the last deliverable – The use of technology allows for this,” he notes.
The preeminent examples of these technological developments are Robotic Process Automation (RPA) and Artificial Intelligence (AI). These two technologies, in their constantly evolving forms, have helped to remove redundant, repetitive, manual tasks and systemise them. The introduction of RPA and AI into firms’ operating models and the potential future use cases for these technologies is extraordinary. Increasingly, we are seeing forward-thinking service providers leveraging these tools to underpin and redefine how they operate.
In addition to these two tools, the industry has seen the emergence of an array of applications and systems that range from workflow tools to portals and data warehouses that allow both providers and their clients a level of collaboration that has not been seen before. “Such tools have resulted in enormous opportunities for material improvements in efficiency, cost-reduction, communication, engagement, reporting reliability and scalability,” Reid says.
Although the benefits of integrating these technologies are being reaped throughout the industry, from service providers to asset managers and investors, the change has not been without challenges.
Any transition can bring with it a certain level of reluctance, and some groups have been hesitant to integrate these systems into their businesses. The primary difficulties have revolved around legacy systems, cost, data security and cultural resistance.
“Integrating new technology into existing systems can be difficult, especially if legacy systems are involved. Older firms built on legacy systems are particularly plagued by this, as unplugging old legacy tech is a difficult exercise,” explains Reid.
Smaller firms may also find it hard to justify the cost involved in implementing new technology. But although the payoff may not be immediate, those firms that are prepared to invest are more likely to reap the rewards in the future.
Some concern about new systems revolves around data security. However, there tends to be more risk of cyber attacks when running legacy technology and having structured data is now critical, especially in light of the introduction of the Global Data Protection Law (GDPL) in 2016 and the Cayman Islands Data Protection Act) DPA 2021.
There are also some industry players who are generally resistant to change and would rather stick with the methods they are familiar with. However, as more firms adopt new technologies to gain a competitive edge, the reluctance is bound to ease somewhat.
“There is no doubt that technology will continue to play an increasingly pivotal role in the Cayman Islands’ investment funds industry,” states Reid, “However, ensuring long-term success and continued evolution of the technology products that will power the industry will be dependent on the training, and education that is available to the next generation of product specialists and fund accountants in the local market.”
Benjamin Reid, co-founder & co-managing partner, Catalyst FA – Benjamin started his career at Merrill Lynch before becoming involved with the setup and roll-out of the LatAm desks at two of the world’s largest financial institutions (RBC and HSBC). During his time in the banking sector, he oversaw books of $500M – $1BN and focused on the institutional and ultra- high-net-worth segments. Benjamin also spent more than 8 years with the Maitland Group where he built the company’s presence in Latin America. Alongside his fellow founders, Benjamin saw the opportunity to apply his experience and expertise in the creation of a new breed of tech focused financial services firm.
