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Estate & Succession planning 20 June 2022

Trust in the Future

By Michael Giraud and Jonathan Sprigg

Imagine travelling back to the year 2000 (ideally in a DeLorean with a flux capacitor installed), seeking out your younger self and explaining that in 2021 you would pay for most items on your phone, you could be transported in a self-driving electric car, the majority of your business meetings would be carried out by video conferencing, you would do a good percentage of your shopping online, your house would be littered with smart devices and that you would watch most programs on a TV hanging on your wall which streamed them from the internet. Upon hearing this there is a good chance that your younger self may not believe what they are hearing and yet it is now our reality.

There is no denying that the rate at which technology is evolving alters how we perceive everyday matters, and live our professional and personal lives. There are, of course, pockets of life that have been largely immune to the rapid technological change of the past two decades and, arguably, the fiduciary services industry has until recently been such a place.

However, things are changing. Work practices are evolving, as is the gathering of information and the mindset of how to conduct succession planning and fiduciary services business. Although Standard Bank’s international fiduciary services have always embraced technological advancements, the COVID-19 pandemic has prompted many firms to further embrace industry-specific technology and flexible work practices. Many trust firms needed to adapt to survive, making their survival almost Darwinian in nature.

Technological advances

So, what has changed in the last few of years? Well, the simple answer is: quite a lot. The rate of change has increased as the fiduciary services industry has started to accept new technology and work practices to streamline processes, gain efficiencies and keep their businesses competitive. This push has not only been driven by the trust industry but also the regulators, who are demanding more from trustees and fiduciary services providers while at the same time embracing new technologies, such as the electronic collection and verification of due-diligence documentation. This alone is streamlining the onboarding of new structures and their ongoing due-diligence maintenance. The new technology is simplifying the certification process and expediting what can potentially be a drawn out and stressful process for families and trustees.

Digital document management

With employees now increasingly working from home, trust services firms have been forced to accelerate the digitisation of information. Document management systems, if not previously implemented, are being prioritised so that documents can be accessed online rather than being physically placed in files. Across the fiduciary services industry, electronic signing is now common use; even banks are making allowances and accepting electronic signatures on instructions. All of this increased electronic data has seen trustees explore the use of artificial intelligence to help file documents and information (information stored electronically is after all only efficient if it is filed in the right place)

Improved Client Experience

Manual processes (such as payments and directors/trustee meetings, etc.) have been altered so that they do not physically take place in the same office and so information is shared electronically beforehand. This has been facilitated by advances in videoconferencing, with many meetings now being conducted over Zoom, Microsoft Teams, Google Meet and Skype. Although no substitute for a good old-fashioned face-to-face meeting, especially in the case of trust intergenerational wealth planning and succession planning, this technology is certainly proving to be an improvement on the telephone conferencing systems.

Data Security

The increased remote access of information has caused fiduciary services businesses to look at how their data is stored, managed and accessed. In many instances, physical servers are being done away with and trustees are moving onto the ‘cloud’ with robust processes around their data access and usage. Although logging in remotely has never been easier, the access to the information has never been more regulated and monitored, ensuring clients can retain peace of mind in relation to both the storage and access of their data (a topical subject for many families and their advisors).

Improving efficiencies

Most importantly, the consolidation of the trust industry has resulted in once-smaller independent trustees now having the capital to spend as they form part of a larger group. Access to capital allows them to invest in bespoke trust systems that are now being used industry-wide, with the level of expenditure dictating how much of the system is used. When these systems are properly populated, they are not only an excellent management and regulatory tool allowing the close monitoring of client structures, but they also allow efficiencies to be built into day-to-day trust administration. These efficiencies include streamlined financial reporting, workflows to facilitate basic administration, streamlined bookkeeping and reporting to facilitate international filings. Increasing efficiencies ultimately combat the consistent upward pressure on fees.

So, what does the future hold?

There is no doubt the use of technology will accelerate and add efficiencies to the fiduciary services industry, thereby removing many of the more inefficient manual processes, and setting some trustees apart. The increased access to relevant and useful management information will delight regulators as it will help the industry with its risk management and help keep trust service providers competitive. With this change and technology now being embraced, it will be interesting see how the trust industry continues to evolve over time.

The Article ‘Trust in the future’ published in the STEP Journal +, 14 January 2022

IMPORTANT INFORMATION

This document has been prepared to assist clients who are considering creating a trust (in either the Island of Jersey or Mauritius). It is not intended to be comprehensive in its scope and it is highly recommended that a client obtains both legal and tax advice (as may be appropriate) prior to the establishment of a trust and any proposed transfer of assets.

These services are provided by Standard Bank Offshore Limited’s subsidiaries in the Island of Jersey and Mauritius. Standard Bank Offshore Trust Company Jersey Limited is regulated by the Jersey Financial Services Commission, to provide corporate and trust services. Registered office address is Standard Bank House, 47-49 La Motte Street, St Helier, Jersey, JE2 4SZ and registered in Jersey under No 9153.

Standard Bank Trust Company (Mauritius) Limited is regulated by the Financial Services Commission, Mauritius, to provide corporate and trust services and does not fall under the regulatory and supervisory purview of the Bank of Mauritius Registered office address is Level 9, Tower B, 1 Cyber City, Ebene, 72201, Mauritius and business registration number: C06021609

The above entities are wholly owned subsidiaries of Standard Bank Offshore Group Limited whose registered office is Standard Bank House, 47-49 La Motte Street, St Helier, Jersey, JE2 4SZ. Standard Bank Offshore Group Limited is a wholly owned subsidiary of Standard Bank Group Limited which has its registered office at 9th Floor, Standard Bank Centre, 5 Simmonds Street, Johannesburg 2001, Republic of South Africa. The Standard Bank of South Africa Limited, an authorised Financial Services Provider (FSP number 11287).