"Unlike furniture removals, the challenge is not in the physical movement of items but in identifying which items need to be moved in the first place"
This was part of a broader FCA initiative on “Making Transfers Simpler” which culminated in PS19/29 just over one year ago. The regulator’s recent focus on transfers should come as no surprise given that promoting competition is one the three core FCA objectives. Making it easier for consumers to move between suppliers is an obvious way of demonstrating the presence of substitute products in a healthy competitive market.
In principle, it should be relatively simple to move financial services products from one place to another since they are essentially just 0s and 1s on a computer system which can now be transported at the speed of light to pretty well any location on the planet. Contrast that with the practical challenge of moving physical assets from A to B whenever we move house and, intuitively, the process seems like it ought to be straightforward.
There’s plenty of demand for this kind of finance removals service too. As well as a steady flow of retail customers looking for a better deal, there is a wave of corporate activity driving the need to move books of business around the industry. From platform M&A to big outsourcing deals, there are millions of accounts moving between providers. Yet, despite all the practice, there is little evidence that the bulk movement of financial assets has become the kind of smooth, efficient process we expect when moving house. Over recent years, the trade press has reported regular tales of migration woe and, even where projects have avoided the headlines, they have typically taken years to complete at huge cost.
So why is moving our financial belongings so much trickier than moving the furniture?
Unlike furniture removals, the challenge is not in the physical movement of items but in identifying which items need to be moved in the first place, being absolutely clear about why they are in their current location and then deciding where exactly to place them in their new home. All three are interconnected.
Starting at the end, moving a book of business requires a detailed understanding of the systems and operations where the business will end up. Simple things like whether totals are always calculated from atomic transactions or stored incrementally can make a big difference to how data needs to be migrated. At the other end of the spectrum, complex nuances around how timestamps are handled can have a disproportionate impact on key values in the data and there are any number of other potential hurdles that need to be carefully considered.
Back at the source, there is a corresponding challenge of working out where to obtain all the data to drive the target operation and that is not always as simple as it sounds. The same data items often have different names on different systems whilst, perversely different data items can have the same name. Occasionally, a data item is not held at all and has to be derived. Having located all the data required by the target operation, there is often an awkward question about what to do with the “spare” bits that are left over! As with furniture, you discard those odd-shaped fixings at your peril.
As discussed already, the physical movement of data is pretty straightforward but one wrinkle that needs careful attention is in-flight transactions. Placing a trade on one system and then migrating off that system before it settles is fraught with practical difficulty. With no equivalent of the Royal Mail postal redirection service, this is a difficulty that migration projects need to plan for carefully.
Speaking of mail, it’s a good idea when moving house to let close contacts know your new address with a “we have moved” card in the post. If you are a financial services company migrating assets, that communication is even more important as the furniture you are moving belongs to your clients who may object to the new location and choose to move themselves. Managing that communication can be a major undertaking.
When the dust finally settles on a property move, the land registry has to be notified of any change in ownership. The equivalent in financial services is usually a transfer agent or depositary and there are now electronic means to update these records in bulk. Not all organisations seem to know about this service though and it is still common to see mountains of paper transfer forms generated by migration projects.
In summary, there are some very different challenges when moving financial assets compared to furniture. However, those challenges are broadly similar across the industry and they are not insurmountable. Several technologies can help, and a number have already been used successfully on some migration projects. But approaches vary and results appear hit and miss. Isn’t it about time someone joined all the dots and launched the financial services equivalent of Pickfords?
