Many trust companies and professionals have fallen behind the rest of the wealth management industry in their use of IT and have still not made the necessary investment needed to increase efficiency, mitigate risk and simply remain competitive, according to research carried out by Bahamas-based wealth management software firm International Private Banking Systems.

In the run up to this year’s STEP Caribbean conference, IPBS carried out an assessment of the use of IT within the trust sector and found that many companies are still using manual record-keeping and accounting systems, or were relying on outmoded and expensive legacy technology.

"Our review of this market shows that the trust industry really needs to catch up with the standards set by the rest of the wealth management industry by using modern and up-to-date technology solutions,” said Bruce Raine, founder and president of IPBS.

IPBS points out that, without effective automation, maintaining records, accessing data and managing the regulatory disbursements of various fees and licences can entail an enormous amount of manual effort. Moreover, this impacts the trustees’ ability to establish an accurate and timely financial position - which could ultimately result in conflict between trustees and beneficiaries.

According to IPBS, an additional factor that will drive demand for new automated systems is the requirement to meet the latest Anti-money Laundering (AML) and Know Your Customer (KYC) legislation which in many instances extends beyond the relationship with the settler to each of the beneficiaries. Without effective technology, many trustees may have difficulty in answering basic questions from beneficiaries about the trust assets and the income derived from them, the firm notes.

“Whilst organisations are under pressure to reduce costs, it is important that this is done without impacting on the performance of the core business. Therefore I strongly encourage trust companies to invest in appropriate technology which will leave them well positioned when the worldwide market recovery occurs. It will also ensure that business expansion can be accommodated using existing systems without the need to increase staffing overheads," said Mr Raine.