Any new investment platform at its core needs to be able to accept money from investors. The FCA Client Money rules state that an investor’s money must be held with a ‘deposit taker’ – in other words, a bank.

Today’s investor expects real-time feedback when investing funds – they want to be able to deposit funds and invest straight away, not have to wait 24 hours plus for funds to clear. Investment managers are therefore caught between the demands of investors and the legacy technology provided by most banks. Banks do not typically offer API access to allow investment managers to get real-time notifications of when funds are deposited. Instead, managers have to rely on an often manual process to download account statements to reconcile.

Increasingly, investment managers are finding it harder to open a client money account as banks are not required or incentivised to provide these services. Innovation, where it exists, is focussed on retail banking and SME banking experiences as this is where the strongest competition is coming from new entrants to the market. When firms can open an account, they are at risk of being exposed by traditional banks notoriously error-prone technology infrastructure. UK banks are required to report major operational and security incidents and in 2018 there was one report for every single day according to a Which? report.

Some firms have turned to modern payment services providers (PSPs) making use of the e-money provisions. These companies often have modern technology stacks however they are not considered ‘deposit takers’ and HMRC have confirmed that they cannot be used to hold ISA funds.

At Goji we’re reinventing the client money and payments infrastructure available to investment managers. We believe firms should focus on building what makes their business unique and not spend time wrestling antiquated banking systems. As a regulated firm, Goji offers investment managers client money and payments capability out of the box utilising our integration with Starling bank. Investment managers can now have complete visibility and control of investors’ funds in real-time and Goji are responsible for all aspects of CASS regulation.

Visit our website to find out more: https://goji.investments