Funds transfer: The case of Indexa Capital

A funds transfer involves moving an invested amount from one investment fund to another. The process entails subscribing to a new fund after fully or partially redeeming the shares of the previous one, with no availability of redemption amount to the investor at any point. Such transfers do not have any tax implications in personal income tax for the investor in Spain, as capital gains and losses are not taxed or deducted until the final refund occurs. Moreover, the subscribed shares maintain the same value and acquisition date as the redeemed ones.

However, such transactions often involve manual errors that can easily be avoided. For example, an incorrect identification of the fund or a mismatched account holder name. In 2022, Madrid-based investment management company Indexa Capital reported that out of 6,900 transactions, about 2,000 were rejected by the originating bank due to minor errors, such as those mentioned above.

Indexa Capital handles thousands of fund transfer operations annually, and knew they needed an ally to help them streamline and scale its transactions. And hence, eradicate manually inputting data, reducing the risk of human errors and improving accuracy. That’s when Flanks and its wealth data orchestration technology came to the scene.

The added value

The fund transfer process usually begins at the originating bank, where the funds are held. To initiate the transfer, the customer must fill out a form and answer several questions, which may be complex to answer. For instance, they may need to provide the ISIN number of a specific fund or indicate whether it's inside a particular portfolio, information the user may not even have at its disposal.

What Flanks technology does is connect to the custodian entity where the financial product is located, retrieve it, and standardize the information. And, finally, delivering it to the destination account. All of that summed up in two clicks for the customer instead, with no extra steps involved.

What challenge does it solve?

Following Flanks’ funds transfer procedure, users avoid having to manually introduce their data, which implies minimizing potential human errors that could lead to rejected submissions. A process that may get longer than usual if done wrong and may take, in certain cases, from three weeks to a month. This is worth concerning in moments of financial uncertainty, when the status of an investment fund can change drastically in little time, and decisions need to be made quicker.

Since Flanks was implemented, Indexa Capital detected a significant decrease in the rejected transfers, from 38% in 2018 to 24% in the last trimester of 2022. Also, the company noticed how the service is especially relevant for bigger or more complex portfolios, composed by more than 10 funds. This is common in high wealth portfolios and has helped us smoothing out the transitions between traditional private banks and Indexa Capital automated service.

“Flanks has helped us delight the user, making the navigation easy when dealing with complexity.”

Patrizia Cotza, User Experience Director at Indexa Capital

The benefits for users

Indexa Capital handles millions of fund transfer operations annually, and the integration of Flanks into its operations has revolutionized the process. With Flanks, users no longer have to manually input their data, significantly reducing the risk of human errors and improving accuracy. Plus, having a simple, quick solution to avoid manual mistakes in funds transfer transactions has a direct impact on the user experience: Facilitating the job of transferring funds means users may request the operation more often for other existing funds. This results in a win-win situation for Indexa Capital and Flanks.

Overall, Indexa Capital customers can trust that their funds will be processed quickly and securely, with minimal hassle. The company is proud of the impact it has had on the financial landscape and, along with Flanks, is committed to continuing its efforts to make the funds transfer process easier and more accessible for everyone.