The depositary mandate has expanded faster than the systems meant to support it. Across the industry, teams are being asked to oversee more complex funds, evidence more decisions and respond faster when boards, governance committees or regulators ask questions. The work has changed. In many cases, the tooling has not.
Spend time with depositary teams and you hear a version of the same thing. The job keeps getting bigger, and the room for error keeps getting smaller.
Three forces are driving that change.
First, the funds themselves have changed. Portfolios once dominated by liquid, custody-eligible securities now carry private assets, alternatives, cross-border structures and layered holding vehicles. Each of those brings data that is messier, less standardised and harder to verify than a listed equity sitting in a custody account. The asset universe a depositary is expected to oversee has broadened well beyond the one most oversight processes were originally designed around.
Second, regulation has moved with it. AIFMD established the modern oversight model across cash flow monitoring, safekeeping, ownership verification and oversight of the fund’s core processes. Since then, the direction has only moved one way, with AIFMD II, DORA and a continued rise in what regulators expect to see when they ask how an obligation was discharged.
Today, the standard is not simply “we did the check.” It is being able to show what was checked, how it was checked, who reviewed it and what evidence supports the outcome.
Third, expectations have hardened. Boards and governance committees are asking sharper questions than they were five years ago. Evidence that used to be acceptable after a few days of reconstruction is now expected much faster. Oversight is being held to a higher evidential bar by everyone who depends on it. None of this is likely to reverse. Markets will not get simpler. Regulation will not get lighter. The people relying on depositary oversight will not start asking for less.
While the mandate has expanded, the software supporting it largely has not.
A lot of depositary oversight still runs on tooling built for an earlier, simpler version of the job. Rigid systems assume every fund, task and user wants the same fixed view. Spreadsheets and manual handoffs fill the gaps. Email threads and shared drives become the connective tissue between processes. The audit trail is only as strong as the team’s ability to reconstruct it under pressure.
That model does not always fail loudly. It fails quietly. Twenty minutes lost reformatting an export before an exception can be investigated. An outstanding obligation surfaced too late to act on. A decision whose rationale has to be pieced back together months later.
Individually, these issues can look small. Together, they create a widening gap between the oversight standard expected and the operational reality of delivering it. Closing that gap is the problem we spend our time on.
We have deliberately built across the depositary oversight lifecycle rather than in a single corner of it. That is because the work does not happen in a single corner. Cash flow, assets, NAV oversight and compliance monitoring are connected. The tooling should reflect that.
Cash Flow Monitoring is one of the most data-intensive duties a depositary carries. It is also one of the least suited to a fixed rule set. Our clients run it on monitoring that is highly configurable and heavily automated. It is tuned to how a given fund and structure actually behave, rather than forcing every fund through the same generic checks. The automation handles the volume. The configurability handles the fact that no two mandates monitor cash in exactly the same way.
The Asset Register is where safekeeping and ownership verification live. It has to cope with the full asset universe, not just custody-eligible securities that fit neatly into a custodian’s records. Private and non-custody assets often bring the greatest oversight challenge. They are also the assets most likely to end up tracked in spreadsheets, side files or manual processes. We rebuilt the register around a simple principle: it should adapt to the user, not the other way around. Teams need to group, filter and reorder data around the task in front of them. They need to cross-reference multiple data points at once. They need to export views without losing the context behind them. The register is designed to hold and evidence ownership for the assets where oversight is hardest and tooling is often thinnest.
Around the NAV, transfer agency activity and reconciliations, depositaries need an independent, repeatable and evidenced way of checking the administrator’s work. The point is not to replace the administrator. The point is to give the depositary its own oversight model. Fund Recs provides configurable oversight controls that allow teams to encode their own checks rather than inherit someone else’s process. Every result and every exception is captured as it happens, creating a repeatable record of the oversight performed.
Investment Compliance Monitoring is where we are heading next. It is one of the areas where legacy tooling is often most rigid. Rule libraries can be painful to change. Breach logic can be difficult to interpret. Many systems were built for a narrower asset universe than depositaries oversee today. Private asset funds are still frequently monitored for compliance in manual spreadsheets because incumbent systems were not designed for them.
We are building a modern, configurable Investment Compliance Monitoring solution on the same foundation as the rest of the Fund Recs platform.
The goal is to handle traditional and private asset mandates side by side, so compliance monitoring sits alongside cash flow, assets and NAV oversight rather than in a separate system. The common thread across all four areas is the same. Configurable tooling that fits the work. A complete record that is already there when someone asks for it.
The next phase of oversight technology will be shaped by AI. We believe the industry needs to be careful about where AI is applied. At Fund Recs, we are layering AI assistance around the oversight workflow. The right place for it is the preparation.
That means helping teams pull exceptions together, draft the first pass of an investigation, surface outstanding items across a structure, assemble evidence behind a decision and reduce the document handling that currently eats into analyst time. Done well, AI gives oversight teams their time back for the work that requires judgement.
But there is a line we hold. AI prepares. Humans commit.
The consequential calls stay with people. Sign-offs, breach determinations and formal records remain human decisions. In a function built around independent oversight, fully autonomous oversight is a contradiction. The teams that benefit most from AI will be the teams that use it to be faster, more complete and better prepared, without handing over the judgement that defines the role.
The pressure on depositaries is not going to ease. Funds will keep getting more complex. Regulation will keep raising the evidential bar. Boards and governance committees will keep asking sharper questions. What can change is whether the tooling underneath catches up to the job.
That is what we are building at Fund Recs. Cash flow, assets, NAV oversight and compliance monitoring on one configurable, auditable foundation.
AI around the work, with people keeping control of the decisions.
The mandate has already moved. The tooling can move with it.
Fund Recs supports depositaries across the full oversight lifecycle, including: