Muni issuers underserved by tech, experts say

Fintech has transformed the way many industries do business and may finally be turning more attention to state and local government issuers.

"The technology that does exist in the space has been more skewed to the dealer community," said John Gunther, director, business development, Lumesis, which is now a division of SOLVE. "Munis are historically underserved from a technology standpoint. I'm seeing a proactive push over the past five years or so in getting technology out in front of people." 

There are software solutions being used in the marketplace including the Municipal Securities Rulemaking Board's EMMA system, a free muni database, but software firms are looking for greater adoption of other tools.

"EMMA is so important to our market, it's really helped the market move forward over the last decade," said Colin MacNaught, CEO, co-founder BondLink. "We all have to go there once a year and make our filings. If you can make that easier and get more out of that experience, that's going to benefit issuers."

The observations were made in a panel discussion during the Government Finance Officers Association Minimuni conference.

Part of the challenge for the software designers is creating a system that works for a diverse marketplace.

"It's fragmented," said Stephen Winterstein, head of capital markets at Alphaledger, a blockchain technology firm. "We have 65,000 issuers. Everything is bespoke and everything is unique. I understand the challenges of small issuers, but we need to embrace what the future has for us. The quicker we do that, the better it's going to be for infrastructure, public finance, and for the price transmission mechanism." 

The needs of small or infrequent issuers are a big key to designing the tools.

"Bonds sales are episodic but when you get into a bond sale, it's a big deal," MacNaught said. "It involves a huge amount of public money."

MacNaught said some issuers do not have enough staff and "that's where technology should be helpful to the issuer and there hasn't been and that's disappointing."

"We think the issuer side is where technology should be able to help the most," he added.

All the panelists stressed the need for affordability of the products.

"Just because you're a small or more infrequent issuer doesn't mean that you don't want to track how your bonds are trading in the market or pull information on similar issuers," Gunther said. "But spending $25,000 on a Bloomberg terminal a year can be cost prohibitive. If we can get tools in their hands that get them 90% or 100% of the way there, I think the market would greatly benefit from that."