In the past decade, a high proportion of technology spend in the asset management industry has gone to servicing regulatory changes, like MiFID II, or due to shifting client needs for fund reporting. Now though, we may have reached an inflection point, with the signs being that we have an opportunity to innovate.
One of the Fund Forum panel discussions focused on where platforms are driving innovation in the asset management industry forward.
In front of a packed room, the panel was well moderated by Gillian Hepburn, UK Intermediary Solutions Director at Schroders and featured:
- Aaron Overy, Head of Client and Manager Development, AMX
- Gavin Lavelle, Managing Director, EMEA, Charles River Development
- Wava Bodin, CEO & Founder, Fundrella AB
Several common themes emerged of where platforms have the opportunity to drive forward innovation:
Increasing transparency – Asset managers are challenged with providing more granular cost breakdowns and asset owners are challenged with knowing exactly where costs are incurred and what is provided for the fees they pay. For example, passive management is being increasingly offered at near zero fees, but what do clients actually get for this? If managers are charging near zero fees, surely they incentivised to cease providing anything extra (as they normally would) that costs them time or money, or to find ways of making a profit elsewhere. With so many actors and elements in the process, the challenge is to make the value of the service offered transparent, which platforms can help achieve.
Finding efficiencies – Asset Owners are asking asset managers for more: “can new products/solutions be launched?”, “can you provide this type of reporting/service?”. However, before their vision of the future can be tackled, the high amount of friction in the investment service process, caused by many people and manual processes, needs to be addressed. This will empower asset managers to meet the evolving needs of their client base.
Cutting costs – The panel were asked where in the value chain, as margins decrease, can costs be saved? It was agreed that reporting costs can be reduced substantially through the use of innovative platforms. In addition, uniting the players on one platform allows consolidation in the market. An open architecture approach, allowing, integration into the wider ecosystem is important. Ultimately, there’s a need to get data in and out efficiently.
At the same time, platforms need to balance standardisation with flexibility. A model is needed to build success and keep costs down, whilst end users may require flexibility.
ESG – Platforms can also support the growth of ESG, which was identified as a prime driver for the industry across many discussions at Fund Forum. Picking the right investments from an ESG perspective can be challenging as the industry currently lacks norms and standardisation.
Fund Forum put together an excellent panel. It was a wide ranging, engaging and optimistic discussion. Whilst these are all areas we’re focused on at AMX, it will be fascinating to see how these themes play out across the industry.