ALFI: Asset managers ready for fintech revolution
09 March 2016 Luxembourg
Image: Shutterstock
Use of, and investment in, financial technology has increased significantly, potentially providing significant benefits to asset managers, according to Simon Ramos, a partner at Deloitte Luxembourg.
Speaking at the Association of the Luxembourg Funds Industry (ALFI) Spring Conference, Ramos presented a study conducted on behalf of ALFI, which investigated the ways in which ‘fintech’ could affect fund distribution.
The study found fintech to be mostly used for lending purposes, although this was followed closely by payments. Ramos also noted that global investment in fintech totalled $4 billion in 2009, a figure that rose to $12.2 billion in 2014.
One practical implication of fintech is as an accelerator to creating efficiency and reducing costs. Ramos said that this innovation is “not only a challenge but also an opportunity”.
The study suggested that the increased use of big data could have very tangible benefits for asset managers. Big data could mean a better portfolio and transaction data, as well as data for use in anti-money laundering (AML) and know-your-client (KYC), and could also allow for more effective collection and analysis.
This means asset managers could tailor advice and products to the needs of clients and improve their marketing strategies, while the data could also have positive cyber security implications.
In addition, the growing use of direct-to-consumer (D2C) channels means fintech could be used to provide investors with better proximity to asset managers. Ramos also suggested that there is an increasing interest in ‘social investments’, allowing peers to compare their investment strategies and results.
Developments in the D2C space offer asset managers the opportunity to build more intuitive online platforms and to better engage with the end investors. There could also be an opportunity to create robo-advisor products and to improve wealth reports for investors, Ramos said.
With regards to blockchain and similar emerging initiatives, Ramos conceded that there “will not be a big bang revolution”, arguing instead that a hybrid model will emerge, offering automation and enhanced digital platforms, and specially designed financial reporting technology. He also predicted a rise in the use of one-stop managed services for asset managers.
Finally, Ramos referred to regulatory technology, or ‘regtech’, suggesting that, with an increase in regulation for fintech, scalable ‘regtech’ solutions could provide regulatory and transaction reporting solutions, screening services and AML and KYC compliance services.
Speaking at the Association of the Luxembourg Funds Industry (ALFI) Spring Conference, Ramos presented a study conducted on behalf of ALFI, which investigated the ways in which ‘fintech’ could affect fund distribution.
The study found fintech to be mostly used for lending purposes, although this was followed closely by payments. Ramos also noted that global investment in fintech totalled $4 billion in 2009, a figure that rose to $12.2 billion in 2014.
One practical implication of fintech is as an accelerator to creating efficiency and reducing costs. Ramos said that this innovation is “not only a challenge but also an opportunity”.
The study suggested that the increased use of big data could have very tangible benefits for asset managers. Big data could mean a better portfolio and transaction data, as well as data for use in anti-money laundering (AML) and know-your-client (KYC), and could also allow for more effective collection and analysis.
This means asset managers could tailor advice and products to the needs of clients and improve their marketing strategies, while the data could also have positive cyber security implications.
In addition, the growing use of direct-to-consumer (D2C) channels means fintech could be used to provide investors with better proximity to asset managers. Ramos also suggested that there is an increasing interest in ‘social investments’, allowing peers to compare their investment strategies and results.
Developments in the D2C space offer asset managers the opportunity to build more intuitive online platforms and to better engage with the end investors. There could also be an opportunity to create robo-advisor products and to improve wealth reports for investors, Ramos said.
With regards to blockchain and similar emerging initiatives, Ramos conceded that there “will not be a big bang revolution”, arguing instead that a hybrid model will emerge, offering automation and enhanced digital platforms, and specially designed financial reporting technology. He also predicted a rise in the use of one-stop managed services for asset managers.
Finally, Ramos referred to regulatory technology, or ‘regtech’, suggesting that, with an increase in regulation for fintech, scalable ‘regtech’ solutions could provide regulatory and transaction reporting solutions, screening services and AML and KYC compliance services.
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