Blurry visions
30 March 2016
TSAM Europe got a little futuristic with talk of tech, data innovation and blockchain, but plans may be marred by the regulations up ahead
Image: Shutterstock
Speakers and delegates at TSAM Europe gathered in London to take a peek in to the future of asset management. Presentations predicted future disruptions and explored the upcoming regulatory challenges, while others addressed the swathes of data that managers will face, likely sooner rather than later.
An opening keynote speech from David Wood, chair of London Futurists and principal at Delta Wisdom addressed disruption as the ‘elephant in the footpath’, suggesting that the industry should anticipate “disruption that is going to be faster and more profound than we’re used to”.
Wood suggested that asset managers can be distracted by issues they deem to be more pressing, such as operational requirements and enhancing products to address issues arising in the more foreseeable future. He said that, additionally, firms should strive to prepare for the unexpected, via studying technology trends and embracing organisational agility.
The pace of disruption is set to accelerate, he said. As new software is developed, it is used to help build the next generation of software, while a growing population means more people to come up with new innovations, solutions and products.
At the same time, as technology improves, more people have access to better education, and can network together, meaning ideas can spread and multiply. Wood pointed out that there are more engineers, innovators and entrepreneurs than ever before, approaching issues from different angles.
“There’s going to be more disruption ahead,” he said, adding: “We’re living in a very complicated world”.
With regard to technological developments, Wood argued that new technology can take some time to get beyond its initial potential, and that disruption takes a long time in gestation.
There is often hype around technology, “especially by technology enthusiasts”, however, because of a lack of usability and limited integration and support, there are often disappointments before a new technology breaks through, at which time a new platform will take off and previous platforms will lose their competitiveness. He said: “We’ll have to be quick and nimble on our feet to transition.”
Wood applied this to the rise in blockchain technology, suggesting that it is going to change the industry significantly. He suggested that asset managers owe it to their companies to monitor such trends, to build scenarios, identify what he called “canary signs”, and work to “understand not just what’s credible but what’s desirable”.
He concluded: “To be frank, I can’t yet make my mind up about how disruptive blockchain is going to be.”
Although bitcoin may not have lived up to its hype so far, Wood argued that the “underlying tech is very sound” and that blockchain is “genuinely valuable and innovative”.
He said the technology is “in the slow and sleepy phase” rather than the “fast and furious”, but stressed that the industry should prepare “to thrive on the disruption ahead rather than being victims of it”.
A panel discussion addressed the uncertainties in the regulatory landscape for asset managers, with one speaker pointing out that disruption in the industry is part of everyday life now, and that it “influences very practical matters”.
He added that where banking regulation leads, other industries tend to follow soon after.
Specifically, he pointed to the Trading Book Review, which could affect the cost of trading and portfolio allocation, as well as derivatives trading rules, making central counterparties (CCPs) a more important part of the banking infrastructure and therefore a greater risk if they were to fail.
Another panellist also expressed some concern over mandatory central clearing, saying: “We are concerned what might happen in a stress scenario, in a crisis, to clearinghouses.”
In such a scenario, he said, the first priority would be to save the CCP at all costs, and “unfortunately it’s the money of the investors” that might be put at risk.
The speaker raised the issue of the financial stability agenda, which is influencing work on a global scale. “We face a fairly uncertain prospect,” he said, suggesting that concerns still remain “more broadly from non-banks and non-insurers”.
He added, however, that while regulators initially tended to focus on the size of asset managers and their funds, regulatory processes are now “much more sophisticated and we welcome that”.
Regulations should address markets more holistically as “an ecosystem of all players”, considering what regulation for all could mean for wider-reaching financial stability, he said.
Responding to a question about unforeseen consequences of the regulatory agenda, panellists generally agreed they haven’t necessarily seen anything unexpected. One said: “The good thing is that the authorities are now beginning to think about the cumulative impact.”
Another added: “Regulators are far more joined up than they used to be,” although he continued to say that both regulators and institutions are still in siloed models, and “always will be”.
In the data management stream of the conference, chair Ronan Brennan, chief technology officer at Accudelta, opened by stressing: “In order to make good investment decisions we need good data.”
Brennan suggested that there are not as many chief data officers in asset management as there should be, and that the industry needs to shift from an emphasis on data quality to data governance, to ensure data is being used in a contextually correct manner.
This requires good data, data integrity and a good structure to the data, he said, and while technology can be used as a framework, it is not a “silver bullet”.
Andrew Barnett, head of investment data at Legal & General Investment Management, agreed on the importance of recognising the value of data, saying that it is important to get interest from an executive level of an organisation from day one. He argued that the attention put in to data “should equate to the amount of attention and detail they put in to managing money”.
Another panellist suggested that the challenge comes because “there isn’t a clear means of communication”.
He suggested that either recipients of data are unsure of exactly what they’re looking for, or those providing in the data cannot deliver the specific information. With different definitions of things like the investment book of record, and with all participants trying to seem like experts on data management, lines of communication tend to break down, he said.
However he conceded that finding the key to data innovation is “not necessarily the most pulse-racing thing out there”.
Later, Patrick Engelhard, head of market and master data at Zurich Insurance Company, asked why the industry needs data governance, saying: “Regulatory changes are only a small piece of it.”
He argued that governance is also driven by clients’ increasing need for information and transparency, as well as by changing market conditions and business strategies, new systems and a changing application landscape.
Engelhard added that the industry should focus on utilisation, suggesting that there could be more value to be gleaned from data that has not been explored yet.
With more attention from regulators, firms need to have an idea of how to handle data requirements in the future, ensuring they have complete transparency on data lineage; where the data came from, and how they are using it. At the same time, he said, more and more stakeholders are becoming involved.
“Data management teams should be the microscope and the telescope at the same time,” said Engelhard.
Teams have to have a granular view of the data, but must also be able to see the bigger picture and wider impacts of it.
Although quality of data is an important part of achieving this, Engelhard argued that, actually, the people involved in data management, the business structure and the technology used are equally important for properly understanding data. He urged delegates to ask: “What is the legitimation for the existence of that data?”
It takes data interpretation to turn information in to knowledge, he said. Once data comes in to an organisation it has to be transformed in to information, which then has to be transformed in to meaningful knowledge. Before this is possible, organisations have to have a business model that is fit for purpose and disciplined staff members with zero tolerance of error.
Engelhard concluded by stressing that good data governance can make asset managers’ lives better, but that the industry does not have it entirely figured out yet. He said: “We are on the journey, so to speak.”
An opening keynote speech from David Wood, chair of London Futurists and principal at Delta Wisdom addressed disruption as the ‘elephant in the footpath’, suggesting that the industry should anticipate “disruption that is going to be faster and more profound than we’re used to”.
Wood suggested that asset managers can be distracted by issues they deem to be more pressing, such as operational requirements and enhancing products to address issues arising in the more foreseeable future. He said that, additionally, firms should strive to prepare for the unexpected, via studying technology trends and embracing organisational agility.
The pace of disruption is set to accelerate, he said. As new software is developed, it is used to help build the next generation of software, while a growing population means more people to come up with new innovations, solutions and products.
At the same time, as technology improves, more people have access to better education, and can network together, meaning ideas can spread and multiply. Wood pointed out that there are more engineers, innovators and entrepreneurs than ever before, approaching issues from different angles.
“There’s going to be more disruption ahead,” he said, adding: “We’re living in a very complicated world”.
With regard to technological developments, Wood argued that new technology can take some time to get beyond its initial potential, and that disruption takes a long time in gestation.
There is often hype around technology, “especially by technology enthusiasts”, however, because of a lack of usability and limited integration and support, there are often disappointments before a new technology breaks through, at which time a new platform will take off and previous platforms will lose their competitiveness. He said: “We’ll have to be quick and nimble on our feet to transition.”
Wood applied this to the rise in blockchain technology, suggesting that it is going to change the industry significantly. He suggested that asset managers owe it to their companies to monitor such trends, to build scenarios, identify what he called “canary signs”, and work to “understand not just what’s credible but what’s desirable”.
He concluded: “To be frank, I can’t yet make my mind up about how disruptive blockchain is going to be.”
Although bitcoin may not have lived up to its hype so far, Wood argued that the “underlying tech is very sound” and that blockchain is “genuinely valuable and innovative”.
He said the technology is “in the slow and sleepy phase” rather than the “fast and furious”, but stressed that the industry should prepare “to thrive on the disruption ahead rather than being victims of it”.
A panel discussion addressed the uncertainties in the regulatory landscape for asset managers, with one speaker pointing out that disruption in the industry is part of everyday life now, and that it “influences very practical matters”.
He added that where banking regulation leads, other industries tend to follow soon after.
Specifically, he pointed to the Trading Book Review, which could affect the cost of trading and portfolio allocation, as well as derivatives trading rules, making central counterparties (CCPs) a more important part of the banking infrastructure and therefore a greater risk if they were to fail.
Another panellist also expressed some concern over mandatory central clearing, saying: “We are concerned what might happen in a stress scenario, in a crisis, to clearinghouses.”
In such a scenario, he said, the first priority would be to save the CCP at all costs, and “unfortunately it’s the money of the investors” that might be put at risk.
The speaker raised the issue of the financial stability agenda, which is influencing work on a global scale. “We face a fairly uncertain prospect,” he said, suggesting that concerns still remain “more broadly from non-banks and non-insurers”.
He added, however, that while regulators initially tended to focus on the size of asset managers and their funds, regulatory processes are now “much more sophisticated and we welcome that”.
Regulations should address markets more holistically as “an ecosystem of all players”, considering what regulation for all could mean for wider-reaching financial stability, he said.
Responding to a question about unforeseen consequences of the regulatory agenda, panellists generally agreed they haven’t necessarily seen anything unexpected. One said: “The good thing is that the authorities are now beginning to think about the cumulative impact.”
Another added: “Regulators are far more joined up than they used to be,” although he continued to say that both regulators and institutions are still in siloed models, and “always will be”.
In the data management stream of the conference, chair Ronan Brennan, chief technology officer at Accudelta, opened by stressing: “In order to make good investment decisions we need good data.”
Brennan suggested that there are not as many chief data officers in asset management as there should be, and that the industry needs to shift from an emphasis on data quality to data governance, to ensure data is being used in a contextually correct manner.
This requires good data, data integrity and a good structure to the data, he said, and while technology can be used as a framework, it is not a “silver bullet”.
Andrew Barnett, head of investment data at Legal & General Investment Management, agreed on the importance of recognising the value of data, saying that it is important to get interest from an executive level of an organisation from day one. He argued that the attention put in to data “should equate to the amount of attention and detail they put in to managing money”.
Another panellist suggested that the challenge comes because “there isn’t a clear means of communication”.
He suggested that either recipients of data are unsure of exactly what they’re looking for, or those providing in the data cannot deliver the specific information. With different definitions of things like the investment book of record, and with all participants trying to seem like experts on data management, lines of communication tend to break down, he said.
However he conceded that finding the key to data innovation is “not necessarily the most pulse-racing thing out there”.
Later, Patrick Engelhard, head of market and master data at Zurich Insurance Company, asked why the industry needs data governance, saying: “Regulatory changes are only a small piece of it.”
He argued that governance is also driven by clients’ increasing need for information and transparency, as well as by changing market conditions and business strategies, new systems and a changing application landscape.
Engelhard added that the industry should focus on utilisation, suggesting that there could be more value to be gleaned from data that has not been explored yet.
With more attention from regulators, firms need to have an idea of how to handle data requirements in the future, ensuring they have complete transparency on data lineage; where the data came from, and how they are using it. At the same time, he said, more and more stakeholders are becoming involved.
“Data management teams should be the microscope and the telescope at the same time,” said Engelhard.
Teams have to have a granular view of the data, but must also be able to see the bigger picture and wider impacts of it.
Although quality of data is an important part of achieving this, Engelhard argued that, actually, the people involved in data management, the business structure and the technology used are equally important for properly understanding data. He urged delegates to ask: “What is the legitimation for the existence of that data?”
It takes data interpretation to turn information in to knowledge, he said. Once data comes in to an organisation it has to be transformed in to information, which then has to be transformed in to meaningful knowledge. Before this is possible, organisations have to have a business model that is fit for purpose and disciplined staff members with zero tolerance of error.
Engelhard concluded by stressing that good data governance can make asset managers’ lives better, but that the industry does not have it entirely figured out yet. He said: “We are on the journey, so to speak.”
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