Issues Archive » FundsTech Spring 2021

Talking heads: The reinvention of the funds industry

Working_from_homeOne year on from a global move to home working, FundsTech asked the industry’s leading figures what 2020 meant for them and their hopes for the year ahead.


What was the most important development of 2020?
The ongoing digitisation of processes was particularly important during 2020 and it’s something that we had invested in during the course of 2019. When the pandemic hit and teams were physically separated owing to the need to work from home, having a common online process management tool was critical in ensuring teams remained efficient and joined up – particularly in the administrative and support functions. Linked to that is also the increasing automation of processes and I expect that to continue as trend in 2021 and beyond.

What are the priorities for 2021?
The first is how firms achieve a seamless integration between the office and home office environments. If businesses don’t have a slick mechanism for bringing office and remote workers together, businesses could see silos start to develop between those in the office and those working at home. Getting both the cultural aspects and technological aspects right therefore is very important. The second is the ongoing importance of data as an asset. Many of the fundamental technology trends require a strong data foundation. Whether it is greater integration of the industry’s ecosystem through use of APIs, RPA or AI and machine learning – all of these technologies rely on quantity and quality of data to generate real value in the business. Whilst quality and availability of good data is not a new trend, many businesses are now realising that a failure to sort out their data will inhibit their ability to implement and benefit from the power of these newer technologies in the future.


What was the most important tech development of 2020?
2020 and the Covid crisis merely confirmed and even accelerated developments we have been observing over the last few years. The asset management industry is facing structural trends that are forcing companies to increasingly think about technology solutions: low rate environment, pressure on margins, the increasing requirements of regulators, the need for more digital and tailored solutions so that companies in the investment industry can instead focus on their core business while being operationally efficient.

What will happen in 2021?
We see two major trends in 2021. Firstly, the need to engage even further in the direction of actively supporting sustainable investment solutions, whether through decision-making tools, compliance or reporting. Another priority will be to pursue technology and operational transformation projects to cope with the trends accentuated in 2020, mainly looking for business scalability and restoring profitability.


What was the most important development of 2020?
For me, the major progress was the area of technology solutions that permit companies to collaborate more efficiently and more cost-effectively in order to benefit end-investors. This covers open platforms, the Open Banking concept which is linked to shifts in attitudes towards the issue of data ownership, and open fintech app stores which allow clients to easily connect to fintech applications within an open marketplace. Finally, I would mention the account aggregation services that pull together data from disparate agencies like banks, mutual fund houses to enable fully integrated start-up offers.

What will we see in 2021?
Asset tokenisation is a fascinating field with vast potential to democratise ownership of real estate and private equity assets which have traditionally only been available to higher-net-worth investors due to minimum investment gatekeeping. Scaling up the tokenisation will increase capital inflows and combining this with fractioning will ensure greater liquidity for these investments that will help smaller investors better diversify their portfolios. Process flow streamlining will also be a major focus throughout 2021, further raising STP [straight-through processing] rates with robotic process automation (RPA) and chatbot-style artificial intelligence (AI) client query handling along with in machine learning technologies in applications like securities lending.


What was the most important development of 2020?
The high volumes, resulting from the pandemic-induced volatility in March 2020, exposed weaknesses in asset management firms’ post-trade processes. For clients still using manual processes, the doubling in trade volumes led to a high rate of trade failure. As a result, firms placed an increased focus on post-trade automation and team resourcing, in order to futureproof them for the next market event.

What will we see in 2021?
In 2021, we are seeing a continued spotlight on middle and back-office automation. The industry is preparing for the implementation of the Settlement Discipline Regime (SDR) in 2022 and with it comes the threat of penalties for settlement fails. Amongst asset management firms, there is a great divergence in readiness – some have advanced their plans significantly, having made the necessary upgrades to their internal systems, while others are still considering how best to improve their levels of post-trade automation. Either way, firms should address post-trade weaknesses over the coming months to lower the chance of financial penalties and costs related to trade failure under next year’s SDR.