Share page with AddThis

Issues Archive » FundTech Autumn 2020

Roundtable: From fundtechs to fund managers

Our experts discuss Covid-19, innovation labs, institutional attitudes and what makes a successful start-up. Chaired by Nicholas Pratt.

FundTech_Roundtable_Autumn_2020

Adam Belding (CTO, Calastone)
Keith Hale (chairman, TrustQuay)
Andrew Hampshire (COO & CTO, Gresham House)
Olivia Vinden (head of fintech, Alpha FMC )
Nasir Zubairi (CEO of Luxembourg House of Financial Technology)

FundTech – How would you describe the relationship between the funds industry and fintech start-ups?

Andrew Hampshire, Gresham House – It is evolving. The challenge and the opportunity are big and it is an industry where there is more innovation and digitalisation to come. We operate in a very strict regulatory environment where you need bulletproof technology. That does not mean there is not an ability to work with start-ups, but you need a clear business case as to the value it is providing to justify the risk of working with a start-up rather than working with a more established firm. The value levers in a business like ours are pretty simple – you want to raise money, deploy money, manage money well, manage risk and take out cost. You want to do all this as efficiently as possible and deliver value to the clients in the process. There is plenty of opportunity to use technology to do that and start-ups can often provide innovation in these areas. Conversely, there is also a challenge around the nature of the regulatory environment and the complexity of the industry and this can be hard for start-ups to understand if they don’t come with a strong industry background.

Keith Hale, TrustQuay – It is mixed. The level of interest has changed dramatically in the last ten years, from very low to much higher, but the engagement with start-ups has a long way to go. The industry often wants to hear about blockchain, AI, big data projects and the solutions that fit into those categories, but the truth is the funds industry is a pretty conservative bunch. They point to regulation restrictions or lack of budget but oftentimes it is the procurement departments that are asking three years of P&L from start-ups that are still burning cash just to get started. This can kill the projects before they are born. But, that said, procurement has a point – 95% of start-ups do fail.

Hampshire – There are two aspects to procurement. One is all the checks and balances and the diligence that the regulator rightly requires us to go through when you work with or outsource to a third party. The other angle is that a lot of the firms in the funds industry are small and medium-sized businesses and they don’t often have a great amount of internal technology resource. They have IT and operations teams but there are not the resources who look to invest large sums into tech R&D. As such, those businesses don’t want to go to five or six fintechs who each offer a bit of a solution and then have to stitch them all together themselves. So, they are looking to other third parties and tech consulting firms to do that for them, which adds a layer between procurement and the business. In other words, it’s not just people at fund management firms doing their checks and balances, it’s also the people advising them in the first place.

Olivia Vinden, Alpha FMC – One way the industry is trying to counteract that is via the Investment Association’s Engine fintech accelerator. They’re trying to give a consortium effect to asset managers who want to select a fintech but don’t want to be their only client. For the last five years, asset managers have been focused on enterprise-wide technology and consolidating on to single platforms and it is only now that we are starting to see some more interesting and exciting technology projects. But there is still a long way to go.

Adam Belding, Calastone – It depends on which part you’re providing fintech for. If you’re providing fintech in the retail/front-end/user experience space, analytics or other business intelligence solutions, it’s a lot easier to be innovative because it’s less critical. You can fail fast. But if you’re working at the heart of an asset manager in the core platform, it’s a totally different situation. There will be greater risk aversion and a fintech with an offering in that space might not penetrate as much as they would.

Most read features

Roundtable: The digital transformation opportunity

The funds industry is looking at adopting new types of technology, from automation to ESG reporting, blockchain and tokenisation. A FundsTech roundtable in March explored how these will revolutionise the sector.

Regulation: Panel calls for simplicity in ESG reporting

The industry accepts the need for more rigour in ESG fund reporting, but the work will be pointless if investors don’t understand the end result. Nicholas Pratt reports.

Tokenisation: The incredible potential of tokenisation

Tokenisation offers a new generation of investors access to a wide range of asset classes. But a lack of analysts is one reason why the market may not be ready for the possibilities, finds Nicholas Pratt.

Cryptocurrencies: Crypto funds face long wait for regulatory approval

While crypto currencies forge onwards, access for investors who prefer to invest through regulated vehicles remains muted. A wait-and-see stance by regulators lies at the centre of this, finds Nicholas Pratt.

Artificial Intelligence: For explainable AI, look in the white box

The rise in AI investing parallels A growing need to understand how computers make decisions, writes Lynn Strongin Dodds.

Sponsored Profiles

The importance of trust when building successful client-vendor teams

Petra Roche and Anna Kanior-FlorekFundTech speaks to Metrosoft’s Petra Roche and Anna Kanior-Florek about cross-organisational relationships and why mutual trust...

The digitally connected Global Transfer Agent

Anand Ramachandran, Vice President, Global Head of Solutions, Richard Clarkson, Head of Solutions, Funds and Swapnil Joshi, Senior Strategy Manager from Oracle Financial Services Global...

Data consolidation takes centre stage in asset management M&A

MergersConsolidation between asset management firms is overwhelmingly expected to increase. Operational challenges remain thanks to legacy systems. But in a recent...

Are you being microserved?

As asset managers grapple with new digital technology, FundsTech talks to Calastone’s Adam Belding about the importance of software architecture and the benefits...