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Magazine Issues » April 2022

Roundtable: Achieving personalisation at scale

Funds Europe – What are the technology issues from an asset servicing perspective? Can you serve both an asset and a wealth management market with the same platform or are you trying to consolidate this infrastructure that you provide for both?

Tummala – From a service provider point of view, it is about embedding ourselves as much as possible into this value chain. You can’t do that with the conventional, boxed software. We have to develop a very flexible architecture and a collection of micro services that can be enabled on a flow-by-flow basis. The technology capability is already available, I don’t think we are inventing anything new here, it’s about using the current capabilities to embed ourselves at both ends of the value chain to be delivering value.

Service providers are largely processing shops and our strength is performing those operational processes at scale so that we neutralise the cost for both ends of the value chain. Our challenge is to get to a place where technology is core to what we are doing and operations are an oversight function. That will allow us to create a huge amount of variants on the distribution side – for example, supporting a discretionary portfolio management platform, a custom index advice, or robo-advisory.

It’s the same thing in the asset manufacturing space as well. Why do we need to replicate data across asset managers and ourselves? How can we use either the benefits of blockchain to maintain a golden source of data between a service provider and an asset manager and a distributor?

Are we there today? Absolutely not, but as more technology becomes available at lower cost, we will get to that point. For example, today you have three or four public cloud providers and you’ve got to make a choice, but as the ecosystem matures you would not have to worry about who the underlying cloud provider is. Similar capabilities will come into the asset management world as technology becomes less complicated.

Wade – The main operational challenge in the industry is one of path dependence. The way that the industry works, the way the actors are set up and the way that the regulation works, was baked in decades ago. In any industry, when you try and change something from the inside out, just sticking to the path that you’re already on, it’s very difficult to get to these monumentally different outcomes. There’s an increasing recognition from asset managers that you can’t just layer on the infrastructure to run on top of the current infrastructure because you’re just going to double up on cost. You have to create something new in order to go to market with a new proposition.

Secondly, that infrastructure needs to be open, where it can be equally accessed and engaged with by multiple parties, a bit like the consortiums that led to the development of Visa or Swift network.

These open infrastructures that lead to a step change in service and outcomes for the end investor have to be industry-led and therefore come with a time constraint that that kind of model goes with.

Gillan – As much as we would all like to see ourselves as disruptors and innovators, I do think the asset management industry has a tinge of conservatism about it and can move a lot more slowly than it perhaps should. Things like that mutualisation will help because it lends an air of robustness to the process that will push more asset managers to adopt some of the technology.

The technology is not new and there is nothing here that we’ve discussed needs to be invented, the tech is available and there are providers out there.

At the moment it’s a journey for asset managers. We are on the first few steps on that journey and no doubt there will be an inflection point in the very near future where there’s a real take-off.