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Supplements » FundTech Winter 2020

Roundtable: Data updated

FundTech – Have we seen any progress in terms of new technology like 5G, quantum computing, tokenisation, robotics and DLT [digital ledger technology] and the impact it could have on the use of data?

Keefe – Calastone has been live on its DLT network for 18 months and we have learned a lot. Having trading information enables us to share that data internally and with our clients on a permissioned real-time basis. But the technology is moving forward at such a pace that there are new use cases coming out all the time and we are seeing an acceleration in the applicability of those use cases. 

The critical benefit is being able to share data on a permission basis around an industry, not just two or three parties – we’re talking about having a regulator have access to data and be a data consumer. DLT allows you to plug permission parties in to view data however they want to view it, it doesn’t have to be in real time but in a timely fashion, and it’s immutable. It’s a regulator’s dream.

But DLT’s only part of the answer. We have trading and settlement dashboards we give to clients, but what we hear from clients now is, ‘That’s great, you’re telling me what I know is going to happen; what don’t I know?’ New technology and AI enables us to be able to predict against previous trading and settlement flows, for example, what’s coming up in the next week or two weeks or the next month for a portfolio manager? What is their liquidity exposure looking like? These use cases are coming to the fore. 

Peacham – Amundi has been working with a provider of AI and robotics particularly around automating some of our internal processes and developing proof of concepts for challenges such as PEP [politically exposed person] compliance, factsheet reviews and price updates – all very time-consuming processes. We are running these about 23 hours a day in parallel with the existing manual operations and hope to roll them out very soon. I would love to hear more about the application of quantum technology because it is a fascinating area and one that could effectively change the world. Although progress seems to be slow in relative terms that we are used to in contemporary computing advances, we are very close to a breakthrough that will have profound effects in financial services and the world in general.

Clarkson – The other point with quantum, along with 5G, is that it will explode the data output further, so the ability to handle and process that additional data will be crucial. Quantum will also help the blockchain, which is going to create a lot of redundant data because you’re making it immutable. You add each stamp and each block to that, which then creates another large data source, but if you can reduce that down with quantum to a manageable data source that’s immutable, that will create the ultimate benefit.

FundTech – We have seen open banking and the use of APIs in the banking world. Could we see something similar in the funds market – a kind of open asset management?

Roche – There are certainly aspects of it that would make asset management and interaction with the investors a lot more effective. On the institutional investor side, for example, there are definitely sources that can be used to share publicly available information such as regulatory status, address, business licence and so on. By connecting all those sources, the information could be integrated automatically so that the investors would not have to provide it themselves. On the retail investor side, it is more complex because it’s personal data subject to data protection and information security regulations.

Clarkson – There isn’t the volume of retail investors yet for API-based open asset management. It is also very diverse between countries. In Ireland, we don’t have a very big retail fund market at all. The UK would be a large player, but if you look at the French and German models, that’s very much based on centralised depositaries. Banking is easier in many ways because it is about money, whereas the funds market is about long-term savings. That is not to say it is dull and dreary, but it’s not going to excite people enough to see lots of new open APIs and an explosion of data. At the institutional level, it’s much more about ‘plug and play’ and the ability to get whatever data they want whenever they want it.

Peacham – Amundi’s portfolio management system (ALTO) is developed with the open asset management language (OPAL) in mind and we are using it for most of the services we offer to investors and to other asset managers, even reporting. It is also a key advantage for integration, whether that is other entities that Amundi has acquired or to other service providers. From a future-proofing perspective, open asset management language should be part of your overall strategy.

Keefe – We are down the path of making it happen. However, when you compare asset management to banking, there’s such a divergence and a larger number of entities that you need to connect, which makes it really difficult. With banking, there is more of a captive audience. But when you look at the trends in Asia, there is a clear demand for a model where you have mass retail investment capabilities directly available in a fund. One of the distributors on our network is Grab, the Uber of Asia, and they enable auto top-ups to funds directly from retail investors’ spending, playing back all of the clients’ data in the app. We need to take heed of what is happening in Asia because it directly affects the European funds market and, we will start to see the same investor behaviour in Europe in the near future.

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