The dawn of a new age in investment fund services
by Philippe Seyll, Co-CEO of Clearstream Banking
It is a recurrent theme these days: Will we slowly but surely be replaced by machines and algorithms in the future world? Will they be faster, more accurate, more reliable, more intelligent – in short: better than us in performing the tasks that must be accomplished to keep our world spinning? This week, "What’s next for funds?" - the Disintermediation and the future of the funds industry in a series by Funds Europe in association with Clearstream was published. It draws our attention to this controversial question once more while casting an eye into the future of investment fund services.
The results of the report’s survey pinpoint one such predicament: we have developed and continuously enhanced elaborate engines fund platforms like Clearstream’s Vestima for example, which provide the many comforts and benefits of a one-stop-shop. Investors and agents gain access to and enjoy the possibility to compare a wide range of funds. It comes as no surprise that a clear majority (80%) of the circa 200 participating fund professionals stated that such open architecture service design is Disintermediation and the future of the funds industry . Until now, we have been embracing this concept of open architecture. However, the traditional model is challenged by new, more immediate channels following for example online direct access models by which investors can buy funds already today. Furthermore, as the study points out, new regulation such as MiFID II / MiFIR may also have a significant impact on open architecture, given its complexity.
At the same time, in this already emergent new world the role of technology is ever-increasing. Already today there is much discussion around investors seeking advice from automated advisory systems coined "robo-advisors". This turns what was once a mere thought experiment by philosophers, writers and movie directors into reality. Will we have to surrender even more tasks to be performed by algorithms and machines to keep up with the surge of new requirements and desire for higher levels of efficiency? Will this consequently render us expendable?
I believe not. Rather, we will have our minds and hands free to tackle the complex tasks which go along with building our future – such as the human relationships required between industry and business partners and also regulators. I agree with my colleague Bernard Tancré Funds Europe: Bernard Tancré - Open architecture in need of protection that infrastructure providers like Clearstream have an important role to play in the new era. Infrastructure providers (amongst other things) constitute centralised repositories for data and will help to facilitate the exchange and analysis of large volumes of information. This way we will contribute to bringing down costs for distributors, increasing efficiency and client asset safety and so protect the open architecture model. But this only gives you a sneak peek into one of many future developments in investment fund services: stay curious for more to come.