Every now and again, a technology bursts onto the scene that seems to turn the world upside down. Tesla did it with cars by finding a way to make the impossible, possible –combining fast, beautiful and supremely eco-friendly. Apple did it for music, pushing the amount of songs you can hold in your pocket from 12 to 1000 with one small iPod. The asset management industry seems to have had a long wait for its own technology train. But now it has pulled into the station … and it’s one high speed bullet train that you don’t want to miss.
Blockchain: the #Fintech that asset managers have been waiting for.
Imagine a technology that will make your processes faster, sleeker and more streamlined. The days of check after check after check for AML and other anti-fraud measures could now be over with Blockchain set to sweep away a whole series of middle men with one neat, smart technology.
Blockchain is the technology that underpins bitcoin and will make a ledger of all transactions that have been executed a reality. It’s made up of blocks – they are a little like bank statements if we take banking as our analogy – which are connected together in chronological order to form a full history of a persons’ transactions. The implications of this for the industry are enormous. Gone will be the intermediaries who validate and relay transactions: instead only “approved” parties will be authorized to be in the Blockchain, where all transactions, balances and addresses are stored. Is this not the very definition of innovation?
Robo-advisors
This technology will be a real game changer for asset managers who want to fully crack the market for investors with €10,000 or under. If a traditional set-up with human advisors usually has 150 basis point fees, robo-advisers have the potential to cut this right down to 30 basis points. With pressure on fees especially high at this point in the market – where value for money is a priority for customers – it could be the answer that asset managers have been searching for. Technology like this is the stuff of fund houses dreams in terms of tackling the all-important fee question.
If we talk about potential, these two technologies have bags and bags of it. They can iron out some age-old problems that asset managers have been grappling with for years. At the Fund Forum this year, during the panel I took part in on Fintech, the consensus on one major point was crystal clear for all: the shake-up is coming so you’d better be ready!
