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FINTECH INNOVATION FOR INVESTMENT MANAGEMENT FUNDS

KEY POINTS

  • 01
    WHAT is FinTech and WHY it’s so crucial on the buy-side right NOW?
  • 02
    WHAT is the Buy-Side and WHAT kind of FinTech Solutions the need?
  • 03
    WHAT does FinTech has to offer for Investment Management Funds?
  • 04
    WHAT are the examples of FinTech companies and their products that we recommend for Investment Funds?
  • 05
    WHERE to go next for more information?

WHAT ARE THE EXAMPLES OF THE BUY-SIDE?

  • 01
    Mutual funds
  • 02
    Pension funds
  • 03
    Insurance companies
  • 04
    Private equity funds
  • 05
    Hedge funds
  • 01
    Family offices
  • 02
    Venture Capital Funds
  • 03
    Asset Management Funds
  • 04
    Wealth Management Funds

Buy-side analysts will determine how promising an investment seems and how well it coincides with the fund’s investment strategy.

They’ll base their recommendations on this evidence. These recommendations, made exclusively for the benefit of the fund that pays for them, are not available to anyone outside the fund.

WHAT TYPE OF TECHNOLOGY SOLUTIONS INVESTMENT MANAGEMENT FUND NEEDS?

    • Portfolio and Risk Management Tools
    • Portfolio Analytics
    • Portfolio Construction
    • Performance Measurement & Attribution
    • Risk Analytics
    • Benchmark Indices
    • Compliance and Risk Oversight
    • Investment & Trade Compliance
    • Transaction Cost Analysis
    • Surveillance & Trade Reconstruction
    • Regulatory & Risk Reporting
    • Research and Idea Generation
    • Market Insights
    • Company & Industry Analysis
    • Quantitative Analytics
    • Research Management
    • Post trade and Operations
    • Reconciliation & Exception Management
    • Allocation Matching & Trade Settlement
    • Collateral Management
    • Corporate Action Processing
    • Order and Execution Management
    • Liquidity Analysis & Price Discovery
    • Order & Allocation Management
    • Execution Management

FACTORS FOR AND AGAINST ADOPTION OF BUY-SIDE OMS

Adoption promoters
  • Pressure to reduce investment management costs
  • Push to consolidate vendor relationships
  • Need to consolidate disparate systems to reduce operational risk and achieve better scalability
  • Data and reporting requirements
Adoption inhibitors
  • Saturation and maturity of the marketplace
  • Total cost of replacement
  • Continued pressure on buy-side for better cost control

THE PROLIFERATION OF FINTECH INNOVATIONS IN INVESTMENT MANAGEMENT

  • AI & ML
  • BIG DATA
  • BLOCKCHAIN
    & DLT
  • ROBO-
    ADVISERS
  • REGTECH
  • CLOUD/API
  • WEALTHTECH

KEY POINTS

SOME USE-CASES OF HOW FINTECH TOOLS CAN HELP INVESTMENT MANAGERS

  • Analysis of large data sets with Big Data
    Security prices, financial statements, economic indicators and qualitative bits of info leading to a better investment decision making process
  • Automated trading with Cloud/API
    Systems built to identify systematic investment strategies and automatically execute multiple trades over seral financial markets worldwide
  • Data science analytical tools
    ML algorithms built to sort an enormous amount of financial data leading to identifying trends and investment opportunities
  • Automated advice with Robo-Advisers
    Internet based intelligence models that provide investment advise with minimal human intervention
  • Improved Risk management
    Big Data models built to aggregate, analyze and interpret data in real life in order – to identify weakening positions & adverse trends in advance

EXAMPLES OF THE AREAS WHERE FINTECH ADOPTION IS NECESSARY ACCORDING TO INVESTMENT ASSOCIATION

  • OPERATIONAL MODERNIZATION & RPA GAINS WITHIN AND BETWEEN MIDDLE AND BACK OFFICE
  • AI AND DATA ANALYTICS FUND MARKETING AND PORTFOLIO DECISION- MAKING AND RISK ANALYSIS
  • AI ASSISTING ASSET ALLOCATION, SECURITY SELECTION, PORTFOLIO CONSTRUCTION AND TRADING
  • DIGITAL PLATFORMS WITH DLT AND API ARCHITECTURE ALLOWS INTEGRATION OF 3RD PARTY PLATFORMS FOR BEST OF BREED EXPERIENCE
  • CLOUD MIGRATION ALLOWS RE-OPTIMIZATION OF INTERNAL ARCHITECTURE AND EVALUATION OF VENDOR SECURITY
  • CHANGING PATTERN OF DISTRIBUTION ROLE OF INVESTMENT MANAGER AND ADVISOR/DISTRIBUTOR

FACTORS FOR AND AGAINST ADOPTION OF BUY-SIDE OMS

60-70% of staff on the buy-side works within Operations, accounting, IT
  • CURRENT OPERATION MODELS DON’T WORK ANYMORE (TOO MANUAL AND NO ALPHA GENERATING)
  • DLT WILL DEPLOY T+0 SETTLEMENT CYCLE (NO MORE FAILED TRADES AND TRADE MISMATCHES)
  • REDUCED BUY-SIDE PARTICIPANTS FEES AND COMMISSION
  • REDUCED COSTS FOR BROKER DEALERS AND CUSTODIANS

KEY POINTS

  • 26% Artificial Intelligence
  • Artificial Intelligence 36% DLT and Blockchain
  • Data science analytical tools
  • 16% Regulatory Technology
  • 6% Quantum Computing
SEE COMPANY EXAMPLES

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