Today, the asset management industry is focused on transparency and efficiency. In light of the January Directives – which sent many financial institutions into a regulatory tailspin – firms have been adapting to these changes and the rise of FinTech solutions too. This has also improved the level of mistrust maligning the sector, by enhancing the reporting process.
So, how are organisations moving forward with the digital revolution? We take a look at some of the latest updates on the FinTech front – from blockchain to robo-advisory.
Prepare for the first blockchain-based platform as the face of private trust management gets a well-deserved lift. Genesis Vision is breaking down barriers by bringing together exchanges, brokers, traders, and investors. Its modern approach will provide a uniquely transparent and efficient method of asset management.
How so? Well, the investor is given more control over their assets for one, with many benefits to reap, including:
- Options to trade in different markets with a variety of available assets
- Advice to optimise trading strategies and tools to prevent risks
- Guides to understand market behaviours and activities, with full transparency
- Access to the market for non-accredited investors
- Tools to enable novice and distinguished investors to manage diverse portfolios
- Background checks to show the experience of asset managers and partner brokers
One of the key advances of the blockchain platforms (aside from the importance of transparency) has been the range of diversity on offer, which reduces the risk involved when the capital is shared across multiple assets. Notably, the brokers and asset managers at Genesis Vision are deft at dealing with traditional assets, as well as cryptocurrencies, with the new platform currently able to process GVT, BTC, and ETH currencies.
While the issue of not being able to regulate cryptocurrencies has been a prominent one, this blockchain platform uses distributed ledger technology to ensure that the information about every transaction will always be stored in a secure, transparent and fraud-proof system.
This all sounds great, right – or are you still not convinced?
FinTech: The Small Print in Swiss
In the digital age, protection is synonymous with transparency – and what’s happening in Switzerland is a prime example of this. The Swiss Financial Market Supervisory Authority (FINMA) has taken up the mantle to ensure firms adhere to the guidelines when it comes to applying for a new FinTech licence. This will be published and rolled out in early 2019. However, FINMA recognises that the application process needs to be simple and straightforward for organisations to effectively implement, as well as being thorough (so, not like MiFID II, you say?)
What information must the FinTech licence applications include?
- Reasons why firms are applying for the licence
- Proof of compliance with capital requirements
- Descriptions of the firm’s intentions and proposed activities if the licence is approved
- Information about the organisation, such as its clients and global reach
- Details about the business, from personnel to infrastructure
Following approval, FINMA will be supervising firms in a regulatory fashion to ensure they comply with the rules of their new FinTech licence. Some of these rules require organisations to have their offices registered in Switzerland and can only operate out of their Swiss location.
How do you feel about this regulatory model?
Digital Case Study: HSBC
There are even more FinTech rumblings with HSBC Global Asset Management as it goes through a digital transition. The organisation’s core fund-management systems are receiving a major upgrade. Why is this happening now? The public equity market is changing, and HSBC must support its $470 billion-valued business with the right kind of tech.
While some firms have boiled down changes like passive investing and compressed fees to the popularity of ETF funds, one of the main influences at HSBC is the seismic shift towards Big Tech stocks. Investment behaviour is diversifying, so fund managers must acknowledge this to keep up with the demand of their investors. Because tech giants like Apple and Google directly influence U.S. equity indexes, fund managers have been struggling with their performance, how to remain relevant, and how to capture the market when there is no access to these privately held tech companies.
Fashion can be cyclable but FinTech is not. Therefore, lagging or being too traditional for your own good is unfashionable. As a result, HSBC has updated its Order Management System (OMS) for executing trades and Execution Management System (EMS) for capturing market data by integrating the two into a single platform at divisions across Europe and Asia.
It’s out with the legacy systems and in with the new!
What kind of improvements does this yield? The ability to keep up with the new regulations and updates in the market, that’s what. Plus, the compatibility of data is guaranteed across different jurisdictions and the speed and accuracy of client reporting is increased.
AI solutions are also on HSBC’s radar – but not to replace humans. It’s to support the company’s philosophy. AI will be utilised to filter through unstructured data and to search for rich and relevant information. Currently, the HSBC team in London is building its own AI system to recognise quant factors and announcements, to name a few. Due to the volume of data, any information significant to their asset and investment managers will be highlighted with maximum efficiency. Because HSBC has core systems to carry out investment decisions already, the choice to create an in-house AI solution seemed more natural than outsourcing.
Are you inspired to keep it in-house or outsource?
Robots: The Uncanny Colleague
Progressing even further with AI are the Finnish. Hailed as “one of the world’s most advanced GovTech nations”, Finland’s Government is trialling its finance and HR workspaces with 28 employees and 18 robots working alongside one another. Can you believe it? It was inevitable, right?
Anna-Maija Karjalainen, the Director General of ICT’s Public Sector at the Ministry of Finance, revealed in an interview with GovInsider that a budget of €10 million has been injected into government agencies to boost the use of AI and robotics for completing daily, admin functions and analyses.
Automation has proved to be cost-efficient for government agencies to date, with annual savings of approximately €5 million. The Ministry of Finance has calculated that one robot costs €16 thousand to run per year, while the €5 million in savings match the salary of 100 human workers.
This may sound like the foreshadowing moment we all feared is catching up with us, but AI is mostly viewed as positive way to take care of the time-consuming manual tasks. This means firms can invest more in customer service, allowing humans to spend more time being, well, human!
What could be better than that in terms of trust, transparency, and efficiency?