Olivier Portenseigne, CEO of FundsDLT, speaking at the Luxembourg Stock Exchange Day argued that distribution actors can grow in new directions with an investor-centric approach and the help of next-generation platforms.
Serve end investors and their goals
A real growth opportunity for the European fund industry lies in a vision that is focused on the end investor and fosters financial inclusion and savings, while fuelling the real economy.
At its most basic level, this means that the buying and selling of fund shares and units should be simple and straightforward. Currently, the process is difficult and time-consuming for individual investors.
There are two aspects to aspects to this. One is using the right technology for improved accessibility and the other is a change of mindset.
On the technology side, usage of Fintech’s propositions is clearly the way forward. A rationalised investor onboarding and investment process is in everyone’s best interests and enables many efficiencies, as well as makes the compliance process easier for all.
However, as Olivier Portenseigne pointed out in his speech, “Technology serves a purpose and as an industry, our only purpose should be to better serve the end investor.”
The mindset is about viewing the investor at the heart of the process. There are various drivers that are pushing the fund industry in Europe to increase the level of investment into investment fund products from retail investors, and to make this model work requires to put the investor back centre stage and to serve their needs.
Understanding the real needs of investors will help lead to the creation of new products and services but also to offer them a more personalized offering. Intermediaries in the fund distribution supply chain can better serve investors while giving access to products and services that are superior to those on offer today.
With data flowing throughout the chain, investors can access much more readily the information they are seeking while wealth and asset managers can access the investor information they need. It will grow the investor base, open up new client segments and enable further advancement of the fund industry. Advanced blockchain distribution platforms make such a vision a reality.
Unlock value and grow business
There is much value in the fund distribution chain and today almost all of it is either under-exploited or completely untapped.
To take advantage of all such hidden value, a reorganisation or reengineering of the chain is in order. Any such transformation needs to be deep and designed for the long term. Building a totally new infrastructure involves cooperation across the fund industry and it also offers the opportunity to embed financial technology in every single step of the process.
As it is now and as is well known, fund distribution is heavily intermediated with many redundancies. The first result of removing any such redundant activities is cost reduction but it is only a preliminary step.
“This is where FundsDLT adds value: easing access to products, bringing transparency and knowledge of the customer while reducing costs.” Olivier Portenseigne
With a next-generation distribution platform, actors can have a real-time view of both their own activities and the market as a whole. Additionally, intermediaries can be in position to share data and transaction information in a way that will open up new opportunities. To give a simple example, today, transfer agents have a wealth of data related to the buying and selling of funds, while asset managers struggle to have a comprehensive picture of their investors.
Again, advanced platforms based on a shared DLT infrastructure will provide the means for fund distribution actors to develop their business and have a much better understanding of it.
Work in an intelligent ecosystem
A platform such as FundsDLT is all about streamlining operations in such a way that transparency and efficiency work together for the benefit of all actors in the chain.
It does not try to do all things because technology and a shared infrastructure mean that specialist partners work with the platform, thus enabling further cost reductions.
“The end investor matters in everything we do. We should never forget why we do what we do today, serving end investors and their goals.” Olivier Portenseigne
Even though a next-generation platform operates a network with a large number of intermediaries, its real business still remains all about the clients of these intermediaries. At the core of the vision is the understanding that the end investor matters in everything.
What the fund industry can have is a more agile and more intelligent system that makes fund distribution easier, cheaper and transparent.