European investment fund actors have reached the point where the technology that can transform the industry is taken as given. These days, the focus is on real-world, business applications and solutions.
Speaking during a recent webinar with Luxembourg for Finance for the US market , Olivier Portenseigne, CEO of FundsDLT, explained “nowadays, in meetings with investment fund professionals, we spend two or three minutes on blockchain and DLT and the rest of the time is taken up with use cases.”
Reaching, understanding and serving the end-investor
The first and most fundamental of these is easier and better investor onboarding. This process is critical to all that follows in the chain.
Fund actors are planning to go back to and reconnect directly with end investors but to do this requires a frictionless digital account opening process that brings client acquisition cost to nearly zero. Account opening and onboarding covers a number of steps – such as digital identity verification, FATCA compliance, a MiFID questionnaire and so on – and this is just one area where the modularity of today’s fintech solutions can come into play. FinTech providers can be specialised in very specific tasks and they can be brought together for a superior onboarding experience at scale.
“Onboarding 10,000 investors per day using 10 year old technology simply just doesn’t work.” - Olivier Portenseigne, FundsDLT
Applied throughout the distribution chain and the entire investment life cycle, such a tech-focused approach has two main impacts on investment fund businesses. The first is to gain knowledge of the customer.
In the current situation, large asset managers may be serving millions of investors but they have very little knowledge of who they really are and what they need. Technology enables investment fund companies to get greater access to the end-investor and, importantly, unlocks data about them. This data is significant new knowledge for managers and indeed all others in the distribution chain.
As the fund industry transitions to an environment that emphasises greater B2C and B2B2C relationships, such knowledge combined with the technology will enable companies to create new products specifically for investor needs and radically reduce time to market.
Financial inclusion and growing the investor base
The second main impact is to enable fund companies to grow the investor base. Olivier Portenseigne pointed out that only around 10 to 15 percent of households in Europe are invested in funds.
Additionally, a greying population together with the discontinuous or non-standard working lives of the young will mean a greater dependence on private or supplementary savings for pension needs.
“The key aim is to help fund companies better serve their customers.” - Olivier Portenseigne, FundsDLT
By giving asset managers the ability to tap into missed opportunities, through better access for investors, a digitally-focused approach will help ensure that consumers are more open to investment funds as a solution for their long-term plans.
These trends have been known and under study for some time but it is only now that solutions are finally crystallising around an ecosystem that is based on serving the end investor more easily, more efficiently, cheaper and with more transparency.
The European fund industry is indeed undergoing a profound transformation which will reap practical benefits and solutions for years to come.
Olivier Portenseigne, CEO, FundsDLT and Bert Boerman, CEO, Governance.com spoke on “The Fintech ecosystem in the EU and its impact upon financial institutions”.