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Issues Archive » FundsTech Summer 2021

Roundtable: New age thinking

FundsTech – Which new technologies have made the most progress in the last 18 months?

Glyn – We have got to differentiate between activity and progress. A tremendous amount of activity over the last few years has been around the use of DLT, but we definitely don’t yet have mass adoption. Whereas some of our clients have made massive progress in areas like our DLT fund services offering or fund issuance or the tokenisation of assets, there are others who are still living in the past and yet to jump on that particular journey. There’s a huge dichotomy between clients who are making massive progress and a whole slew of slower movers who will potentially die off if they don’t start to embrace these innovation possibilities.

Lorenc – Application programming interfaces (APIs) have been around forever and, finally, most of what we do now is API-based. This allows for real-time fetching and sharing of data – not replicating and then sharing, which invites data reconciliation problems. APIs are a game-changer in terms of processes. For example, the onboarding and KYC [know-your-client] process relies on lots of data from different sources and providers with different systems and this is where APIs, when used, allow for real-time control. We also see greater interest in machine learning (ML) and simple explainable ‘white box’ algorithms.

Ruetimann – I would pick three examples, namely – the cloud, DevOps, and chaos engineering. The latter refers to the discipline of experimenting on a software system in production in order to test the application’s integrity and resilience.

Clarkson – There is also that element of adoption. We’ve talked for years about innovation in this industry and the last 18 months has driven that innovation forward in leaps and bounds, but we’re still starting from the 1980s whereas most industries are starting from the 2010s. Faxes are still used a lot and we need to get our feet moving forwards, together as one. There are too many parties involved in this process and there’s too much friction. There can be 19 layers between the investor and the fund manager, and that raises issues around data and the investor journey and without an investor, we don’t have a job. For us to add value, we’ve got to make sure that costs are reduced and that friction is minimised, be that through simplified processes or easier access to data.  We’ve talked about ESG, but bitcoin is not ESG-friendly because it consumes too much energy, so is DLT the answer if it takes half a rainforest to power it? That’s the question we’ve got to ask ourselves.

Andemeskel – It’s not about the new technology that has come into our industry, it’s rather that technologies that have been here for some time have reached a new maturity level, DLT being one of the best examples. In the last year, we have seen a rise in use-cases and a surge of investment in new technology like AI and ML. Currently in the industry we can see concrete, tangible products that create value for asset managers and for clients, be it onboarding and KYC/AML [anti-money laundering] or ESG-driven investments, where you need to have better insight into investors’ beliefs. The incumbent players are also no longer secured through the closed regulatory environment. New players are entering and obtaining regulatory approval and that is accelerating innovation.

Bernstein – The industry is in a ‘Field of Dreams’ moment – if we build it, people have to come. If they don’t come, no matter how innovative we are, what’s the point? With DLT, there are processes where you can innovate and get a lot of bang for your buck. For example, you can have investor onboarding where a physical signature is digitised, it doesn’t have to be end-to-end, and it is ready for consumption. In certain jurisdictions, the use of electronic signatures has been a painful experience. There is nothing wrong with taking a physical signature, converting it into a pdf and putting it on DLT to create an immutable record for everyone to consume. We have found that you get a lot more adoption when you break the technology down into little pieces rather than trying to do it all. Anyone who says they are all things to all people is usually nothing to anybody.

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