Looking Ahead: How Technology Is Reshaping The Asset Management Business
It’s been awhile since we have talked about innovation in the FinTech industry and how it affects the asset management industry, especially the alternative investment industry. While there has been a significant amount of progress in business to consumer models (take peer-to-peer lending, crowd sourcing or online banking as examples), very little innovation exists in the corporate world outside of what blockchain and digital assets are already promising to revolutionize. (Blockchain technology basically allows two counter parties to keep one set of records for all transaction and accounting activities).
So why is there resistance to innovation? When it comes to innovation, on an enterprise-level, companies tend to proceed slowly and cautiously. An abundance of appointed decision makers and a predisposition to mitigate operational risk contribute to delays in innovation. In examining innovation from an industry-level, there are currently several highly inventive developments that are expected to help firms better navigate today’s volatile landscape. (Volatile markets are generally more challenging to perform in, and have resulted in considerable fee reductions over the last 10 years.)
When I first wrote about innovation a few years ago, my thoughts focused on cloud computing, social media and mobile technology. While all of these have experienced significant growth, they have had little impact on the institutional world of asset management. Today, the buzz is all about cybersecurity, big data and (still) cloud computing. While these are important topics and relevant to hedge fund entrepreneurs, is there something more profound that is affecting our industry?
