By Eva Keogan
By Luuk Jacobs
By Jonathan Max
By Luuk Jacobs
By Andy Milner
By Luuk Jacobs
The FCA has now recognised the increased use of big data and AI across the Investment Management and banking value change. It is aiming to better understand the impact it has and will have, the benefits and harms and implications for regulation. One of their focus points in their 2019 Research agenda on the theme of technology, big data and artificial intelligence (AI) is the economics and ethics of this theme.
The economics of the use of big data and AI in general are already quite well understood. They have changed the way of doing business and generating value enormously. Industries have been and continue to be disrupted; examples like Amazon, Apple, Facebook, Uber and even Microsoft have shown how the philosophy of platforms has moved us from single supplier mentality to open marketplaces. These places where producers and consumers come together in interactions that create value for both parties, whether it is peer to peer or direct to consumer and disrupt the existing status quo.
Platforms are not an entirely new phenomena as it has existed already in traditional open air market places around the world or for example in stock markets. What is new, is the addition of digital technology enabling platforms to enormously extend their reach, speed, convenience and efficiency.
I would argue that the real impact of big data and AI has not hit Investment Management yet. Yes, there is robo-advice providing digital financial advice based on mathematical rules or algorithms (examples like Nutmeg). The majority of them however have been struggling to make their platform economically viable and according to a Deloitte report robo-advisers would need around £6bn assets under management to generate enough revenues to cover their costs. Nevertheless, also Investment Management is at the start of using big data, blockchain/ Distributed ledger technology and natural language processing. The benefits are seen already in better informing (investment) decisions, driving operational efficiency and fraud prevention and compliance.
Arguably lesser known are the potential ethical impacts that will be associated with the use of these technologies while companies move from the traditional commercial yardsticks to include ethical and value-based decision making.
The established players like Facebook and Alphabet (through the accusations of distributing fake news), Uber (sexual harassment and leadership style), AirBnB (destroyed properties from their users), have and continue to show that the ability to embed ethical awareness and decision making across functions will emerge to be a key attribute of successful digital organisations. The Investment Management industry is to be warned.
Governments are stepping up (the FCA research agenda aims at looking at the implications on regulation) and, for example, GDPR is a first step. Nevertheless, the industry should not be waiting for governments and regulators to step in. I would argue that especially in an industry like Investment Management which is based on trust, companies that put ethics and morality front and centre of their organisation and especially with regards to big data and AI, are more likely to engender the trust of customers and differentiate themselves from competitors in the market.
So what are the ethical questions ‘big data and AI’ that should be asked?
Can artificial intelligence exacerbate, hide and create unintended biases? Do network effects reduce competition and, in turn, impact consumer choice? How can we be accountable for big data? How do we define big data? How do we adjust risk management frameworks? What are the benefits and, more importantly who will benefit and who might be at risk by this?
According to Charles Ellis, CFA, and chair of the Whitehead Institute, Cambridge, Massachusetts, the “biggest challenge” with regards to ethics for the investment management industry is to “find the pathway to reassert the dominance of the profession over the business”; an inherent conflict of interest in the Investment Management business as they are supposed to deliver financial performance both to their owners and their clients.
Regulation is in the end already in place and leaves little room for ambiguity ie to treat the clients in a fair and ethical way with the general principle to always put the clients’ interest first (AIFMD, UCITs IV and MiFID II).
It is up to the industry now to ensure that these principles are followed and embedded when using big data and AI. There is no magic pill for it yet, but the market shapers and early adopters will show how easy or difficult this might be.
Great insights from our Imperial College Business School panel “The impact FinTech is having on the demand for skills in the Investment Management industry”By Luuk Jacobs
We partnered with Imperial College Business School for a panel discussion about the Impacts of FinTech to careers in Investment Management. We were keen to marry up the collective experience of the panel, and their insights and views, with the audience. Equally we wanted to get a feel for what the next generation of Investment Management professionals should set in their sights.
Based on the findings from our soon to be published report The Disrupted Career - FinTech, Investment Management and future careers, we created a truly interactive debate as we put the questions we used in our survey to our audience, enabling to give real-time feedback via the AlgoMe Community mobile app.
The panel consisted of Rob Carter, CEO, AlgoMe and Ruben Lara, Chief Data Officer, Standard Life Aberdeen, and Henrik Grunditz, Co-Founder & Chief Revenue Officer, Hivemind, a FinTech that is helping companies create value from complex data sets. The Moderator was Anne-Louise Burnett, Centre Manager, Imperial College Business School Centre for Global Finance & Technology.
The key questions that were discussed were:
Do I understand typical career paths in Investment Management?
The combined experience of our panel is both lengthy and varied. For example, moving from working within an investment company, joining a consulting company and also joining other industries where core skills are transferable (eg. within data science), indicated that careers are fluid and certainly not predefined. The key trend however was all the panel members, throughout their careers. kept developing and adding to their skillsets.
Are career paths less well defined due to the changes happening in the industry?
There was a general view that indeed career paths are now less well defined than before, and technology and general innovation were changing these paths as existing positions in the industry will likely be displaced by other new ones. The new careers demand an understanding of data and how they can be leveraged to create efficiency, greater understanding of clients, investments and decision making. As the technology impact is just starting to hit the Investment Management industry, career paths will be impacted in the next 10 years to a great extent, beyond what we imagine today. Some research indicates that 90% of today’s jobs will not exist in 10-15 years.
What skills will be the most important to develop careers in Investment Management?
As already mentioned, skills linked to data science will be important. Along with this, the ability to interpret what it presents, to further support risk management, controls, understanding of clients and trends in the market as well as supporting (investment) decision making. These skills will be in demand for both junior and senior positions and given the technology developments ahead of us will likely change and become more complex.
What will, and what can, you do to progress your career?
The panel indicated that if they were looking at their 20-year younger self, they would not have seen themselves in the positions they are today. Nevertheless, a key ‘red line’ through their careers was the development of their main professional interest and continuously developing the associated skills, be it business management, data and analytics, or information systems engineering. All equally being influenced by the need of these aforementioned hard technology skills.
Rob Carter stressed the value of having mentors throughout your career, people that can guide you and hold a mirror up for you. Hendrik Grunditz mentioned the benefits of networking, staying in touch with people and create a reputation of being nice, delivering constant high quality and be committed. Ruben Lara added to this the need for the softer skills and ability to influence, manage stakeholders and communication.
We believe the Investment Management professional career is about to change direction, and for some this will be a radical change. It seems everyone is in agreement and there are very exciting times ahead, especially for those with a passion for technology and change.
By Luuk Jacobs
This article shows very well as to what data you "give away" when using apps on your phone and clearly also how others make money with it (just in case you believe in the myth that the Internet or Apps are for free).
Not everyone is using / selling your data and numerous apps need your location to work. However as we all install apps without readings the T&Cs its worthwhile every now and again to review what permissions you have given to your data.
Equally you can protect yourself to it by changing some of the settings on your phone.
Now you see me, Now you don’t…… – Innovation Today
INNOVATIONTODAY.WORDPRESS.COM Have you ever wondered how targeted advertising works or even how by magic your phone seems to know more about you than you have shared? Data forms the backbone of the new location economy and you...
By Colin Ng
Metrobank has not been having a good few months starting with an accounting scandal in January exposing a weaker capital position than anticipated. Today the FT reports that Ben Gunn will move away from his current role as most senior independent director to take on a newly created role as deputy chairman of the board.
He (and quite a few others on the board) have passed the recommended 9 year board tenure under corp gov code.
The 4th Annual Private Wealth Switzerland Forum–Geneva brings together 75+ allocators of high-net-worth capital from Switzerland, including leading private banks, wealth managers and family offices. The event is a one-day networking and peer education platform. The meeting's program covers asset allocation, trust and estate planning, family governance, risk management and alternative asset classes.
ECONOMIC, POLITICAL & GLOBAL MARKETS OUTLOOK
Currently, we find ourselves in a positive domestic GDP environment, with optimistic corporate earnings growth, a strong dollar and a volatile stock market. What is to be expected in 2019 and beyond?
EMERGING AND OPPORTUNISTIC ALTERNATIVE INVESTING
Private Equity, Venture, Hedge Funds and other alternatives investments hold appeal for wealthy families. How are wealth managers viewing future allocations as valuations increase and dry powder sits on the sidelines?
FIXED INCOME INVESTMENTS
Global growth remains positive and central banks around the world continue to unwind what has been a very accommodative monetary policy. However, with volatility likely to stay high, investors must continue to do their homework.
EQUITIES AND THEIR IMPACT ON PORTFOLIOS
Huge opportunities remain available for investors considering (I would change “considering” to “making” predictions for 2019. Aside from energy, where are the biggest opportunities? Will ESG be affected as volatility cripples some specific industries?
REAL ASSET AND REAL ESTATE INVESTMENT STRATEGIES
With volatility expected to continue throughout 2019 in public markets, investors with appetite for less risk will be turning to real estate and other real assets investments. Still, finding the best opportunities will require great due diligence and patience.
With competition for clients and assets on the rise, wealth managers need to ensure that their asset allocation strategies address the balance between risk and opportunity. domestic GDP environment, with optimistic corporate earnings growth, a strong dollar and a volatile stock market. What is to be expected in 2019 and beyond?
4th Annual Private Wealth Switzerland Forum - Geneva | MarketsGroup
WWW.MARKETSGROUP.ORG Continuing the success of our multi-asset class Annual Tri-State Institutional Investor Forum, the US Markets Center for Investor Education is pleased to introduce a specialized one-day meeting...