Sharing an article co-written by my former colleague Lee Beck on the changing landscape in the distribution of funds in the United States, which we will see happening on this side of the pond, too: https://www.kuduinvestment.com/the-disruption-in-asset-management-distribution-a-qa-discussion-between-kudu-investment-management-and-envestnet/.
Lee suggests that successful strategic decisions in funds distribution will be formed on the basis of the granular business intelligence that technology now permits. Also, the time of one-size-fits-all marketing predicated on product differentiation is now over; instead, asset managers need to aim their marketing strategy at responding to the actual financial and budgeting needs of their end investors, and not on the intrensic features of the products/funds that are pushed on the market (e.g. rate of return, beta or alpha statistics ...). This requires a major shift in the mind and behaviour of asset management firms, which Lee reckons, calls for significant investment in learning and development in the industry ...
Chris Skinner, an independent commentator on the financial markets once said, FinTech firms make faster horses but TechFin firms are working with airplanes. Perhaps one of the first technology companies to disrupt the investment management industry is AliBaba.
6 years on from its introduction, AliBaba's money market fund, Yue Bao is still the world's largest at approx $200bn under management (beating JP Morgan's similar fund).
In an age where data is an industry in itself, having a significant user base already which trusts your brand and the means to mine consumer data must surely be a strong starting point to disrupt the industry.
Will other tech giants like Amazon and Google follow suit this year? Perhaps a quicker way would be to acquire other fund managers.
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