During the first quarter of 2017, European asset managers enjoyed inflows of EUR210bn - the highest in 5 years. This is great news and points to a wider theme that governments around the world are shifting responsibility for savings and retirement to the private sector – all good for investment managers.
However, it’s not all rosy. I’ve spent 20 years working with asset management clients and while global AUM is rising, the drumbeat on infrastructure challenges is stronger than ever. A friend recently became head of Fixed Income for EMEA at a large Asset Manager. He told me that his job was no longer about managing bond portfolios – it’s about dealing with the constraints of incumbent technology infrastructure, budgets, different analytics/data sources, vendor upgrades, and so the list goes on...
We need to call time on this. Asset managers should not be spending their time managing technology infrastructure – they should be spending their time managing their clients’ money.
We believe that managers arrived at this point because in the past, technology infrastructure was a differentiator, and managers could point to their more robust, more performant technology stack as a key consideration when pitching for mandates. This was fine ten years ago, but expectations – from regulators, clients, risk managers have changed and the incumbent technology solutions are struggling to keep up.
However, recent advances in technology, including cloud, mean that products with a far richer functionality set can be deployed at much lower costs when compared with incumbent products. It no longer makes sense for managers to build or pay heavily for technology that handles ‘non-differentiating’ workflow. We believe that managers should use utility products for utility functions, and concentrate purely on investing in workflow which differentiates them from their peer group. As we speak to more clients, it’s clear the mindset is changing, but the challenge is that migrating away from legacy infrastructure can be daunting and there is no ‘well-trodden route’.
FINBOURNE will provide a landing place in a future state investment technology platform, starting with a core transaction hosting platform (more on this in future blogs, and more detail on our technology will appear in our engineering blogs).
Our philosophy will be to keep the hosting platform as open as possible (use of APIs, open-source code), to enable low cost adoption and integration with clients’ workflow, systems and data. We believe that even the fiercest Buy-side competitors can benefit if they can lower ownership costs for common, non-differentiating functions, and at the same time get access to better functionality than they have today.
We are focused purely on the design and engineering associated with storing transactions - with all the associated data versioning, audit, logging, what-ifs, security, tagging and integration requirements. This will define our company. With this ‘landing place’ built we will then focus on how clients can bolt on, via APIs, their own, FINBOURNE, or third party best of breed services for the rest of the investment management workflow.
We want to thank AWS, Thomson Reuters and our asset management clients who are supporting this initiative with us.
Whether you are a potential client, or potential team member - if you want to join us on our journey, or hear more, please contact us on firstname.lastname@example.org