June 08, 2016

Kathy Damsell: Investment management still needs the human touch

Fund Forum

Why did you come to FundForum this year? Seriously, in an era when innovation in communication technology is reshaping business models and bringing new ideas, insights and analyses direct to the desktop (or, indeed, smartphone), isn’t it a bit last century to physically travel to a conference?

The impact of technology is undeniable - on our everyday lives, our finances and the industry in which we work. The way we book a flight, invest for our future, catch up on the latest news are all subject to radical, ongoing technology-driven change. But amid all this upheaval, ‘authentic’ face-to-face experience is valued more, not less. Concerts account for a greater share of a musician’s revenues than recordings these days, while authors spend almost as much time reading their work as writing it. In the fund management industry, we are exploring the possibilities of big data analysis to improve how we invest, package and distribute funds – but we still need to keep in touch with each other and, critically, our clients to make a meaningful difference to outcomes.

Across fund management, and in everyday life, we are re-drawing the boundaries between the tasks that should be conducted by skilled professionals, and those that are best handled by machines. Talking, listening, blogging and demo-ing at FundForum – essentially taking the industry’s pulse – is one of the most effective ways of assessing how those boundaries are moving and where they are taking us.

In terms of investment strategy, the growth of lower-cost, process-driven options – such as ETFs and liquid alternatives – are challenging the business model of active managers, while artificial intelligence is gaining ground in the generation and interpretation of research and provision of advice.

On the distribution front, an increased capacity to interrogate and analyse data sets is helping firms to devise more effective strategies for breaking into new markets, informed by a more precise understanding of the impact of price, performance and product range on customer behaviour. Firms are using similar capabilities to engage with and understand the future needs of Millennials, a mission-critical task for the industry given current indications on the financial planning by this generation.

And with such a wide range of regulatory change facing the industry, technology also plays a crucial, but supporting role. Automating and standardising processes will enable greater transparency and efficiency, as demanded by regulators. However, creating and implementing appropriate oversight structures for UCITS V funds, for example, requires a combination of compliance, project management and related skills by teams of experienced professionals.

In all the areas mentioned above, BNY Mellon is playing an active, facilitating role in the success of clients, and in engaging with industry stakeholders to map out future strategies.1 They’re also keynote topics at this year’s FundForum and front of mind for innovators and leaders across the industry.  This is why I am one of many BNY Mellon representatives – spanning asset servicing and alternative investment services, with segment and country-specific expertise – who are happy to meet with clients, peers and partners in Berlin this week.

This year’s FundForum takes place in Berlin between 6th and 8th June. FundForum is made up of three parallel full-day forums for investment managers, asset owners, intermediary investors and innovators.

1 BNY Mellon published ‘Optimising Sales in Asia’ and ‘Generation Lost: Engaging Millennials with retirement saving’ in 2015, both drawing on ongoing proprietary research programmes.