The fund industry’s distribution chain is ripe for a change that will drive innovation and meet investor expectations. Data and information exchange will help make this happen.
There are significant inefficiencies in the investment fund industry that need addressing.
A study by Deloitte highlighted that fund distribution is particularly ripe for change, summarising it as a “mixture of bilateral links, aggregator platforms, and processing service providers… while documents and data dissemination are channelled through multiple information distributors or resellers”. The study estimated that distribution costs could be cut by some 70%.
In today’s Mifid II environment, any reduction in expenses is welcomed but cost-cutting is only part of the picture.
Digitalisation means a vibrant fund industry
Currently, the fund industry is experiencing the first stages of a digital transformation. The ultimate aims of which are not only to eliminate costly inefficiencies but also to future-proof the industry. Central to both of these are data, data quality and, importantly, information flows and exchange between all stakeholders.
Digitalisation will unleash growth and make the fund industry more dynamic. For industry players, it creates the conditions needed for products and services innovation, streamlines the fund supply and fund distribution chains and offers a strategic and real-time overview of them. For end investors, it both enriches and simplifies the investing experience.
Chief Operating Officer (Fundsquare)
It brings fund producers and fund buyers closer together, creating a virtuous circle in which producers can better fulfil buyer expectations, while strengthening cost competitiveness.
Reaching this point will not be a revolutionary process, rather it will be incremental. So what are some of the prerequisites and steps that will lead us there?
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Paperjam, September 2018