Anticipation around which market segment is next to be disrupted in today’s digital world can often overshadow the achievements and efficiencies already being delivered by smart financial technology.
Whether it’s adding new tools to the financial system or enhancing existing functions, a central premise underpins fintech: technology is a business enabler and should be seen as a means to support the overall business value chain.
Financial technology enables businesses to grow, evolve and become more dynamic in delivering better outcomes and experiences for end users. For managed funds this means safer and faster operations.
The wealth management sector is continuously evolving as market conditions expand and contract.
The systems and processes that lie deep within the industry have survived years of corporate change, acquisitions, takeovers, demergers and liquidations.
The result is a plethora of proprietary and inherited systems that don’t integrate well, let alone connect to external networks.
This is where effective use of technology brings much needed risk controls and operational efficiency, allowing participants to concentrate on serving the needs of their clients and ultimately the growth and profitability of their businesses.
The most powerful technology networks are agnostic and interoperable
Today, firms can bypass the costly and time-consuming process of integrating legacy systems and instead connect them to external, agnostic networks that digest data from very disparate sources across different markets.
Smart technology is bringing connectivity to participants, relieving them from having to invest in more systems, project teams and compliance.
‘User-agnostic’ technology connects market participants (asset managers, platforms, custodians and administrators responsible for the myriad of detail exchanged for managed fund order), relieving them from the headache of unifying disparate systems for straight through processing – a challenge that for years has backlogged project queues.
Smart technology automates detail heavy, multi-lateral flows of information, removing time, risk and friction associated with manual processing.
Differentiating agnostic networks (such as Calastone) from standards-based ‘utility’ models is their inter-operability.
An inter-operable network operates like a universal adapter, catering to different systems as opposed to mandating conformity. Both models become exponentially more powerful with greater adoption, and are increasingly being leveraged as firms strategically focus on where they can differentiate and add value in today’s cost and risk sensitive environment.
Mindset and culture determine the power of smart technology
All participants will need to adopt smarter solutions to mitigate risks, improve efficiencies and reduce costs over time. If they don’t, they will be left behind.
Fintech’s success can be quantified by the magnitude of the problem it solves and the efficiencies it creates.
At Calastone, we base success around the fact that the once massively intensive and manual process of executing managed fund orders between funds and platforms now takes seconds at a fraction of the risk and cost.
Smart technology adopters ultimately determine how powerful it can become. From our perspective in Australia, these have been the progressive order senders and receivers who have opted to utilise and embrace innovative technology.
By absolving compliance requirements using technology, they have freed resources to focus on the core parts of their business.
An open mindset to understanding and leveraging technology-enabled solutions is key to building a culture that embraces change and remains ahead of its competition, and consistently compliant with regulation.
To persist with old practices, including those not yet entirely redundant excel spreadsheets and fax machines, ultimately drags industry performance, at a time when effectiveness and accuracy are competitive thresholds.
Culture impediments will be the biggest factor determining how far financial technology can ‘transform’ the market ecosystem and the ability of participants to regenerate and re-visualise how best to service their customers and sustain over the long term.
Only once technology has been fully harnessed as a means of remaining competitive and agile can we tackle the ‘new frontiers’, and it needs to be a collective effort.
Sarah Hayward is the managing director of Calastone Australia.
