FinTech: a game-changer in fund distribution

According to a new paper published by the Association of the Luxembourg Fund Industry (ALFI) and Deloitte, “How can FinTech facilitate Fund Distribution”, the surge in FinTech is starting to reshape the financial sector on a global scale with a flourish of new players attracting significant attention from markets, customers and investors.

FinTech will be a game-changer in investment management operating models. Luxembourg’s strongly connected industry players are well-positioned to ensure that Luxembourg is in the driving seat for innovation.

Denise Voss, Chairman of ALFI, says: “The asset management industry has a once-in-a-generation opportunity to reimagine and modernize its distribution model to address market and operational challenges – for future and current investors. Luxembourg asset servicing providers should make engagement in the FinTech revolution a top priority to remain relevant and competitive to continue to provide best-in-class services to their asset management clients and investors.”

The study shows that Luxembourg asset servicing firms have a major opportunity to help asset managers and distribution intermediaries to succeed in the change.
Successful asset management companies will adapt product management and marketing strategies to the mind set and habits of the new generation of investors, using FinTech to make use of a wide set of available data sources, including external sources such as social media. Client profiling will be supported by data analytics. Key features of online platforms will be education, risk & performance metrics, account management functionalities, wealth reports vs investment goals and market insight. These enhanced digital platforms will stimulate direct-to-consumer (“D2C”) distribution channels in both retail and the institutional investor segments.

Luxembourg has very strong investment fund and private banking sectors efficiently working together for the prosperity of investors and the market place. Transfer agents, order management platforms, central administrators and custodians have a major role to play in the Fintech change. Luxembourg players must actively drive the Fintech innovation locally and engage with disrupters, modernizers and enablers in order to be ahead of developments, adapt their operating models with agility and avoid innovation imposed from abroad.