Asset Management: The next frontier for FinTech?
Future of Fintech The UK is a leading global financial services centre, and the most internationally focused financial marketplace in the world, with more overseas financial institutions and investors choosing to do business in, and with, the UK than any other country.
In regards to asset management, the UK is the largest fund management centre in Europe and the second largest globally, accounting for over £6.2trn of assets under management. Furthermore, of the total assets under management, some £2.2 trillion are now managed on behalf of foreign clients, making the UK the leading global centre by this measure.
Globally, the UK is fast becoming recognised as the fintech capital of the world. According to Accenture, the UK and Ireland is now the fastest growing region for Fintech investment with deal volumes here having been growing at 74 per cent a year since 2008, compared with 27 per cent globally and 13 per cent in Silicon Valley.
Cloud-based service providers have helped lower barriers to entry across many industries by reducing operational costs and seed capital needed to start a business.
Investment management is no different and even in this highly regulated environment there are many opportunities to improve operational efficiencies by moving activities to the cloud.
Advances in various academic fields like behavioural sciences have created an opportunity to introduce performance enhancing techniques into the investment decision making process. In much the same way as athletes training programmes are now supported by data analysis, ground-breaking data driven tools developed by companies allow managers to track, measure and improve on their performance taking into account input across multiple dimensions.
Big data and powerful analytics tools have also helped a new breed of real time investment strategies appear.
The age-old-art of sector research and analysis is complemented by tools that can analyse anything from the number of specific job adverts on global online job boards, to the price movement of hotel rooms in New York as a proxy for the health of a sector.
Investment opportunities and strategies which not long ago were only available to high-net-worth individuals with access to private banking services can now be reached on one’s own smartphone device.
The UK is uniquely placed to take advantage of these trends
As the second largest global market for assets under management, situated alongside what is probably the hottest hub for the development of fintech businesses, UK Trade & Investment – the economic development arm of the British Government – anticipate further growth in this segment.
Developments in financial technology, and the innovation pioneered by the companies comprising the sector, have the potential to make a big difference to investors and long-term savers. Increased competition will bring lower costs across the investment process. Coupled with better distribution and greater efficiency, one could arguably expect that to be translated into higher net returns.
UK Trade & Investment is the Government Department that helps UK-based companies succeed in the global economy and helps overseas companies bring their high-quality investment to the UK’s dynamic economy, acknowledged as Europe’s best place from which to succeed in global business.