Responding to disruption

“No one has doubts in the room that our industry needs to change,” commented one speaker from the audience. “But when you talk about innovation it is not easy to quantify.”

This was in response to a weak showing by the attendees after Samantha Ghiotti, a partner at Anthemis Group, polled the audience to see what percentage of their P&L they anticipated would be dedicated to digital change. Instead of a show of hands voting on numbers as varied as 1% to 80% - the shirt sleeves remained lowered amid comments that the ‘question was too big’.

Not being able to put a number or a metric against the response to transformational change and disruption is one that is common to all areas of financial services dealing with waves of FinTech innovation – not just the fund management industry.

However, the discussion by the panel – spearheaded by a keynote by Ghiotti looking at how success related to disruption – was not conducted by thought leaders who had their heads in the sand when it came to FinTech and innovation.

Panel moderator, Sven Korschinowski, partner at KPMG Germany asked the speakers if the fund management industry was “ready to be agile” in response to FinTech disruption. Lorna Martyn, vice president, technology management, Fidelity Investments commented that “in terms of technology, this industry has been agile for a very long time.” However, advances in FinTech innovation and the rise of startups has make significant changes in how a firm can take a product to market.

However, Matthias Niklowitz, senior analyst, banking e-foresight, Swisscom responded with what is now a well-worn phrase in many industries facing digital transformation – ‘Can you afford to do nothing?’ “You can’t wait until Amazon or Google decide to enter this market,” he said. “We are also watching China and Alibaba – their entrants to this market could be a showstopper for these businesses.”

Of course, no panel about FinTech and the asset management world could be complete without the mention of robo-advisors. Many on the panel felt that most robo-advisors were “too simple” to pose a direct threat to the current financial advisor market. Although Martyn agreed with that conclusion, she did warn that the traditional financial advisor or old is no longer held up on a pedestal dispensing advice. “The world is much more customer-centric,” she said. “Customers now go to many different places to vet and verify their investment decisions. Robos are part of that.”

Although robo-advisors are seen by some as a disruptive force in the financial advisory space, Ghiotti started the discussion with her keynote warning that success and disruption don’t always go hand and hand.

She argued that many disruptive ideas, such as the music file sharing service Napster, never see commercial success. Other developments, such as the latest ‘better, cheaper, faster’ iPhone, are successful without being disruptive.

It is the the startup or idea that “addressing the previously unaddressable in a sustainable way” where disruption in any industry will equal success.