Why investment management needs a digital mindset

In the opening session of Fund Forum Berlin 2016, Tom Brown, Global Head of Investment Management at KPMG, informed us that this year's conference would have two main themes – technology and regulation.

So it was apt that the first speaker in the Main Conference was Andreas Weigend, former Amazon Chief Scientist and now Lecturer at the University of Berkeley and Director of Social Data Lab, who dove straight into the world of Big Data.

"I don't have any current knowledge about what's going on in the financial world," he began. "But I think I do have a grasp on what's going on in the world of financial data."

Which was lucky, as the demand to hear what he had to say outstripped the number of seats available.

The value of data

"At 9 o'clock this morning," stated Andreas, "we have already created more data than mankind has created from the beginning of time to Y2K."

Whether it’s in Google searches, Google history, or location detection on our devices, explained Andreas: "Every decision you make, somebody is watching."

The value of that data, according to Andreas, is in looking at what decisions are being made from it.

"There are three-something billion smartphones, more than half of which are in Asia," said Andreas, going on to explain why mobile is so interesting. "Because of the many sensors it has: microphone, GPS, gyroscope, camera...the phone knows where you are walking, how you are walking, it has an amazing collection of sensors, there are tens of billions of sensors in this world.

"But beyond all of that, I think it is the most relevant device for identity. It knows more about who you are than maybe even you do yourself. There are new technologies in the location space which will have a big impact."

Fund management needs a data mindset

Andreas asked the audience to stand up if they thought their business was a "data refinery". Very few did. Yet, he argued, that's exactly what they are in the business of.

"I invite you to think about your company as a data refinery. There is a plethora of different data sources that you have, many of them you might not even be thinking about," he said, going on to list these as: implicit data (the data that people leave); explicit data (what people share with the world); and context (knowing where people are).

"Why do hotels offer free wi-fi?" he asked. "So that you give them your location."

How do people make investment decisions?

Andreas eschewed the traditional idea of the customer journey, to one of a customer decision map:

"The decision map says: What are the decisions they can make - and how then do we measure what influences the decisions, at a given point on the decision map?

"It turns out that for financial decisions, many people base them on their friends; on people they know. If you think about how you all opened your first brokerage account it was probably through the advice of a friend. It's surprising how important social is."

Digital Bill of Rights

Crucial to this new data-driven landscape was having in mind a customer Bill of Rights, which would, according to Andreas, look something like this:

1. Transparency – you as a customer should have the right to access your data. Not only that, but you as a consumer should have the right to inspect the refineries and ask: how is the overall security? In addition, there is the privacy "burn rate" to consider, in other words, if some other part of the bank wants to know what you’re doing in fund management, how do you protect the privacy of your customer?

2. The return-on-data score – What is the consumer getting back for giving you their data?

3. The right to amend – anyone in the world should be able to amend any piece of data about them.

4. The right to blur – the customer should be in charge of the amount of information available.

5. The right to play – what are the consequences of shifting money from this pocket to that pocket?
6. The right to port – allowing people to take their data from one place to another.

"Those rights I want to put in your head," urged Andreas. "Because I think this is the direction consumers should be moving."

A supplication

"Data should be your core competency," concluded Andreas, before – for possibly the first time ever at Fund Forum – ending his talk with a prayer:

"Grant me:

The serenity to accept what computers do better than people,

The courage to let people do what they do better than computers,

And the wisdom to know the difference."