Fintech is lauded as the great enabler of innovative frontiers, however, the reality for most is that it presents the critical means to remain competitive, agile and sustainable in a high-cost economy. 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, faster operations.
The wealth management sector has continuously evolved over recent years 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 such as Calastone that digest data from very disparate sources, across different markets.
For every unit bought or sold in a managed fund connected to our network, we translate and automate the message flow between platforms, fund managers and their respective counter parties. It doesn’t matter what operating system each use, Calastone translates, processes and confirms transaction information to every sending and receiving party.
This ‘user-agnostic’ technology relieves asset managers, platforms, custodians, and administrators from the headache of unifying disparate systems for straight through processing – a challenge that for years has backlogged project queues. The result, using Calastone is an automated flow of information that removes time, risk and friction associated with manual processing.
Differentiating Calastone as a ‘network of networks’ from the mutual or shared ‘utility’ model is its interoperability. In other words, Calastone 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.
Ensuring flexibility and agility is paramount
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.
Calastone’s success is a measure of the problem it solves, and the efficiencies it creates. What was a massively intensive and manual process, now takes seconds at a fraction of the risk and cost.
Yet the driving factor that has enabled this success is the open mindset demonstrated by each of its adopters. 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. Tim Samway, Managing Director at Hyperion said:
‘Smart technology is bringing enormous relief by solving fundamental industry problems, rather than just fixing legacy systems. This marks a real step change for the managed funds sector.
The scale and intensity of regulation has forced us to rethink our operations and to trust networks like Calastone to do much of the heavy lifting that has long been done by archaic, manual and costly systems.’
Mindset and culture are the key
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.