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Direct investors are firmly top of mind among the world’s leading asset managers – with “financial literacy” and “next gen” digitization among the key themes that were discussed on both sides of the pond at last week’s Irish Funds and Investment Company Institute Leadership events.
Both conferences provided a comprehensive overview of the current landscape and future directions of the financial services industry in the U.S. and Europe, highlighting the critical areas that will shape its evolution in the coming years. Following are key takeaways cited by the FundGuard team.
The UK election’s potential impact on the financial sector was a significant point of discussion. Operational resilience emerged as a critical focus, with industry players emphasizing the need to withstand and adapt to disruptions while maintaining continuous business operations.
AI’s transformative role in financial services was highlighted prominently as it is already making tangible impacts across the industry for its predictive analytics and potential to maximize operational efficiencies and enable risk reduction.
Demand for data from regulators, clients, and the rapid automation of manual processes are fueling AI’s integration. AI is now also being used to support compliance, generate alpha, and deliver more tailored information to clients. According to Invesco research, within a decade, over 60% of data used for market decisions is expected to be generated by AI, outpacing traditional methods.
Both conferences underscored the importance of digitization to meet investor expectations. Accelerating the onboarding of institutional investors and increasing access to retail investors through digital platforms are seen as crucial. Today’s tech-savvy investors demand 24/7 access via technology, making the collaboration between financial services institutions and FinTechs vital. The right combination of products from financial participants and enabling technology from their providers is essential.
Enhancing financial literacy is vital for ensuring retail investors make informed decisions and fostering a sustainable investment ecosystem. Providing access to new asset classes while maintaining robust valuation policies benefits both institutional and retail investors. The European Long-Term Investment Fund (ELTIF) was mentioned as a key vehicle in this regard.
Culture, starting with individuals in their personal and professional lives, plays a crucial role in the industry. Leading by example can drive a significant cultural shift across the sector. Embracing diversity in teams and boards is not only a social and business imperative but also essential for innovation. A diverse workforce brings varied ideas, leading to greater innovation and reflecting the communities the industry serves.
With T+1 settlement now live (as of May 28, 2024), discussions also focused on the importance of synchronization across jurisdictions, particularly in the UK and EU, with one leader noting that working at different paces across regions poses challenges, and achieving synchronization is seen as critical for smooth operations.
Key priorities among the industry leadership panels included the adoption of AI, the growth of alternative investments, and the implications of industry growth for asset managers and owners. Distribution strategies were also top of mind as firms look to expand their global footprint.
Change is hard. FundGuard can help.
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We believe that by starting with the accounting engine, your firm can address critical operational inefficiencies, ensure data integrity, and lay the groundwork for further technological advancements. Get in touch if you’re ready to discuss your path to transformation.
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