The democratisation of asset management and its technological trends

In a place as symbolic as the Palais Brongniart in Paris, AM Tech Day brings together all the experts in the asset management industry and its ecosystem. As its name suggests, AM Tech Day is dedicated to the technologies that will impact the business of tomorrow. This year's theme was "Democratising investment: risk or opportunity?”.

This democratisation is the result of the societal revolution we are currently experiencing, but also of the new technologies that amplify this revolution.

Three main trends emerged from the day:

The first theme that emerged was related to distributed ledger technology, cryptos and the metaverse. Arquant Capital is now the first regulated French fund, with the support of Societe Generale Securities Services (SGSS) as a provider, to offer exposure in crypto funds. Despite the fall in crypto stocks during this "crypto winter", the appeal of this new asset class is being felt, particularly via Wealth Management Advisors (WMAs) looking for innovation or performance. Funds that are currently limited to a professional audience could one day be offered to a retail audience that takes the risk of investing directly in the markets. Indeed, nearly 8% of French people¹ in 2021, according to the Adan survey, have invested in cryptos. Even if they are mostly young, the trend is there.

Distributed ledger technology can also bring efficiency to the fund subscription/redemption process and its distribution. Innovative companies such as Iznes and FundsDLT are offering their platform to improve efficiency with promises of transparency, speed of execution, lower costs and better distribution. This same technology has also been cited on several occasions for making illiquid products more accessible. This accessibility of private equity and real estate funds, previously reserved for a sophisticated audience, is gaining popularity with a more retail audience.

In a more futuristic vision, some funds also see metaverse as a means of changing the world of asset management, in line with the societal revolution. With over 3.2 billion gamers² worldwide, it is hard to ignore this phenomenon, even if today we can still consider that we are at the beginning of the story. As the web3 develops, asset management will have to follow.

The second theme of the discussions was the consideration of Environmental, Societal and Governance impacts. Beyond the fact that it is mandatory, investors are the ones who are now concerned about investing in projects that reflect these values while not neglecting performance. This point is all the more important in the context in which we operate, characterised by hyper-inflation and rising rates. It has also been proven that socially responsible investments often have a higher performance³. To achieve this, the key is the provision of quality data and we have been able to count a dozen start-ups which have positioned themselves in this niche with, of course, different value propositions and at different degrees. Some position themselves as data providers and others more like technology companies using machine learning to deliver or search for the necessary information. Robo advisors have also demonstrated their usefulness, but as Guillaume Heraud, Head of Marketing at SGSS points out, it is education and pedagogy that are the determining factors.

The last theme, which was the common thread of the conference, is data. The data is necessary to analyse client behaviour and make a tailored recommendation. Operational effectiveness and monitoring of risk and fraud management also cannot be achieved without data. The explosion of social networks and platforms has contributed to the “exponentialisation” of data. 30 times more data was produced in 2020 than in 2010, and this phenomenon is expected to increase threefold by 2025⁴. 2.0 asset managers, as mentioned in his speech by Yvan Mirochnikoff, Head of Digital Solutions at SGSS, will increasingly need to acquire these skills in order to create an unforgettable client experience. Web giants have understood this issue well and are also increasingly positioning themselves on this niche. The power of the cloud is a real accelerator here and this is the bet of the Luxembourg start-up Next Gate Tech, for example, which sources its data externally. This consolidated and harmonised data then makes it possible to help monitor changes in the Net Asset Value.

It is clear that the success and the high number of participants in this 13th edition of AM Tech Day demonstrates the interest shown by the industry in the issues related to new technologies and how to take into account the societal revolution. New generations will be the investors of tomorrow and the future of asset management is being decided today.

Laurent Marochini, Head of Innovation, Societe Generale Securities Services Luxembourg

¹www.lesechos.fr/finance-marches/marches-financiers/les-francais-investissent-de-plus-en-plus-dans-les-cryptomonnaies-1386904.
²www.blogdumoderateur.com/chiffres-cles-gaming-france-monde-2022/.
³www.morningstar.fr/fr/news/211508/quelle-a-%C3%A9t%C3%A9-la-performance-des-fonds-esg-au-1er-trimestre-.aspx.
⁴fr.statista.com/infographie/17800/big-data-evolution-volume-donnees-numeriques-genere-dans-le-monde/