The launch of this investment management focused tech initiative was seen as an essential milestone in the evolution of Investment and Wealth Management.
The mission: to power up the adoption of technology throughout the investment management industry to better meet the goals and needs of investors and savers.
Working with FinTechs of varying size and maturity across the full universe of technologies, we can connect investment firms to solutions that transform every stage of the value chain.
Since launching, the initiative has grown considerably expanding both nationally and internationally, opening the Engine Room co-working space in Birmingham (in collaboration with Wesleyan) and the development of global initiatives through our Global Partners Programme.
The IA Engine works with an Advisory Panel of senior industry experts to identify and work with some of the best tech as well as providing an extensive programme of events and TechTalks with an impressive online and social presence that seeks to connect, amplify and educate.
The six-month Innovator Programme is now on its third cohort and has provided unrivalled access, support and engagement for selected firms who, as a result, have secured funding and contracts as well as significant promotion.
The key areas of technological focus primarily concentrate on:
While we now have a greater general understanding of many of the key technologies available, their true potential is still less well understood. Additionally, the number and range of players within the FinTech Ecosystem for Investment Managers makes navigation an additional and considerable challenge.
The following schematic provides a visual overview of the complex landscape in which FinTechs and Investment Management firms can be seen to operate. Within the ecosystem, there are a large number of intermediaries, facilitators, influencers and other stakeholders.
This complexity is exacerbated by the fact that it exists as part of a web of further inter-linked ecosystems. These include the wider Financial Services ecosystem.
For example, Investment Managers dealing with sell-side firms or being serviced by other institutions such as custodian banks; similarly, emerging technology firms also offering their services to other industries such as Telecoms.
Source: The Engine Advisory Panel membership research, 2020
We also know from recent experience that our business models face:
A changing value chain
Margin pressures and a resulting quest for greater operational efficiency
A requirement to measure Social Impact
The use of greater Data Science Analytics to increase our client understanding of the Alpha generation processes
Rapid digitisation driven forward by COVID-19
The speed of adoption, integration and development of new technologies, is often slow because of obstacles such as:
Data ownership and management
Business & industry complexity
Legacy technologies and supporting systems
Various operating models stemming from different degrees of outsourcing
Organisation culture & skills gaps
Source: Alpha FMC 2020
Onboarding a FinTech is often complex and requires multiple stakeholders and departments to ensure support and adoption. The graphic below identifies many of the common issues faced, whether it is over customising a solution, lack of testing through proof of concepts, failure to understand the regulatory requirements or concerns around data security and access.
These key areas form part of the ecosystem and together with a clear understanding of user behaviour and training provide the foundations of successful implementation.
The Engine Advisory Panel is convened to assist the industry and guide the resolution of the above challenges and obstacles to support industry transformation through adoption of innovative solutions.
The 28 strong Advisory Panel consists of a mix of influencers, decision makers and pioneers together with a selection of external domain experts. Understanding the industry pain points and problem areas is key to identifying and assessing the potential solutions that exist in the FinTech landscape.
Every six months the Advisory Panel open applications to the Innovator Programme. Assessing a written / videoed application, the successful applicants are progressed to the 'Pitch Panel' and decisions are taken as to the appropriateness and impact of the solution within Investment and Wealth Management.
Assessed areas include:
Benefit of adoption
It was through working with the FinTech members, and discussions with the cohorts and the Advisory Panel that we are now in a position to present guidance to IA members on the best practices for successful & responsible engagement with FinTechs.
This paper provides a framework for assessing the following:
Advice on scouting & FinTech solution assessment
Advice for FinTechs on how to reduce friction in large client engagements
Common pitfalls to avoid when working with FinTechs
Mutual IP consideration guidelines
Mutual considerations on a solution fit for the Investment Management industry
Best practices for being a responsible client of a start-up