Funds industry criticised for failing to innovate

Industry participants have called for wholesale changes to the funds industry.
By Paul Walsh
The funds industry must adopt a proactive approach to ensure it is not left behind, a panel of industry participants has said.

Speaking during the SWIFT Business Forum in London, panellists discussed how the industry had seen little change in recent times and now is the time for wholesale alterations.

“We are ripe for needing a paradigm shift in the industry and when you look at recent developments, the regulators and other industry participants are saying that we need things to change, we need more transparency and we need fees to be cut down,” said Laurence Mumford, COO at M&G Investments.

“I work for M&G which founded the mutual fund as we know it in 1931 and 86 years later, to some extent not much has changed about mutual funds.

“Surely now is the time for some fundamental change and if we’re not going to drive it ourselves, somebody may come along and drive it themselves if we don’t wake up,” said Mumford.

Fellow panellist Katrina Sartorius, global head of FundsPlace at Euroclear suggested the industry should take an example from non-banking institutions and warned of potential implications if the funds industry isn’t proactive.

“When we look at other industries such as what Uber has done to the taxi industry, this is completely different to what we’ve done.

“There are a lot of examples out there which should make us think about what is going to be done to the fund industry if we don’t look to make some changes for ourselves.”

Sartorious also stated such changes were critical to attract the next generation of talent.

“We have a lot of paper in our industry and a lot of that paper is heavily involved in the processing so we need to focus on how we can eradicate this.

“People also talk about millennials who want to do everything on the app and we need to change in response to this.”

Other panellist Jon Willis, chief commercial officer at Calastone also stated the biggest challenges faced by the fund industry is “legacy” in the form of “legacy technology”, “legacy people” and “legacy practices.”

Willis also stated that in spite of the difficulties attached to changing these systems, institutions would recognise the dangers of being left behind.