The Investment World of Tomorrow: Spotlight on the Fund Value Chain

Regional insights can path the way to a more successful business. To identify the most pressing local painpoints in the fund value chain, Investment Navigator conducted an international survey in association with the University of St. Gallen and PWC Singapore, among leading private banks. “We knew from our daily interaction with our clients that the fund distribution business works differently in Asia and Europe. What really surprised us in the findings was the material extent of the differences.” says Carina Zuber, Head Business Development APAC from the reg-tech solution provider Investment Navigator.

According to the survey findings, a distributor in Europe needs two months to onboard a new product whereas in APAC the process to identify, select, approve, and making a product available for sale in internal systems requires in average 22 weeks. Or in other terms, in Europe a fund is already available for sale while in APAC the due diligence process has just started. Hence it is not a surprise that for the Asian fund distributors time-to-market is a key concern in the current environment. In contrast, for the European fund selectors, data collection and validation ranks as a top concern.

Were you aware that the fund distribution value chain in Europe experiences a higher degree of automation than in APAC? In APAC, 62.5% of the onboarding of a fund in order applications is mostly manual whereas in Europe 45% is mostly or fully automated.

Both regions still have a lot of potential and automation appetite: 86.5% of the respondents feel processes are inefficient due to the lack of technology. Not only the due diligence process requires a lot of manual interactions between the distributor and the product issuer, product shelf management is seen as a major challenge along keeping product related information up-to-date.

For a large majority of fund distributors – all respondents in APAC and 3 out of 4 in Europe – consider ensuring a compliant distribution a paramount challenge. This key risk can be better mitigated and tracked in an automated environment. Due to a more complex regulatory landscape in Europe, automation efforts have started earlier than in APAC. This also explains why in APAC 86% of the survey respondents see a big challenge in ensuring that relevant data is available and not outdated (vs. 38% in Europe).

“The fund distribution value chain is more automated in Europe than APAC, for example suitability checks are performed automatically and logged in audit reports. This automation trend has recently also been accelerated in APAC by new regulations, increased margin pressure and new competitors. The automation appetite has grown to free up time for revenue generating activities as well as to reduce costs and operational risks and to improve product time to market.” summarizes industry expert Carina Zuber comprehensively. She adds that “The core competence of Investment Navigator is to automize product shelf management and product distribution checks. For our global clients, it’s most important that all stakeholders are seeing their regional needs well understood and at the same time, global synergies are brought to work.”

You can watch the presentation of Investment Navigator and Clearstream Fund Centre from the virtual Private Banking and Wealth Management Conference London here:

Contact Investment Navigator for more information about the fund value chain research and how private banks can globally harvest the benefits of technology without compromising on the reflection of local needs.