Co-designing the digital fund distribution platform of the future
In recent months, innovative distribution models have been adopted by a number of different platforms. Disruptive customer experience providers like Nutmeg, Wealthfront and FutureAdvisor, to name a few, have introduced interactive ways of addressing the needs of end investors.
According to the results of the EY Fintech indexi published on 22 January 2016, this wave of innovation in financial services is here to stay.
“The Q4 2015 EY market survey ranks different categories of FinTech products in terms of how widely used they are. Payment services (17.6%) figure at the top, followed closely by savings and investments (16.7%). In the latter category, online stock brokers and spread betting were most common. Online budgeting and planning, online investments, equity and rewards crowd funding, and peer-to-peer or marketplace lending also figured.”
“The market survey also found that higher-income individuals are some of the most economically valuable customers for banks and insurers: FinTech use is highest among consumers with incomes greater than US$ 150,000 (44.1%).”
When it comes to digital initiatives, BNP Paribas Securities Services actively engages with its clients in the search for disruptive solutions to new problems. This “co-creative” approach positions the client at the centre of the process.
The client’s involvement ensures that market trends impacting the client’s business model are taken into account; that the client’s expectations are a constant priority; and the process is transparent and efficient.
In October 2015, BNP Paribas Securities Services organised a “business hackathon” in London, in collaboration with EY.
Actors of the asset management value chain, ranging from distributors to institutional clients and FinTech companies, gathered for two days to challenge the main trends and assumptions surrounding data management. In addition, leaders in the distribution space were present, and provided analysis on the impact of data management on distribution.
Participants were called on to design the value proposition and business model pillars of a “data platform of the future” in a series of workshops.
“AXA IM really enjoy the possibility of participating in the hackathon organised by BNP Paribas Securities Services. It was very motivating to exchange on all the topics the industry is looking at, like digital solutions and the distribution platforms of the future. Being with peers for over 2 days and meeting start- ups is very powerful. This is a first step towards moving together in the same direction: clients and providers. We definitely appreciate the cooperative spirit of this kind of event”
Joseph Pinto, Global Chief Operating Officer, AXA IM
By addressing the key challenges of the stakeholders in the value chain – end client, distributor and asset manager – participants co-designed two types of platform: first, an investment and portfolio management platform for the end investor, based on a Direct-to-consumer (DTC) strategy; and secondly,a data consolidation and analytics platform, which can apply throughout the value chain.
Leveraging on its key position in asset servicing, the Bank is cooperating with major actors throughout the value chain to develop and test prototypes. It calls on its partner clients for for feedback and recommendations, ensuring a continuous innovation cycle.
As an example, BNP Paribas Securities Services has deployed an analytics tool that allows fund managers to analyse their performance relative to the rest of the market. The web portal provides a powerful way to compute data such as fund performance, net cash balance, the number of transactions, and total holdings with various level of aggregation. Information can be fine-tuned by the clients thanks to modern and easy-to-use widgets.
Data and customer knowledge within BNP Paribas Securities Services will enhance market benchmarks and predictive analytical tools. The Bank launched the DNA reporting through a Google-style internet portal that offers direct, customised information to Transaction Agent customers. The search engine and data visualisation modules, among other features, make DNA for Distribution extremely user friendly – and useful in focusing on what information is important.
According to the EY global funds distribution review, a successful platform distribution strategy will require an assertive and strategic use of social media; a commitment to brand identity; a comprehensive investor education program; and a high degree of personalisation and focus on client experience.
These drivers will help address the key challenges of product differentiation, and further build customer relationships.
This article was co-authored by
Pierre Mottion, Global head of transfer agent and fund dealing services products (BNP Paribas Securities Services)
Philippe Limantour, Executive Director (EY)
Pierre Borg, Partner - Head of Digital & Customer (EY)
1 EY’s FinTech Adoption Index attempts to capture the extent of adoption of FinTech by digitally active consumers. The index draws upon a survey of 10,131 digitally active consumers undertaken from 1 September 2015 to 6 October 2015. Survey respondents were located in Australia, Canada, Hong Kong, Singapore, the United Kingdom and the United States. FinTech users were defined as survey respondents who indicated they “used two or more FinTech products in the past six months”