Fintech is more than a buzz word. It is a game changer in the operating model of asset managers, distribution intermediaries, and service providers. New investor behaviors are the driver of change. The investment management ecosystem has to further increase efficiency and provide a better customer experience. Luxembourg asset servicing firms have a major opportunity to help asset managers and distribution intermediaries to succeed in the change.

Executive summary

Industries are permanently evolving, but incremental changes are hardly noticed. Sometimes however, industrial sectors undergo radical changes, where the process of incremental evolution is significantly disrupted by outside technological, demographic, regulatory, or economic forces.

In this ALFI report produced by Deloitte Luxembourg, we seek to describe the impact of Fintech on the distribution model of the asset management industry and the strategies to be adopted by incumbent actors.

Today the Fintech surge is starting to reshape the financial sector on a global scale with a flourish of new actors attracting significant attention from markets, customers, and investors. This Fintech movement is also gaining momentum in Luxembourg. Several driving forces can be identified:

• New technologies have emerged: Blockchain, artificial intelligence, machine learning techniques, digital investment platforms, peer-to-peer (P2P) lending
• The new generation of investors desires more proximity with asset managers, a better ability to compare their investments with peer groups, to invest in a socially responsible way, and they are willing to use online investment platforms
• Big Data and analytics make sense of data and can produce descriptive and predictive analytics on investor behaviors, performance measurement, market intelligence, or risk metrics
• Regulation in the historical ecosystem is still evolving and regulation of the fast evolving Fintech solutions is uncertain
• Regtech emerges as a technology-based solution creating efficiency and automation in non-subjective compliance tasks
  

Content

1. Fintech is reshaping financial services
        1.1. Worldwide investment in Fintech is growing exponentially
        1.2. The Fintech landscape in luxembourg is healthy and has room to grow

2. Re-wired investor and technology: the Fintech drivers
        2.1. New generation of investors will redefine the rules of the game
        2.2. Most relevant Fintech macro trends for investment management
        2.3. Data, data and more data…but how to make sense of it?

3. Fintech and regulation – A cat and mouse game?
        3.1. Regulation of the current ecosystem evolves whereas Fintech regulation is uncertain
        3.2. Move over Fintech, here comes Regtech

4. Fintech and fund distribution – Where is the hook?
        4.1. Product management and marketing: the field of asset managers
        4.2. Fintech is a game changer for asset servicers

5. Robo-advisors will change the face of distribution
        5.1. Robo-advice (2016): a small step in AuM, but a giant leap for AM
        5.2. Robo-advice is shaking the traditional asset managers
        5.3. Four methods of getting robo-advice capabilities
        5.4. No avalanche of regulations on robo-advisors (for now…)
        5.5. The future of robo-advice
        5.6. Does Luxembourg have opportunities in the robo-advice market?

6. Fintech opportunities for the Luxembourg asset management industry

7. Conclusion