“Think about disruption and what you’re options are, so you’re not left behind”. Neil Ward, Former General Manager, Global Business Operations at Skype is interviewed at FundForum International.
Consider the following:
By disrupting the way people consume TV shows and movies, Netflix has achieved 92% penetration in the US. By offering rich content, via a platform interface that learns to understand what people’s viewing preferences are, it has taken the market by storm.
It has taken years for the BBC, that bastion of the British Establishment, to cotton on to this disruption. Recently it announced it would, for the first time, offer an entire TV show on demand via its digital platform, iPlayer; a clear acknowledgement of the power Netflix holds.
Similarly, Airbnb has disrupted the hotel market to the tune of USD110 billion of value to the hotel industry, picking up an estimated USD2 billion in revenue stream per annum.
What then, can the funds industry learn from these disruptive technologies?
Neil Ward, who leads the digital strategy and transformation at KNEIP, gave an interesting presentation on this recently at Fund Forum. He quipped that the funds industry is extremely friendly. It is one where relationships are built on trust and respect and there is a great camaraderie. But it is fair to say that the industry, a bit like the BBC, has been slow to understand the power of disruptive technology, or even what disruption means.
The principals of disruption are simple, said Ward. Learn from the past, look at the data in front of you, and ask questions of your business five years ahead. Then try to future proof your business by choosing the right partners.
“Nobody is taking the edge and trying to disrupt in the funds industry,” suggested Ward. “If you think technology is everything in the equation for disruption, you will fail. If you carry on with the thought that it has to happen, you will fail.
“How could the fund industry benefit from digital applications and solutions? That’s the journey we are on at KNEIP.”
Ultimately, though, if you want to change any industry you have to be willing to change internally.
“At KNEIP, I have moved away from day-to-day management to spend more time overseeing our new digital division, Accelerator. From the beginning, I made a point of separating Accelerator from our flagship business: our main revenue source, which has to keep on growing and improve the client experience over time,” Bob Kneip, Chairman and Founder of the eponymous Luxembourg-based firm, told Hedgeweek recently.
Ward is an integral part of this future path being forged at KNEIP, where digital solutions and applications are being developed every 90 days to bring tangible benefits to its clients. In his view, if companies can leverage technology and insight and always give the customer what they want, they will win the race.
The gauntlet being laid down to the funds industry is this: Who is going to take an edge, like KNEIP, and be willing to take the industry in a new direction? At present, inertia still seems to be an issue. It’s easy to follow the pack, much harder to lead it.
Ward touched upon this inertia point during his presentation, commenting:
“People say their websites are bland but that they update them every two years. In the non-funds world, that is a lifetime. At Skype, we iterated our website every two weeks, 15 years ago at Virgin Media we iterated it on a three-monthly basis. At KNEIP, we are thinking about agile processes. What does my customer want that gives them an edge and gives us consistency of certainty that customers are looking for? We are asking that question every 90 days.”
The human touch is vital to the way the funds industry works. There is no suggestion that disruptive technology will lead to a de-humanisation of the industry. Nobody would want that. People will still want to shake hands and investors will want to hear the sincerity in a fund manager’s voice.
But what if you could automate fund distribution or fund registration? Or service contracts?
“When you think about digital, think about what’s in it for you? What’s applicable to you? And how quickly do you want to deploy it or partner for it?
“The reality is, this is the only market where regulation drives the product agenda. With the relevant data, and by offering an end-to-end solution, you can turn regulation into a marketing campaign. That’s a big opportunity,” Ward told the audience.
Disrupt yourself. Establish your own transformation. Innovate from the core.
If not, Google, Amazon and Microsoft will play hard and exert the same disruptive influence on the funds industry that Netflix has had on the TV & Film industry.