05.21.2018
By Shanny Basar

Cobalt Set To Catalyse Schroders

Cobalt is a transition metal that can be used in compounds as a catalyst to speed up a chemical reaction by increasing its activation energy. Graham Kellen, chief digital officer at Schroders, told Markets Media that the new global in-residence fintech programme was named Cobalt as it aims to genuinely help change the investment and wealth manager’s business.

“Cobalt is a true transformation program that aims for behavioural change,” said Kellen. “We are aiming to increase agility and innovation, how we solve problems and to change the way we work.”

The asset manager, which was founded in 1804, announced the latest stage of its evolution through the launch of Cobalt in March.

Peter Harrison, Schroders

Peter Harrison, group chief executive at Schroders, said in a statement:“Innovation is part of Schroders’ DNA. It has enabled us to evolve and grow our business for more than 200 years.”

Kellen explained that Schroders did not want to set up a fintech incubator that was separate from the business. “It is really important for us to work with start-ups and getting early access to technology and services is key,” he added.

Kellen has nearly 20 years experience in  strategic roles in both fintech and financial services, on both sellside and buyside. He joined Schroders in 2013 from FRM, part of hedge fund Man Group, where he was a digital strategist and chief technology officer.

Schroders, which was responsible for  £447bn ($604.7bn) of assets at the end of last year, is targeting fintech firms who offer relevant solutions for investment management and have moved beyond the conceptual or early-growth stage. Other criteria include having few (or no) other enterprise clients in financial services and compatibility with Schroders’ values.

A start-up’s residency in the programme will last for up to one year and potential benefits include desk space; mentors from different businesses; access to product users and business leadership; and the opportunity to pitch for investment. Schroders has a private equity arm but it is not mandatory to buy a stake in companies on the programme.

Each successful applicant will have a business sponsor as an advocate within Schroders.

Kellen said: “As an ex-fintech entrepreneur in the early 2000s I found that one of the hardest issues was getting access to people in the business.”

He added that companies that join Cobalt need to have a solution to a defined problem that decreases friction in the business or with customers.

“The bar for the customer experience in asset management has been raised by digitalisation in everyday life,” he said. “We are also a huge data processor and we have a  data insight and analytics team whose skills can be spread throughout the firm.”

Since Cobalt was launched, approximately 20 fintechs have approached Schroders. The asset manager has a digital steering committee which scores each application against the programme’s criteria, viability and importance to the business.

This month, Qwil Messenger, which provides a secure instant messaging platform through one app while meeting global financial services regulations, became the first fintech start-up to join Cobalt.

Graham Kellen, Schroders

Kellen said: “The biggest concern amongst distributors and wealth managers is secure low-friction instant messaging but very few platforms meet regulatory requirements. It is really important for communication to be safe and Qwil Messenger have great technology.”

The importance of secure communications and the protection of data becomes even more important as GDPR, the European Union regulation covering consumer privacy and data, comes into force at the end of this week.

Kellen said Qwil Messenger should be deployed to clients by the end of this year.

Peter Reading, chief executive and co-founder of Qwil Messenger, said in a statement: “We are proud to be selected as the founding Cobalt programme participant. Collaborating with a forward-thinking institution keen to nurture the growth of an industry-wide solution is key to our development and success. Schroders is a great match for us.”

A new report, Sustainable Financial Services in the Digital Age, from trade body UK Finance and management consultancy Parker Fitzgerald, called on the industry to collaborate with technology suppliers as well as domestic and cross-border regulators to create a risk framework that embraces the benefits of digital transformation.

Matthew Hayday, leading partner, global technology services at Parker Fitzgerald, said in a statement: “Digital transformation is both inevitable and necessary for the financial industry. Of particular importance to financial firms is understanding how future regulations can affect their digital transformation strategies, how key technologies can be safely adopted within their operating models, and how their risk frameworks can be adapted to take account of new risks and threat vectors arising from cyber and technology risk, as well as data privacy and protection considerations amplified by PSD2 and GDPR.”

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