Front-Office Innovation Remains Challenging
Daniel Andemeskel, head of innovation management & strategic initiatives at AXA Investment Managers, said introducing technical innovation has been hardest in the front office where the firm wants to accelerate investment decisions and optimise alpha.
Andemeskel gave a presentation today at The Summit for Asset Management in London.
AXA IM launched an innovation strategy four to five years ago. He said: “When I started the job I was inspired by the Back to the Future movies which showed the need to think completely differently.”
Andemeskel said most progress has been made in marketing and sales. “We want to enable clients to buy funds like they buy books on Amazon and provide the same kind of recommendation engine,” he added.
This month AXA IM took a 10% stake in Dreams, a Swedish fintech whose app uses artificial intelligence and cognitive behavioural techniques to encourage users to save and invest money.
In the two years since launch, Dreams has attracted 300,000 users – the equivalent of 14% of the total 20 to 40 year-old target group in Sweden, according to a statement from AXA IM.
The partnership marks the beginning of a phased roll out of the platform across continental Europe, including German, Belgian, French, Italian, Dutch, and Spanish markets and the two firms will also run an innovation lab to conduct research on millennials’ savings and investment habits.
Joseph Pinto, global chief operating officer of AXA IM, said in a statement: “This partnership is a key milestone in our digital strategy to open up new digital distribution channels, starting with one targeting millennials – who are already today’s investors.”
Andemeskel described Dreams as the WhatsApp for finance. He said: “We will distribute funds through this channel this year.”
In the middle and back office AXA IM has been able to cut costs through the increased use of robotics and new technology for regulatory compliance to remove repetitive workflow and improve efficiency.
In contrast, progress in the front office related to accelerating investment decisions and optimising alpha is still challenging.
“We have invested in a lot of alternative data, sentiment analysis and artificial intelligence but they are difficult to integrate into existing processes,” said Andemeskel. “However our quantitative team are building new products driven by artificial intelligence and machine learning.”
He continued that everybody should look at digital assets, which are being approved by regulators across Europe.
“Digital assets will dramatically change our business,” Andemeskel added. “There is a lot happening under the radar.”
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Most buy-side firms miss alpha-generation opportunities by not using granular ESG data.
The acquisition reinforces Schroders’ private assets and real estate capabilities.
ICS, a digital platform provides transparency and comparability of the impact of investments.
Buy-side trading head has somewhat warmed up to the notion of trading from home.