Enhanced compliance requirements, a focus on transparency and disclosures, investor protection, resilient operational processes: the Luxembourg asset management industry copes with a highly-demanding environment. In the Luxembourg financial market, asset managers confirm that current workflows involve some legacy manual processes, silo bottlenecks and decentralised reporting.
While enhanced project and change management processes aim at avoiding lengthy software implementations and projects’ fat tails, some day-to-day needs may remain unaddressed by the current solutions used in the market. On the other hand, innovative fintechs are booming, eager to put into motion the most advance technologies. Yet, many remain in their starting blocks and strive to meet their target market in the funds industry. The FundTech 360 Catapult Program was designed to address this contrast.
Connecting the dots
Capitalising on their complementary industry footprint, The LHoFT (the Luxembourg House of Finance & Technology), in partnership with ALFI (the Association of the Luxembourg Fund Industry), have designed a program with an aim to connect the dots between the Luxembourg Funds industry ecosystem and the FinTech entrepreneurial universe.
The FUNDTECH 360 program is an accelerator for FinTech companies (post-seed start-ups) to participate in a program for mentoring and business development, following a challenging selection process.
“We are thrilled to build on the LHoFT’s successful history of similar “Catapult” FinTech development programs, bringing our membership into the design of a FinTech solutions program fully dedicated to the investment funds industry”, declares Isadora Pardo, Senior Industry Affairs at ALFI.
Focus on priorities for investment fund managers
To do this, ALFI gathered a team of industry specialists from its Digital and Fintech Forum, to define and prioritise the industry requirements that FinTech solutions could address. The taskforce worked over three months in a series of workshop, first brainstorming on the main needs to be addressed, then defining the utmost priorities.
“With our taskforce of industry practitioners, we started from a blank sheet of paper and listed all the operational requirements we could relate to, deep diving into the current processes in place, the risks and costs associated, the teams involved, and the way they could be streamlined in an ideal world”, explains Laurent Marochini, Head of Innovation at Société Générale Securities Services and co-chair of the ALFI Digital and Fintech Forum.
Eleven hot topics reached a consensus within the Forum’s participants. “We most benefitted from having a very diverse representativity in the forum, with a majority of asset managers, in particular in the prioritisation of topics’ phase”, comments Isadora Pardo. Indeed, the Forum gathers representatives of asset management companies, service providers including custodians, consulting and legal firms. Most financial market participants concerned are the Luxembourg-based office of global financial groups and could bring the multi-jurisdictions view to the panel.
Governance and ESG as top priorities
“Our Forum analysed in depth all eleven topics and all received enthusiastic calls for clear operational improvements in our industry”, describes Laurent Marochini. “Eventually, we agreed on three top-priorities for investment funds managers: governance and board centralised management came first, closely followed by counterparties oversight and the highly expected SFDR management and reporting. Yet, we would definitely keep the remaining eight topics in our files and welcome an open discussion going forward.”
To perform the priority assessment, the ALFI forum members ranked the various topics along three axes. “We first estimated the outreach”, explains Laurent Marochini, “considering the industry segments concerned by the operational issue, fund managers and/or asset servicers, UCITS funds and/ or private assets, Luxembourg-only or global coverage, as well as the novelty of the topic. Then we reviewed the potential for value added in terms of risk mitigation, cost saving, competitive edge in light of the expected feasibility as we all need fit-for-purpose solutions!”
A final screening confirmed the maturity of the proposed requirements. “While we were confident with our prioritisation approach based on the experience of the industry experts in our ALFI Digital and FinTech Forum”, explains Isadora Pardo, “our views were definitely confirmed by the LHoFT.”
Call for FinTech applications is out!
The program was launched by the LHoFT and ALFI on 19 November 2023 with the issue of the “Call-for-applications”. The LHoFT will collect the FinTech applications until January 2024 and make the short-list selection of post-seed FinTech best addressing the key challenges of the funds industry priory identified by the Forum.
The newly launched two-week training bootcamp, co-sponsored by ALFI, and delivered by The LHoFT, will take place in March 2024. The solutions chosen will be presented at the ALFI Global Asset Management Conference taking place in Luxembourg on 19 and 20 March 2024.
In a full win-win approach, the selected FinTech companies will gain direct exposure to the investment funds industry as a privileged target market for their solutions, while the funds industry will benefit from tailored solutions and services from selected and innovative Fundtech solutions, hence paving the way for enhanced efficiency in processing. This engagement of the industry will continue during the mentoring phase, when the fund industry practitioners will provide knowledge and training to the selected FinTech, helping them turn their innovative tools into fit-for-purpose solutions for the Luxembourg fund industry.
