Ostrum Asset Management – the new name of Natixis Asset Management since last April – has been the first French investment firm to have completed the purchase of a fund share by investors through a blockchain-dedicated fund distribution platform for fund managers, FundsDLT, in July 2017. The cooperation also involved Fundsquare, InTech and KPMG Luxembourg at the time.
Speaking at Ostrum’s European press event on 14 June 2018, the asset manager’s chief executive officer Matthieu Duncan outlined how large the impact of blockchain will be on the asset management industry.
He first distinguished a dual trend in the asset management industry : pressure on fees and increase in costs. “Accommodation to those two things is challenging for everybody in asset management. As for the pressure on fees, it goes along with the low rate environment and the rise of passive strategies. On the cost side, regulatory pressure has driven costs up and this is only going one way.
“Now a third challenge is digital transformation. People often ask why the AM industry has not been disrupted as much? The answer is that distribution mechanisms in asset management are a barrier to enter this space. Distribution mechanisms are multi-layered and complex. Blockchain technology is a disintermediation mechanism. It disintermediates trusted third parties.
“The financial industry is full of trusted third parties. If you disintermediate all trusted third parties, you make the distribution chain simpler. If you lay the distribution chain simpler, that opens the door to potential disruption. FANGs have not been involved in asset management because distribution mechanisms were a barrier to them. But blockchain can very much opens the door of asset management to FANGs in the future. That has a potential to significantly disrupt the industry,” Duncan highlighted.
Ibrahima Kobar, deputy CEO and chief investment officer of Ostrum AM, added that the firm was also looking at integrating big data and artificial intelligence tools in its investment process.
“A significant change will happen in the way we will manage portfolios through the use of big data in order to read behind the figures, build new strategies and generate new alpha. It will be key. We discuss internally on the topic of big data. We need to be active on this trend, otherwise in a few years, we will find ourselves behind where we need to be,” said Kobar.
“That does not mean we are going to turn into a quant-driven asset manager but the use of quantitative tools will inform the qualitative fundamental judgment. We do believe technology has evolved in such a way that has become relevant,“ Ostrum’s CEO Duncan specified.