For , technology is, of course, important for a bank--both in terms of complying with regulation and helping it remain safe. van Kerkhoff, who is head of securities services at BNP Paribas here in Luxembourg, as well as responsible for Ireland and the Channel Islands, was speaking on a panel during Elvinger Hoss Prusssen’s inaugural fintech conference, held on 17 September at the Spuerkeess. But there has been what he called an “evolution,” or a shift from doing things “in house” to looking at the market, “seeing what is out there” and even taking a stake in or partnering with certain tech companies. It’s a way to “stay abreast” of developments in the sector, he argued. “We need to know what is going on in the market.”
As a concrete example, van Kerkhoff explained how BNP Paribas complied with a recent regulatory requirement related to NAV (net asset value) oversight. In the past, “we would have developed that in-house,” he said. This time, they “looked outside” and found that the Luxembourg fintech Next Gate Tech was offering “exactly what we were looking for.” And in March 2022, the Next Gate Tech and BNP Paribas’ securities services business announced an agreement that would allow BNP Paribas to leverage the fintech’s data management and NAV oversight technology to support their depositary bank operations.
“The competitive dynamics of the market are shifting radically,” added , general counsel and authorised manager at the cryptocurrency exchange Bitflyer, who was another panellist. “Competitors are no longer just other asset managers or banks.” Instead, players who have not been “traditionally viewed” as competition are entering the space, and looking at newer technologies that will allow the increase of assets under management is key for staying competitive.
Indeed, for Sevag Hawarian, CEO of the payments firm Zota Tech (EU) and another participant on the panel, “companies that don’t embrace [tech] will become obsolete.”
Main challenges and how to embrace them
But embracing technology does come with its fair share of challenges, another topic that the panellists touched upon.
“Even if you have the will to embrace something,” said Tulpule, “the question becomes: how do you integrate that into legacy systems? It’s not easy. There’s a lot of work that goes into integrating the new system or protocol into your existing IT frameworks.” It’s key to make a wise decision about which solution is selected. The ability to be agile and nimble is also important, he added.
Whilst the migration of a fintech solution into existing systems is an element that needs to be considered, van Kerkhoff noted that selection criteria have also changed. It’s about more than just the tech product itself. Instead, factors like management, data protection, security, conduct or strategy have become more important.
For Hawarian, the main challenge is “uniting strategy and implementation.” And in this challenge, “the most important factor is the human element. You can have as much technology as you like, but without the human element, you cannot control the technology.” He added: “People want to be understood. People want you to be impactful; they want you to solve the problem. They don’t want just a service; they want a solution. In order for you to solve people’s problems, you need to understand the people. To understand the people, you need to combine the human factor. And the successes I’ve seen is when there are technologies that are built on the human factor.”
Trends in the market and a “flashpoint”
Asked to talk about trends that could revolutionise or have an impact on the asset management sector, panellists didn’t hesitate to point to artificial intelligence.
It’s probably “the first thing that comes to mind for a lot of people,” replied van Kerkhoff. AI could, for instance, be used to improve client knowledge, automate processes, and predict and prevent risk related to money laundering and fraud. But beyond AI, he added, there’s also quantum computing. If artificial intelligence really does take off, then there will need to be investment in infrastructure related to quantum computing, computing power and processing power.
Read also
Things move quickly, said van Kerkhoff. In panels just a few years ago, the main topic was blockchain, followed by data. When ChatGPT came onto the market, everybody leapt to talking about large language models. Quantum computing could be the next big thing.
“Couldn’t agree more,” said Tulpule. “And one thing that’s not quite a trend yet, but definitely something to watch out for is the conversions of multiple technologies. So when artificial intelligence starts getting combined with blockchain or data sets, or even [when] cloud computing starts converging with these areas, that’s going to be a flashpoint.”
“Where is this going to end up? I don’t know. How could it be used? I don’t know. How will it be GDPR-compliant? I definitely don’t know. But watch out for that.”