The NextGen Finance podcast series is an initiative of the Association of the Luxembourg Fund Industry (Alfi) aimed at giving a voice to young professionals in the finance sector as they discuss a particular theme with a more experienced professional. This third episode features a dialogue around technology and the role that digitalisation and AI have to play in the continuing development of the funds service industry.

Technology might be the one area that would see the biggest difference between the different generations. Indeed, Anne Cullen, a Managing Director at BBH with over 30 years’ experience in the financial services industry, explains that “next gener” Yash Moolchandani Khubchandani had not even heard of some of the technology that was around when she first started out in the industry.

“I started my banking career working on what were referred to as ‘the machines’. They read code on the bottom of payment slips, and the bank administrators frantically typed in the remainder of the data that was required before all the information was then transmitted to mainframe computer at the bank's headquarters. Lending agreements were typed up using word processors, and we use microfiche to store and review historical information.”

Yash, a Relationship Management Analyst at BBH, acknowledges that technology is developing at a rapid rate, and he is impressed by the unlimited access to data” that we now have.

Technology is not here to replace us, rather to augment our roles and our abilities both at work and outside of work.

Yash Moolchandani KhubchandaniRelationship Management Analyst BBH

Both agree that the fast-changing pace at which technology is progressing is both an opportunity and a challenge for the funds servicing industry. Anne argues that technology has emboldened non-traditional players to develop and provide solutions for alternative fund servicing, for example. “All the big banks, but also PE-backed administrators and, more recently, the Big Four are also offering fund administration services.” Even the tech companies themselves are developing and providing solutions.  

“Technology is an important differentiator but it’s all about how you use that technology to drive actual efficiencies.” Yash adds.

Anne says that outsourcing is clearly an important strategy for service providers nowadays. The challenge of matching supply with demand and the growth that the Luxembourg funds industry is experiencing would be extremely difficult without being able to leverage from other centres of expertise and specialists providers, she explains. “I think what's important is to understand what makes us special. And then recognise where there are others who can supplement and complement our service offering, be it via tech solutions or availability of talent.” But Anne also emphasises that successful outsourcing requires deep due diligence when selecting a service provider and complete transparency through all elements of the engagement.

Yash says that using outsourcing with technology is definitely a step forward. “From the perspective of our clients… it’s all about futureproofing your operations to allow you to focus on your portfolio and investors.”

The innovation implementation challenge

It’s all well and good having technology and striving to differentiate on service offerings, but is the industry really using innovation to its full potential? Anne says that it is in human nature to be innovative, and that all businesses are constantly looking at ways to do things better increase productivity and reduce cost. “Key to successful implementation of innovation, I think first and foremost, is communication. To make sure you're establishing buy in on change. Being able to articulate the benefits of new tools or new processes, as well as providing the right level of training and realistic implementation plans, are all elements which will help with successful adoption.”

Key to successful implementation of innovation, I think first and foremost, is communication.

Anne Cullen Managing DirectorBBH

Yash would love to see more integration of Artificial Intelligence with the technology tools that are already being used in the funds industry. “What really excites me is how we’re harnessing the power of AI. There are tools and tech we’re using already… and I can already see how that could be of real benefit to what I do and how I help clients.” But that does not mean losing sight of the challenges that AI poses, such as data protection, or the fact that human input and assessment of output is crucial. “We have simply scratched the surface… Technology is here to reduce human effort, but it still requires our input to tailor it to the solution we want it to become.” Yash concludes.

Listen to the full episode of The NextGen Finance podcast at the .

The views and opinions expressed are for informational purposes only and do not constitute investment, legal or tax advice and are not intended as an offer to sell, or a solicitation to buy securities, services or investment products.