Even though much has changed in the funds industry environment over the past two decades, a certain amount of complexity has existed for at least 15 years. That’s one of the points on which Craig Blair and Aurore Boussemard agree in the latest episode of Alfi’s The NextGen Finance podcast.
Craig, the country head at Franklin Templeton in Luxembourg, started his financial sector career in the grand duchy in 2004, when, he says, there was a lot of talk about offshoring. “The industry was starting to think how they could have cost efficiency,” he explains. Another major challenge in the first few years of Craig’s career, apart from the uncertainty that resulted from the 2008 global financial crisis, was the introduction of UCITS III. “That led to a lot more complexity within the fund environment and in derivatives and instruments that hadn't been permissible before.”
Aurore, associate corporate counsel at Franklin Templeton, says that complexity is the common denominator challenge she shares with Craig when she started her career in Luxembourg. “It was all about understanding the mechanics and the technicalities of the funds industry.”
If you think about industries like FinTech or digital, then you sense that that's where the energy and the innovation is.
Both Craig and Aurore are keen to point out that ESG is not really a new phenomenon, even though it has recently become more formalised through regulatory obligations and it has become more prominent following a significant rise in appetite for ESG products from consumers and investors. “There’s a real movement in that space now…and I'm hoping it will generate positive change,” says Aurore.
Increasing regulation and AI
Craig acknowledges that there has been an increase in the volume of regulation since 2008’s crisis, and that this has generally been a good thing. “But the journey the industry has taken to get there has not always been that smooth,” he qualifies. He also questions whether the industry is as appealing for the next generation as it was for him, because of the focus on the amount of change and regulation. “If you think about industries like FinTech or digital, then you sense that that's where the energy and the innovation is.” Craig reckons a major challenge for the financial sector will be to now harness the digital technology environment for products to lower the cost to investors and create value.
Multiplied and increasingly sophisticated requirements are making the regulatory environment more complex to navigate for the younger generation, says Aurore. “The solution is to maintain a dialogue between the players, lawmakers and regulators.”
I see many practical applications for AI. I'm looking forward to seeing how it will develop.
Aurore has a positive view of artificial intelligence technology and how it might shift the ways the industry does things. “I see many practical applications for AI. AI could prepare first drafts of certain documents or help with certain time-consuming tasks, such as duplication, document management or tracking. I'm looking forward to seeing how it will develop.” Craig is also enthusiastic about some AI applications and says it will transform the industry. But he also calls for caution. “We need to ensure the appropriate checks and balances, control environments, are in place before we mass adopt such technologies.”
Although she is part of the NextGen, Aurore has already taken the opportunity to provide mentorship to young professionals and students as a member of several female driven professional associations. “I think it's important to have someone to ask questions, technical or otherwise. It is invaluable and I was extremely lucky to have met several mentors in my life who have helped me.”
And that is something she may continue as she looks 35 years into the future, when Alfi will turn 70. She hopes the fund industry at that stage will still focus on topics that she feels are important, such as the human factor and social impact. Craig is similarly optimistic about future sustainability. “Ultimately we're working to make our lives better, and hopefully, we can enjoy those benefits,” he concludes.
Listen to the full episode of The Finance NextGen podcast at the Alfi website here.