Asset managers urged to put technology experts in C-suite
The Australian asset management industry has been warned that it must do more to introduce technologists to their businesses as core personnel, rather than viewing them as cost centres or operational functions, fintech company Calastone has said. The speed of technological change means firms risk making costly mistakes without their expertise. Calastone’s research has found that 40.4% of top 100 ASX-listed firms have technologists in executive or board positions. While this is an improvement from 7.4% in 2011, there are still areas of the financial services sector, such as asset management, where they are underrepresented.

The asset management industry must do more to have technologists in executive positions and leverage their skills to use technology strategically, rather than see it as a cost centre or an operational function.

Research from financial technology company Calastone found 40.4% of the top 100 ASX-listed companies have technologists in executive and board positions - a fourfold increase from 7.4% in 2011.

While the significant jump is positive, there are still gaps in the financial services sector - particularly in asset management, Calastone marketing director Andrew Tomlinson said.

Asset managers should do more to take advantage of the great opportunities and value technology presents to them, Tomlinson said.

If they don't, there are the potential threats on the horizon of other players that could disintermediate the market, he added.

Tomlinson said the asset management community has a core specialism in terms of how to manage and build funds and ascertain growth for clients investing in them - but how they reach investors is a different challenge.

Whether these businesses are running technology as a strategic or operational function, today it's seen as "a very big cost base."

Other research has demonstrated all too often the paradox of the more money sunk into technology, the less efficient the businesses become because they end up buying plug-ins and add-ons to core systems. This drives up maintenance costs and ultimately becomes "a huge overhead" that prevents businesses from growing, he said.

Empowering the right people with the IT background would mean having someone who knows how to leverage new technologies in terms of what to build, buy in, who to partner with, and steer some of those strategic decision for the organisation, Tomlinson added.

Particularly in financial services, companies are "buying and buying new services" as opposed to firstly having the foresight of understanding of how things will look in three to five years' time.

Calastone Australia and New Zealand managing director Sarah Hayward added: "For the managed funds segment, the scale and speed at which new technologies such as blockchain, robo-advice and machine learning are challenging business models makes adding technologists to strategic levels a corporate imperative."

"The industry has much to learn from other sectors including banking, music and retail in reassessing the structures, people and partners required to adapt and drive future competitiveness," Hayward said.