The potential entry of a big tech firm into the funds market has been described as a ‘game-changer’. It has also been described as ‘game over’.
If the likes of Amazon – with its €20 billion annual tech budget, global distribution chain, aggressive tax planning and low-cost supply chain management – decides to target the institutional funds market, then we might as well all pack up and go home.
Big tech is the new bogeyman, baba yogo or Keyser Söze for the funds industry and it is only the inefficient market structure, low margins and burdensome regulation that is keeping it away, like an operational crucifix around the neck to ward off its ruthless digital efficiency.
There is merit in treating big tech this way. Time and again we have seen that the funds industry only makes significant changes when an outsider threatens to make the changes for them. It is a complacency that big tech firms do not seem to have, at least in terms of their customer’s digital experiences.
But there is another change that asset managers should note – the mass, global transfer of wealth to a new generation. In the US alone, an estimated $20 trillion dollars will be transferred over the next 30 years to today’s millennials, who will be only too happy to invest in an Amazon fund.
Nicholas Pratt, technology & operations editor
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