The relationship between fund managers and fintechs needs to improve if they are to profit from the clear benefits offered by either side, experts have said.
Andrew Hampshire, chief operating officer and chief technology officer at UK fund manager Gresham House, said a problem was the very strict regulatory environment in which fund managers operate.
“That does not mean there is not an ability to work with start-ups, but you need a clear business case as to the value it is providing to justify the risk of working with a start-up rather than working with a more established firm,” he said.
Hampshire was speaking at a recent roundtable event held by Funds Europe and published in our latest ‘FundTech’ report.
However, fund managers are also at fault for the protracted nature of the procurement process, said Keith Hale, chairman of fund administration vendor TrustQuay. “Oftentimes it is the procurement departments that are asking three years of P&L from start-ups that are still burning cash just to get started. This can kill the projects before they are born.”
The roundtable also touched on the impact of Covid 19 which was described as both positive and negative in that it has demonstrated the effectiveness of digital technology but also placed many startups under financial pressure.
Consequently, this may lead to more acquisitions, suggested Olivia Vinden, head of fintech at consultant Alpha FMC. “There is still a lot of dry powder out there looking for a good home. Maybe some of the pre-Covid prices were a bit inflated and now they are looking more like value-for-money prices.”
The full roundtable can be read here
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