The financial services industry is undergoing fundamental change, forcing wealth managers to look for specialists in unchartered territory. Schroders for instance helped itself in the motor racing world of Formula 1.
Part and parcel of the financial services industry of this century will be to collect and analyze data in the most efficient way.
«Asset management is undergoing fundamental change, and I'm convinced that it will be a long journey,» Peter Harrison (pictured below), head of investments at Schroders, said in an interview with finews.ch.
Data – Data – Data
The challenges are enormous as complex financial products demand an entirely new data administration. Transactions and trade need to become more efficient as customers and in particular also regulators demand detailed documentation and proof of performance.
As asset management in part is the art of processing data, the traditional know-how of a bank or wealth manager doesn't suffice to implement innovations anymore, Harrison said.
Experts From the Outside
«Previously, we hired specialists at the competition. This is no longer the case as we need entirely different skills,» the British banker said.
Financial services companies thus take the best from outside the industry, from tech firms – and even from motor racing. Schroders recently hired two experts from the McLaren Formula 1 team.
«In Formula 1, data specialists need to prepare and present every single piece of information about the race, the performance of the car or the driver for immediate use. We will use exactly this skill in our branch,» Harrison said.
Statistics, not Instinct
The preparation and presentation of data is only part of the transformation affecting the industry, according to the investment boss of Schroders. According to his observations, the change is much more fundamental and akin to the revolution described by the film «Moneyball» about Baseball Coach Billy Beane – a true story.
Beane replaced the typical approach of a coach in the sport, fielding a team of players he liked, with one exclusively based on statistics. «Beane changed baseball beyond recognition,» Harrison said.
Avoid the Crash
Harrison chose experts from Formula 1 and not baseball because of their skill in presenting enormous amounts of data in an understandable fashion. We all know the pictures of drivers and engineers looking at small screens where bits of information tell them how they can still improve the performance.
The goal of Formula 1 is to improve lap times without crashing. Asset management is similar, Harrison claims: «We also try constantly to improve our performance without taking so much risk that we crash.»
