kindly sponsored by - irish funds · 2016-03-14 · fintech advances collaboration, co-operation...
TRANSCRIPT
2 2
kindly sponsored by
DRINKS
BREAKFAST
3 3 www.irishfunds.ie
New York, 11 March 2016
Investment Funds Seminar
PREMIUM EVENT SPONSORS
EVENT PARTNERS
www.irishfunds.ie
Welcome / Opening Remarks
Tadhg Young
Chairman, Irish Funds
Head of Global Services Ireland, State Street
www.irishfunds.ie
Economic course steady and strong
Ireland GDP Growth Rate, Quarterly
www.irishfunds.ie
Political Developments & Policy Drivers
• Irish Election
• United Kingdom’s Referendum on EU Membership
• EU’s Capital Markets Union Project
• Linking in with the European Securities and Markets Authority (ESMA)
www.irishfunds.ie
Steering and Working Group Structure
www.irishfunds.ie
Some highlights and focus areas
Highlights
• Dominance in ETFs
• Increasing interest in CCFs
• Private Equity and Real Estate
• Liquid Alternatives
Focus Areas
• ICAV adoption and usage
• MMF Reform
• International tax environment for funds
• Access to new markets
PREMIUM EVENT SPONSORS
EVENT PARTNERS
Moderator:
Panellists:
www.irishfunds.ie
Product/Distribution Panel
Andrew D'Souza, Partner, International Investor Services, Lord Abbett
Paul Fehre, Chief Operating Officer, Muzinich & Co.
Dervilla Lannon, US iShares Counsel, BlackRock
Ethan Stambler, Managing Director, Head of Global Product Strategy & Development, PineBridge Investments
Andrew O'Callaghan, Partner, Asset Management Leader - EMEA, PwC
PREMIUM EVENT SPONSORS
EVENT PARTNERS
www.irishfunds.ie
David Dalton, Partner - Strategy and Operations, Deloitte
FinTech
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
DELOITTE - FINTECH Disruption Everywhere
New York, March 2016
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
HIGHLIGHTS
Traditional financial services firms are struggling to innovate and are weighed down
by legacy infrastructure and thinking
Innovation is being driven from the outside-in by players with deep pockets and an
eye for value and its creation
Investment Management and the funds business is not immune to disruption or
FinTech advances
Collaboration, co-operation and exploration with the ecosystem is the only route to
survive
FinTech: traditionally applied to technology applied to the back-end of established
consumer and trade financial institutions. The term has expanded to include any
technological innovation in the financial sector
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved. 16
THE VIEW FROM MOUNT
LEGACY
One size
fits all
Process
inefficiency
Customers
frustrated
Innovation
stifled
Legacy
systems
Limited
flexibility
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
WHERE MARGIN IS UNDER PRESSURE
ADJACENT
TRANSFORMATIONAL
CORE
RETURN ON INVESTMENT
HOW TO WIN: INNOVATION
70%
20%
10%
20%
10%
WH
ER
E T
O P
LA
Y:
NE
W M
AR
KE
TS
TY
PIC
AL
IN
VE
ST
ME
NT
70%
FS Return vs Investment
“Innovation for us is dealing with
regs…shoe horning new requirements into
our systems is a constant struggle…our
P&L is getting battered.”
- Global Head of Transfer Agency
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
GIVING THE FINTECHS
A WALK
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
INVESTORS ARE QUEUING UP… “The market is ripe for disruption, with incumbent banks, insurance, payments and
investment management companies no longer able to bamboozle consumers with jargon,
hidden costs and arcane language. The time is right for entrepreneurs and new
technology to shake up these industries.”
- Sir Richard Branson
$31.6
$39.5
$4.4
$3.5
Americas Total
Europe Asia
FinTech Investment 2015 ($bn)*
* = CB Insights
Early Investors
Citi Ventures Multi-city accelerators
23 active investments
JP Morgan $30m investment in 5 year Centre for
Financial Services Innovation
Goldman Sachs $50m investment in startup for
development of SETL Coin
Barclays $150m investment fund
Accelerator with TechStars
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
…TO INVEST IN THE MULTIPLE SECTORS BEING DISRUPTED
Investment in FinTech by Vertical* Op Costs as a % of Outstanding Loans**
0
5
10
15
20
25
30
35
40
45
50
Personal Finance
Capital Markets
Data Analytics
Banking Payments
FinTech Investment by Vertical
*Deloitte 2013 ** = The Economist ***= Panorama
Estimated FinTech Impact by 2025 on
Traditional Banks Revenue & Profit***
Traditional Bank 6.9
2.7
- 40% -30% -25% -15% -10%
-65% -35% -35% -30% -20%
Consumer
Finance
Lending Payments Wealth Mortgages
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
ADDING FUEL TO DISRUPTOR GROWTH
USA
Top 5 FinTechs
Stripe
Payments
Adyen
Retail Payments
Ant Financial (Alipay)
Payments
21 inc
Cryptocurrency / Blockchain
Nutmeg
Wealth / Robo
Call Levels
Market Intelligence
Coinbase
Cryptocurrency / Blockchain
Lending Circle
P2P Lending
Dianrong
P2P Lending
Betterment
Wealth / Robo
DueDil
Market Intelligence
Coins.ph
Cryptocurrency / Blockchain
Lending Club
P2P lending
TransferWise
FX Payments
TradeHero
Trading
Europe APAC
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
SO WHAT ABOUT FINTECH & FUNDS
– THREAT OR OPPORTUNITY?
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
THREAT – DISRUPTING THE VALUE CHAIN
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
Robo
Advisor
An online investment platform that provides automated online investment advice and uses
algorithms to determine asset allocations and automated rebalancing for investors
AUM Robo-
Advisors*
$13/ month
$500 million
$3 bn AuM
120,000
Customers
0.25% /
month
$700 million
2.3 bn AuM
21,600
Accounts
68
2.2
% Annual
Growth
Total AuM
2020 ($tn)
Purchased FutureAdvisor - will become part of BlackRock Solutions and its products will be
sold to brokers and financial advisors, who in turn can offer them to their clients.
Millennials Under-Served Mass
Affluent
Growth Areas /
Opportunity
*=Bloomberg
OPPORTUNITY – ENGAGE NEW CUSTOMERS
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
Blockchain
• A highly secure, tamper
proof, distributed ledger
• It lives in the internet,
accessible to anyone
• It can store assets,
identities, contracts and
more
• People (and things) use it
to interact and transact
with each other
• It enables the organisation
and exchange of value
with no third party
involvement
KYC & AML
Settlement
Proxy Voting
Corporate
Actions
Single immutable
valid ID
Leverage
blockchain &
smart contracts to
exchange assets
Transparent and
efficient voting via
token exchange
Issuance and
trading platform
for smart
securities
Market will need
to consider place
of utilities
t0 reduced
settlement to 10
minutes
Estimated cost
saving of 50 –
60%
Believes it will
eliminate 6 steps
of as-is process
Use Case Focus FinTech Insight
OPPORTUNITY – INCREASE EFFICIENCY
Emerging
Alliances
42 banks
Standards review
Capital markets
Use cases
and integration
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
RegTech • Corlytics provides compliance risk analysis
for financial institutions
• Trustev provides online fraud prevention
solutions that scan transactions in real time
to determine whether they are real or not
• TradeFlow is a trade data tracking and risk
alert-based technology
• Vizor provides software that enables the
supervision of companies by a supervisory
authority (central bank, financial regulator or
tax authority)
• AQMetrics offers integrated regulatory risk
and compliance management solutions
• Funds Reconciliation Software develops
cloud-based reconciliation software for the
funds industry, replacing prehistoric
enterprise software with SaaS
• Sysnet Global Solutions is a leading
international provider of information security
assurance and compliance validation
services
Technology solutions designed to
address specific regulatory
requirements
Characteristics
Agile
Rich analytics
Leverage rules
Easily integrated
Deployed as a Service
OPPORTUNITY – ENHANCE COMPLIANCE - IRELAND: A HUB FOR REGTECH INNOVATION
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
SO WHAT DO I DO NEXT:
“CO-PETITION” - IT’S THE NEW
BUZZWORD
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
WE TRADE STRENGTHS
Bridging a Cultural Gap & Embracing Opposites
We H
ave
W
e W
an
t
We W
an
t W
e H
ave
Capital
Customer Numbers
Brand Value
Understanding of Business Problems & Technology
No Legacy Constraints
“Down with the kids” – Gen Y & Gen Z
Agility & Flexibility
FSI
Firm
The
FinTech
Deloitte Copyright © 2015 Deloitte LLP. All rights reserved.
EMBRACE THE ECOSYSTEM Deloitte example: learning through experience whilst embracing the ecosystem
• From concept to
commercialisation, Rubix
provides solutions for our
clients to understand and
capture the power of this
technology for their
businesses. With a range
of service and product
offerings, Rubix will help
or allow you to prototype,
test, and build your own
customised blockchain
and smart contract
application for any use
case.
• Global partnership
• Colu incubated and
sponsored as a start up
by Deloitte member firm
in Israel
• The Colu Engine provide
developers with the tools
to issue and manage
digital assets with an
easy to use API/SDK.
The Engine makes this
technology accessible
with a minimal learning
curve
• Developing
understanding and
sharing insights
• Patterns of
Disruption
• Local firm eminence
• Blockchain –
Disrupting
Financial
Services?
• Blockchain – From
Hype to Prototype!
• Sponsored the world’s
largest Blockchain
Hackathon in Dublin,
Ireland
• Hosted Asia’s largest
Blockchain Hackathon in
Shanghai, China.
• Network of EMEA
FinTech SMEs
• Connect FSI Clients with
FinTechs
• Create and identify
opportunities for
innovation
• Collaborate to create new
solutions and businesses
for our FSI clients
• Deliver rapidly with short
PoC cycles
PREMIUM EVENT SPONSORS
EVENT PARTNERS
www.irishfunds.ie
Scott Clemons, Chief Investment Strategist, Brown Brothers Harriman
Global Economic Update
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & C5. “BBH” and “BBH & Co.” are registered service marks of Brown Brothers Harriman & Co.
On the Other Hand …
A Contrary Look at the World
11 March 2016
G. Scott Clemons, CFA Chief Investment Strategist 140 Broadway New York, NY 10005 [email protected]
@GSClemons
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
Chinese GDP Growth Beginning of the End … or the End of the Beginning?
Source: China Bureau of Statistics, BBH Analysis 0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
Chinese Population Projected to Peak in 2028
millions
-
200
400
600
800
1,000
1,200
1,400
1,600
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
Source: United Nations Population Division, BBH Analysis
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
Rising Chinese Dependency Ratio Population Aged <15 and >65 as a Percentage of Population Aged 15-64
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
China
United States
Source: United Nations Population Division, BBH Analysis
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
European Immigration A Double Edged Sword
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
JUL AUG SEP OCT NOV DEC JAN 2015 FEB MAR APR MAY JUN JUL AUG SEP
European Monthly Asylum Applications By County of Origin
All Other
Afghanistan
Syria
Iraq
Sources: Eurostat , BBH Analysis
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
European Population Growth … or the Lack Thereof
An
nual
ized
Po
pula
tio
n G
row
th
-0.8%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
United Kingdom
Germany France Italy Spain United States
China
2000-2025 2025-2050 2050-2075 2075-2100
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
Roadmap of the Domestic Economy
Housing Market
Labor Market
Personal Consumption GDP
Wealth Effect
Income Effect
Deleveraging Savings
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
The Labor Market 2.7 million jobs added in the last year … bringing unemployment down to 4.9%
-1%
1%
3%
5%
7%
9%
11%
-1,000
-800
-600
-400
-200
0
200
400
600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
000 s
Source: Bureau of Labor Statistics, BBH Analysis Updated through January 2016
Monthly Net Job Gains
Unemployment Rate
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
Whither Wages?
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Bureau of Labor Statistics, BBH Analysis
Average Hourly Earnings Growth (yoy)
Real Hourly Earnings Growth (yoy)
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
Monetary Policy Interest Rates Expected to Normalize at a Slow Pace
0%
1%
2%
3%
4%
5%
6%
7%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Federal Reserve, BBH Analysis
Fed Funds Futures
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
A Tale of Two Markets The S&P 500 is Down 7% From its 52-week High ...
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Standard & Poor’s, BBH Analysis Updated through 1 March 2016
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
A Tale of Two Markets ... But 40% of the Stocks Within the Index are in Bear Market Territory
Source: Standard & Poor’s, BBH Analysis Updated through 1 March 2016
The price of each stock in
the S&P500 Index versus
its 52-week high.
S&P 500 Index -7.3%,
better than 377
members of the index!
218 stocks down > 20%
55 stocks down > 40%
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
A Tale of Two Markets
The bad news is that the equity market is in
worse shape than headline index levels indicate.
Leadership is narrow, valuations are lofty, and
earnings are waning.
The good news is that not every company in
the index (or the market) suffers from weak
earnings and lofty valuations. There are
opportunities lurking beneath the surface of the
index!
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH" and "BBH & Co." are registered service marks of Brown Brothers Harriman & Co.
Implications and Conclusions
China is in transition, not terminal decline.
Immigration poses unprecedented challenges to Europe,
but also offers unprecedented opportunity.
The rumors of the demise of the American economic
cycle are greatly exaggerated.
The global economic glass is half full.
©2016 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & C5. “BBH” and “BBH & Co.” are registered service marks of Brown Brothers Harriman & Co.
On the Other Hand …
A Contrary Look at the World
11 March 2016
G. Scott Clemons, CFA Chief Investment Strategist 140 Broadway New York, NY 10005 [email protected]
@GSClemons
PREMIUM EVENT SPONSORS
EVENT PARTNERS
Moderator:
Panellists:
www.irishfunds.ie
Regulatory Panel
Ann Fogarty, Head of EMEA Investment Operations, BNY Mellon
Deirdre Power, Financial Services Tax Partner, Deloitte
Justin Rose, Head of Liquidity, Western Asset
Benjamin Slavin, Head of Product & Business Development, WisdomTree
Mark Browne, Partner - Financial Services and Investment Management, Dechert LLP
PREMIUM EVENT SPONSORS
EVENT PARTNERS
www.irishfunds.ie
Pat Lardner, Chief Executive
Closing Remarks
DUBLIN
23 JUNE 2016
ANNUAL GLOBAL FUNDS
CONFERENCE
COLLECTIVE
STRENGTH
GROWING
TOGETHER
For information and registration please visit us at: www.irishfunds.ie/events
FREE PLACES AVAILABLE FOR A LIMITED NUMBER OF OVERSEAS MANAGERS AND INVESTORS
PREMIUM EVENT SPONSORS
EVENT PARTNERS
Disclaimer: The material contained in this document is for marketing, general information and reference purposes only and is not intended to provide legal, tax,
accounting, investment, financial or other professional advice on any matter, and is not to be used as such. Further, this document is not intended to be, and
should not be taken as, a definitive statement of either industry views or operational practice.
The contents of this document may not be comprehensive or up-to-date, and neither Irish Funds, nor any of its member firms, shall be responsible for updating
any information contained within this document.