In the world of financial services, disruptive, fast moving ‘fintechs’ have been the driving force behind bringing new innovative solutions to bear, and in providing access to financial products – from the most basic payment services to the most sophisticated investment strategies – for consumers and businesses who previously found them out of reach and too cumbersome.
Perhaps the most noticeable area, and one that has seen a considerable level of growth, is the rise of the retail investment platform – those that allow individuals to buy and sell securities, mutual funds or ETFs through a brokerage firm or savings account. This has, in turn, led to an explosion in the level of share and bond trading by individual investors since the dot com boom of the late 1990s.
Wealth platform providers are now expanding to new strategies and providing access to access to new product structures – such as alternative investments. Alternative investment assets are those that differ from cash, equities, and bonds, and are often more illiquid, such as real estate, infrastructure, private equity and hedge funds.
Even institutional investors have traditionally had limited investment in these assets, but that’s now increased to around 30 per cent of their portfolios as they look to diversify and explore new opportunities for diversification, yield and returns. And, with individuals historically following the institutional trend, they are becoming more attractive to individuals and those managing private wealth.
But considerable challenges exist to accessing and monitoring these investments due to data fragmentation, paper-based processes and systems that don’t interoperate.
Speaking at the 2021 Macquarie Technology Summit, Rafay Farooqui, CEO of +SUBSCRIBE – a leading order management system for alternative investment transactions that serves institutional investors, wealth advisors, fund sponsors, and service providers – gave his perspective on why the alternative investment sector is undergoing a transformation and how technology is driving that.