Schroders eyes fintech investments, partnerships
Asset manager Schroder Investment Management is looking to make further investments in financial technology (fintech) start-ups and partner with online fund platforms to expand its regional distribution channels.
But while many fintech start-ups have focused purely on sales, Schroders is targeting investments in the advisory segment of the nascent industry.
The UK fund house told AsianInvestor that it has started discussions with Alibaba’s financial arm Ant Financial on the possibility of working together in China. The talks were in the early stages as Ant Financial only last week launched its mobile app that will distribute nearly 1,000 funds in China.
Schroders is one of the few fund managers that has already invested in fintech start-ups, while the majority of its peers are adopting a wait-and-see approach.
In 2014, Schroders invested $32 million in UK online advisory firm Nutmeg.
Lieven Debruyne, Schroders’ Hong Kong CEO and head of distribution for the region, predicted that digital platforms providing financial products would become more prevalent in Asia.
“Arguably the country where this is taking hold the most is China,” he said.
“We are very keen, as this develops, to work with financial platforms as an alternative to banks and insurance companies and make our product available,” he added.
It will not be Schroders’ first time working with online fund distributors in the region. In Singapore, its funds are distributed by online supermarket iFast Financial and Aviva’s platform Navigator.
“We think this is going to be a segment within distribution of mutual funds that will grow. We want to be a partner for them providing good and strong investment products,” Debruyne said.
When asked if Schroders was considering investing further in fintech start-ups, including those in Asia, Debruyne was positive.
“We’re very much interested in the fintech industry and obviously [that] has much context in it. And in what form or shape it is still early to tell but clearly it’s an element that we as a company have been active in for quite a while and we feel it is instrumental for us to grow our business and be relevant as a partner of our distributor,” he said.
Debruyne said Schroders is not looking at building its own transaction platform for mutual funds.
“I am not surprised that it’s the tech companies that are leading that charge, as it’s very much a tech solution rather than an investment solution,” noted Debruyne.
Instead, Schroders is looking to invest in the advisory segment.
“One area where we are looking to be more active in the digital space is advice. It’s one element in Asia we can still do a lot about educating the market and giving better financial advice to the market,” he added.
“We can see ourselves play a role in that, in how we can help provide relevant advice. But that’s different from an online distributor, which we feel is a distribution game and we’re very much an investment company and not a distribution company.”
Schroders had an AUM of $464.1 billion as of the end of 2014, with $111.3 billion of that in Asia Pacific, according to AsianInvestor’s annual rankings.