kindly sponsored by - Irish Funds · 2016-03-14 · FinTech advances Collaboration, co-operation and exploration with the ecosystem is the only route to survive FinTech: traditionally

2 2

kindly sponsored by

DRINKS

BREAKFAST

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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


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


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


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


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


GIVING THE FINTECHS

A WALK


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


…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


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


Lending Circle

P2P Lending

Dianrong

P2P Lending

Betterment

Wealth / Robo

DueDil

Market Intelligence

Coins.ph


Lending Club

P2P lending

TransferWise

FX Payments

TradeHero

Trading

Europe APAC


SO WHAT ABOUT FINTECH & FUNDS

– THREAT OR OPPORTUNITY?


THREAT – DISRUPTING THE VALUE CHAIN


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


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


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

http://corlytics.com/

http://www.trustev.com/

http://www.tradeflow.net/

http://vizorsoftware.com/

http://www.aqmetrics.com/

https://www.fundrecs.com/

https://www.sysnetgs.com/




SO WHAT DO I DO NEXT:

“CO-PETITION” - IT’S THE NEW

BUZZWORD


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


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


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


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


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


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


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


Roadmap of the Domestic Economy

Housing Market

Labor Market

Personal Consumption GDP

Wealth Effect

Income Effect

Deleveraging Savings


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


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)


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


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


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%


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!


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


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


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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

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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.

Documents

kindly sponsored by - Irish Funds · 2016-03-14 · FinTech advances Collaboration, co-operation and exploration with the ecosystem is the only route to survive FinTech: traditionally