Schroders’ Marsland: Governing fintech partnerships becoming an “enormous” challenge

The increasing need for firms to have resilient operating models is putting pressure on fintech partnerships, according to John Marsland, chief operating officer at Schroders Investment Management. “It has been made very clear by pretty much all of the regulators that we are the ones responsible for the service, regardless of whether we have outsourced it …

by | September 18, 2019 | bobsguide

The increasing need for firms to have resilient operating models is putting pressure on fintech partnerships, according to John Marsland, chief operating officer at Schroders Investment Management.

“It has been made very clear by pretty much all of the regulators that we are the ones responsible for the service, regardless of whether we have outsourced it or not,” Marsland said on a panel at the InvestOps conference in London this week. “They don’t mind if we outsource it, but it is still our responsibility. And if that service fails, it is our responsibility to step in and fix it. That is a very challenging environment.

“The challenge is from a management point of view, service management is expected of us in terms of being able to prove that those partners can deliver.”

Part of the problem for Marsland is proving that a firm can function correctly without vendors.

“It doesn’t matter whether your supplier has the best disaster recovery business continuity plan that exists, it doesn’t matter how many sites they are spread across, you still have to be able to demonstrate that you can run your business without them. I think that is really hard,” he said.  

“The only way to do that is to identify overlapping suppliers, and to partner with them very deeply. So, you could use a supplier for one purpose, or you could use them for another.”

How firms respond to that increasing specialisation both in investment and operations is becoming challenging, but data is the solution, according to Marsland.

 “The thing that ties it all together is the data, and the only way that we can manage our business in that very specialized world is to have data at the center. A lot of other systems are fragmenting to the corners, fintechs usually only give very point solutions to the individual problems. The question is how do you bring that all together in the middle? That is where I think data comes in.

In a later discussion on data management, Rob Middleton, head of investment operations at Royal London Asset Management said the firm “has a very bright shiny [data] warehouse, which has been live for probably three years. It hasn’t got very much in it at all. But somebody, somewhere got paid a huge bonus because they delivered a data warehouse.”

The trade-off between having quick, ugly data versus data that is thoughtfully reconciled, quality assured and required by regulation is causing frustration among technology architects who wish to have a real-time view of transaction data, according to Middleton.

 “You cannot get it from there, through there, past that, and out in less than a minute,” he said. “You’ve got to hang it off the back of your trading platform. And the technology architects hold they heads in their hands saying, ‘this isn’t the way it should be done.’ But it’s not a choice we have because the regulator insists on certain timelines.”

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