Second in our “AssetTech” Series

By Romi Mahajan President Pepper
and Pulak Sinha, CEO Pepper

The Financial Services sector is every-changing and frenetic. As conditions change, markets change, as consumer behavior changes, markets change, and as new paths for ROI are created, markets change. That’s the name of the game in FinServ.

Couple this rapidity of change with the sheer size of the market and the results are epochal. One sliver of the market- the world of professional Asset Management- breaks the tape at $120 trillion AUM world-wide, a staggering number that exceeds global GDP. With a $120 trillion river running its course, even tributaries can be huge and powerful.

Enter the world of “private credit,” a fast-growing marketplace that now exceeds $1.5 trillion in investment with annualized deal-size in excess of $35 billion. As companies and other entities seek new sources of funding and as investors seek new forms of ROI generation and liquidity, the private credit market has burgeoned. New funds are minted daily.

For all investment types and asset classes, data is central to the story, but even more so with regard to non-public assets. Here, data and its connection to proprietary methodologies, valuation methods, and calculation is paramount. Further, ensuring that all parts of the organization are using the same data and the same methods to evaluate, value, invest, track, and report on deals is key to success. The lack of the proper platforms and controls is a sure-fire way to create internal friction and to slip-up in the marketplace. In private credit, data is the watchword.

As we mentioned before, private credit is a huge asset class, but very few companies build technology platforms and solutions specifically for this –and adjacent- industries. This is a huge miss in the technology industry as a whole. The private credit industry deserves better.

The data opportunity in this space is enormous. Even industry-watchers would have been challenged to notice the space even two years ago. Now it has emerged as a colossus. That’s why “AssetTech” – technology platforms that are innately and natively responsive to the needs of Asset Management- matters; the size and importance of the marketplace is unmatched.

The private credit data opportunity is real. We are eager to discuss it with you.

Part One in a Three-Part Series on “AssetTech”

by Romi Mahajan- President, Pepper

Business coins portmanteau words liberally.  As an example, combine “Finance” and “Technology” and you get “FinTech.”  Similarly if you combine “Assets” with “Technology,” you get “AssetTech.”  While the first is part of the everyday vocabulary in the industry, the latter is hardly understood.

This is curious, given the sheer size and importance of the industry.

World-wide, formal Asset Managers have over $120 trillion in” Assets under Management (AUM).”  This number is staggering- it exceeds World GDP.  The larger firms in the space themselves manage amounts measured in the trillions.  It is not uncommon for the tallies of “deals” –even just in the US economy-exceeding $250 billion in a month.  Again, these numbers suggest the importance of the industry as a whole.

Importance implies both opportunity and complexity.  With the rise in numbers and valences of asset classes and the intermingling of private and public assets- and that too across geographies- the opportunities to generate ROI where it was “invisible” before have increased substantially.  With this increase, the attendant increase in compliance, data, security, and governance needs come part-n-parcel.  In addition, investors are calling for transparency, where opacity ruled the day before.

Practitioners understand that the best tool-set to manage the forests of data and to derive insights and actions is Artificial Intelligence.  AI cuts across data, knowledge, decision-making, and pattern recognition.  AI is by its very nature dynamic, just like the markets being harnessed and understood.

Investors and Asset Managers have yet another convergence of interests with regard to AI. Both are looking for a step-up in a competitive game and both are looking for potential ROI being converted into kinetic.

For this reason, AI has to be native in AssetTech.  An AI-powered chassis is necessary for meaningful AssetTech platforms.

Here, distinguishing between rhetorical AI and real AI is key.  Kicking the tires is essential.  Furthermore, AI has to be at play at any entry point into the platform, from whatever workload you begin with.

Because of this, Marketing Darwinism and Pepper are together opening an industry dialogue and issuing an industry challenge.

Doesn’t Asset Management deserve its own technology and doesn’t that technology have to be the best we can offer?  Isn’t it time we go get it?