A Manifesto for a New Category:
Pulak Sinha and Ann Eberle Thomas, Co-Founders of Pepper
The portmanteau word “Fintech” has come to be associated with a variety of companies spread across the world of financial services that use digital products, services, and techniques to transact, pay, amass capital, and connect with customers. Fintech is witnessing a boom, as measured by venture dollars, unicorn creation, brand awareness, and customer traction. It makes sense since “that’s where the money is,” but it is also curious in one crucial way: Financial Services companies have always been technology plays so Fintech is one part innovative and one part old wine in new bottles.
When you break Fintech into separate fields and foci, however, you start seeing the power of its innovative side. Take, for instance, the area of “Payments”—the innovations over the last 5 years have literally changed how people make and receive payments. In the area of consumer-investment, the barriers to entry have been reduced to almost zero. And in the buoyant area of Crypto, it doesn’t take too vivid an imagination to understand what a sea-change this has wrought with regard to traditional finance.
We believe that AssetTech is just such an area- one that will see a renaissance in innovation and importance.
AssetTech can be defined simply as all technologies and platforms that help Asset Managers successfully use data to allocate capital. While the definition can be seen as academic, in fact a visit through the data makes it very real. The numbers are staggering: World-wide, $120 trillion of assets are managed by professional managers. The number exceeds the world’s GDP. Within the $120 trillion, emerging areas like “Secondaries” are becoming multi-trillion dollar categories. The complexities that face Asset Managers are increasing: diversification of asset class, regulation, globalization, security, risk management, and changing investor profiles. Managing such large flows of capital and generating ROI for investors requires a judicious combination of data, intuition, and systems through which to act on both of them.
That is the essence of AssetTech.
Societies have been made or broken by the modes in which they allocate capital. Capital allocation is the hero when times are booming and the culprit when we face crashes like we did in 2008. Great AssetTech is key to navigating the shoals, to steering the ship through the narrow passage dividing boom and bust.
AssetTech’s time is upon us.