Creating an innovation-friendly corporate culture is a challenge. Prof. Bernd Thomsen has a clear view how it can be achieved: “It’s essential that the whole company - from the intern to the CEO - lives a culture of innovation,” explains the CEO of the Thomsen Group, a global management consultancy group that specialises in future expertise, innovation and strategy. “This includes a willingness on the part of the company’s leadership to constantly question the status quo and to keep abreast of evolving human needs.” Daniel Andemeskel, Head of Innovation Management at Universal-Investment since summer 2019, agrees: “A culture of innovation should envelop the entire company and its entire value chain. It’s important to create an environment in which you can implement innovative ideas.”
A culture of innovation should envelop the entire company and its entire value chain.Daniel Andemeskel
A passion for innovation is nothing new at Universal-Investment. “Innovation has always been a part of our DNA,” notes CEO Michael Reinhard. “Now we’re accelerating innovations.” He believes it is crucial to see innovations from a client perspective as well as to measure them against the added value that they provide for the clients. Technology, he says, is only a means to an end. ”Digitalisation helps us save valuable time through technical improvements so that we can focus even more intensely on our clients as well as offer them more innovative services,” adds Jochen Meyers, Head of Relationship Management for Institutional Clients.
Digitalisation helps us save valuable time through technical improvements so that we can focus even more intensely on our clients as well as offer them more innovative services.Jochen Meyers
A lot has happened since summer 2019. Universal-Investment has set up an innovation steering committee comprising C-level executives as well as experts from different divisions who act as “ambassadors” for their departments. This facilitates systematic, cross-departmental innovation management. More than 30 company-wide innovation initiatives have been launched already.
The company is already using Artificial Intelligence (AI) in risk measurement. ”In addition to the actual calculation of market risk, Universal-Investment verifies the data used in the calculation," explains Dr. Svetlozar Nikolov, Head of Risk Measurement. This is where a proprietary-programmed machine-learning algorithm comes into play: The algorithm indicates the data quality and reliability of the results. The system identifies when experts need to check the output manually. This allows them to save valuable time and to focus on essential tasks and detailed analyses. "For years we’ve been seen as the benchmark for our peer group in terms of quality, efficiency and the stability of our qualified market risk measurement. We want to keep it that way in the future.”
Universal-Investment is currently testing an ESG sentiment analysis that uses machine learning (ML). Information on companies’ ESG compliance is compiled from high-quality texts online (see interview with YUKKA Lab) . "Clients thus receive a new type of ESG signal that, compared with existing, classical ESG ratings, eases the view ahead by providing daily trend indications", explains Robert Bluhm, Sustainability Officer / Head of Securities Product Management at Universal-Investment. Fund initiators can use it, for example, to conduct a swift review of their ESG strategies or to integrate the signal into individual stock analyses."
AI-based intelligent workflow automation is also currently being tested. Under this project, PDF documents are automatically downloaded via interfaces while NLP (natural language processing) is used to select the relevant information. This information is then compared with operational data. The advantage for the client is that it speeds up and improves underlying workflows. “Specialists can sharpen their focus on (as yet) non-automated client requests or on other developments,” says Matthias Heiß, Head of Operations at Universal-Investment.
Other initiatives are focusing on "advanced analytics". These are additional interactive analyses that, supported by market data, can be used to advise clients.
Universal-Investment is also addressing numerous other topics and is in active exchange with the fintech industry on:
- digital assets (digital securities)
- blockchain / distributed ledger technology (DLT)
- alternative data (information extraction from unstructured data)
- RegTech (AI- or ML-based handling of regulatory requirements)
- PropTech (AI- or ML-based analyses of real estate investments, including, for example, energy consumption data)
The digitalisation of classical asset classes can be used to target new client groups on the investor side.Andreas Gessinger
Andreas Gessinger, Head of Relationship Management Fund Initiators, believes that the digitalisation of traditional asset classes such as bonds and equities, as well as real estate and private equity is highly interesting for fund initiators. “New client groups can be targeted on the investor side including, for example, those who would like to invest relatively small amounts and who were previously not eligible for certain asset classes." The main reason is that the investment process is simpler and faster, and that digital assets can be traded with minimum effort. “Innovators” are also eying underlying blockchain / DLT, which facilitates financial transactions without requiring trust-building intermediaries. "As a result, financial transactions are becoming much faster and more efficient." explains Andemeskel.
The next logical step for the Universal-Investment Group was to launch "UI Enlyte", one of the first end-to-end investment platforms for digital assets worldwide. As a new company in the group, UI Enlyte offers a inhouse-developed, end-to-end investment platform based on distributed ledger technology. For the first time, all main phases of the investment processes are covered fully digitally on a single platform, from client onboarding to the issuance and administration of token-based structures (STOs - Security Token Offering) and reporting. "UI Enlyte supplies a comprehensive white label offering and cooperates with established partners in the areas of custody, trading and structuring. This is what makes the offering stand out clearly from other options on the market," says Andemeskel, who is also Managing Director of UI Enlyte.
Universal-Investment's innovation concept is not just about technical innovations. Innovative investment and administration products are also part of the agenda. Recent examples include additional wrappers for special funds compliant with § 282 of the KAGB (German Investment Code), the InvKG (German Investment Act) and "Rent a Compartment" platforms in Luxembourg. In addition, there are new services in almost all product areas. As well as ESG sentiment analyses (YUKKA Lab), these include matching (CAPinside), interface delivery (SimCorp, FACT, etc.) or short-term investment opportunities for excess liquidity (UI short duration funds).
There is a great deal of pressure on the fund industry to change. For this reason, CEO Michael Reinhard is convinced that it is vital to sustain and foster a culture of innovation throughout the company. "This is the only way to achieve our goal of maintaining dynamic growth and becoming Europe’s leading fund service platform by 2023 as well as to remain one of the innovation drivers in the fund industry."
Non-fungible assets that, using smart contract-based tokens, can be issued and managed via the blockchain, eliminating the need for trust-building intermediaries.
As a sub-area of artificial intelligence, the technology aims to understand human language and to extract and interpret information. Emotional statements are identified in a sentiment analysis and words are classified as positive, negative or neutral signals.
Data exploitation and analysis of opinions and trends contained in texts, using large amounts of digital data.
(Published February 2021)
Author: Daniel Andemeskel, Jochen Meyers and Andreas Gessinger, Universal-Investment
Date of issue: 8/20/2021
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