The Investment Association, a trade body representing fund managers in the UK, officially launched Velocity, a fintech hub and accelerator for the buy side a year ago, and now wants to develop a taxonomy and expand internationally.
Keith Phillips, membership & enterprise director at IA, told Markets Media that the launch of MiFID II, the European Union regulations that came into force at the start of last year, led to a huge uptick in fintechs and interest from asset managers.
“The IA is in a unique position next to the largest fintech hub on the planet,” said Phillips. “Asset managers are bombarded by fintechs and had a huge appetite to engage so we created a portal for the industry.”
The fintech membership program was set up to connect firms with buy-side organisations as the IA has more than 250 members who manage more than £7.7 ($9.9) trillion. The aim is to promote innovation which results in increased efficiency and better outcomes for clients.
“More than 120 fintechs have already connected and we get two to three enquires from fintechs every week,” added Phillips. “A specialist ecosystem of venture capitalists and consultancies is also emerging which we support if it helps the buy side.”
Due to the number of fintechs who have become members, the IA is going to develop a taxonomy for the firms including the asset class being covered, the position in the value chain and the underlying technology.
“The taxonomy will provide greater clarity,” said Phillips. “We will put the results on the website so it can be searched by asset managers and it will also allow us to identify trends.”
Accelerator
In October last year, the IA also unveiled the first cohort of five fintech firms who joined its fintech accelerator specifically for the asset management industry.
“We made a conscious decision not to be an incubator as the fintechs have to enterprise ready and solve an existing business problem,” added Phillips. “We are agnostic to the underlying technology but they have to make a difference to the asset management industry.”
https://twitter.com/IAVelocity/status/1049721448670085120
In May this year IA unveiled the five firms which who were successful in joining the second Velocity cohort.
https://twitter.com/IAVelocity/status/1126080059989741568
This month IA launched the search for the third cohort to join Velocity. Five new member firms who joined the cross-industry Velocity advisory panel, which will take part in the selection process - Citi, Columbia Threadneedle Investments, GAM, Insight Investment Management and Wesleyan.
https://twitter.com/IAVelocity/status/1184421444656271360
“A big focus has been cloud-based fintechs using AI to unpack unstructured data and improve how data is utilised,” said Phillips.
He continued that one metric for Velocity’s success will be that the firms increase their market presence and gain traction with the buy side.
Birmingham
The IA is expanding its fintech program by creating Velocity Birmingham with Wesleyan. The new premises are set to open next month as a regional co-working space of 5,000 square feet in the centre of the city.
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Fintechs can apply to become one of up to ten firms who will receive one year’s free co-working space and access to the IA’s expertise. The firms will be chosen by a panel led by Graham Kellen, chief digital officer of Schroders and chair of the Velocity advisory panel.
Phillips said: “We are seeing an enormous appetite for the Birmingham hub. Technology firms are finding coding and development talent in the West Midlands and also want to use Birmingham as an operating centre.”
International expansion
As well as expanding in the UK, the IA is looking to grow the fintech hub internationally.
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Velocity has signed a partnership with B-Hive, a fintech ecosystem based in Brussels, to promote pan-European collaboration. Velocity and B-Hive will share knowledge and expertise on technology trends and work together on joint events and training, and tackle common innovation challenges.
Phillips explained that Velocity is largest global fintech tub for the buy side and one fifth of its fintech members are international. Collaborations with other financial centres will be a priority next year.
He added: "There are more than 2,000 fintechs in the UK so we still have a way to go. It is an interesting time with the asset management industry at a nexus in terms of culture, ESG and technology.”
