Juan Alcaraz explains how big data is going to transform the investment industry.
European platform Allfunds chief executive Juan Alcaraz is described by some as the most powerful man in the continent’s fund industry.
The ex-global chief executive of Santander Asset Management first had the idea of building a platform business while he was working as an intern for its private banking division in Madrid back in the early 1990s.
Foreseeing that the US open architecture model would sooner or later spread across Europe, he started to introduce foreign fund ideas into the bank’s offering.
He was responsible for registering the first Sicav for distribution in Spain (a fund from MFS); a ground-breaking change for third-party product penetration into a world that was entirely dominated by local captive distribution.
Santander’s management gave Alcaraz the green light to launch Allfunds in 2000, and since then the platform has grown well beyond its home market to become a giant. Assets under administration currently stand at over £300bn – the largest European platform since 2015, according to our research.
“International expansion was on the roadmap from day one, but our greatest success was to make a bet on the Italian market,” he says.
In the UK, where the platform counts wealth management groups like Charles Stanley among its clients, Alcaraz recognises the journey has not been easy.
The most significant platform deal to date
“Initially, our main difficulty was our lack of local product offering in terms of both fund structures and UK strategies. That’s no longer the case but it is still a challenging market because our natural clients aren’t IFA firms and they are key in the UK fund distribution model.”
In addition, Alcaraz says regulation and tax planning drive fund distribution here to an extent he has not seen anywhere else in Europe.
In March 2017, the platform was acquired by Singapore sovereign fund GIC and private equity firm Hellman & Friedman for around £1.5bn.
The sum made it the most significant platform deal to date, raising a few eyebrows among bosses around the world as to the potential value of their businesses.
When asked what is next for Allfunds, Alcaraz points to scale and added value.
“We work with a product [funds] that is suffering margin erosion. As a platform, we can only overcome this by building further scale and providing added value services,” he says.
Allfunds wants to lead consolidation in the sector but Alcaraz does not expect to face big technology integration projects like those seen in the UK platform market.
What really excites him, however, are the opportunities presented by data.
With platforms able to leverage their position between distributors and asset managers, Alcaraz believes Allfunds can transform its business from transactional to information-led. “The new Allfunds is about providing added value to our clients through big data,” he says.
Big data solutions including behaviour analytics
The boss’ vision is for his platform to play an Amazon-like role in the fund distribution industry. The first step was the launch of Telemetrics last year, a data hub that should be the foundation of future big data solutions for distributors and asset managers and which will include predictive behaviour analytics.
Alcaraz thinks Mifid II and the current generational change will mark an inflection point for the wealth management industry. Investing in technology, particularly around data and digital delivery, has ceased to be optional. In an environment where margin pressure is leading firms to outsource, it will ultimately present companies like Allfunds with valuable opportunities.
The need to embrace technological change could well be one of the reasons behind the recent acquisition of Finametrix. This provider of digital wealth management solutions will complement the platform’s back and middle services, with a digital front-end solution, including white-labelling for asset managers who want to develop their own direct-to-consumer propositions.
But while the latest wave of regulation will boost some technological solutions, it could also distract the industry from other exciting developments. For example, Alcaraz sees blockchain having a significant impact on the wealth management industry, although it is difficult to predict when.
For now, seeing the passion he shows when talking about the future of Allfunds, it is a clear a new journey has begun for the platform – and data is going to be pivotal to it.
Rodolfo Crespo is associate research director at Platforum
2000-present: Founder and chief executive, Allfunds Bank
2009-present: Member of the President Advisory Council, EFAMA
2009-2017: Global chief executive, Santander Asset Management
1994-2000: Investment funds director, BSN (Santander Private Banking)
1991-1994: Investment funds analyst, BSN (Santander Private Banking)