The institutional asset management giant is making a huge investment to digitize its processes in order to take advantage of changes it sees occurring to asset management firms over the next 5-10 years.
State Street is investing $550m over a four-year period in digitisation and fintech in expectation of substantial disruption to traditional financial services.
State Street is one of the largest asset management firms focused purely on institutional investors with more than $2.45trn of assets under management. It is also custodian to a further $28trn of assets.
Head of Europe, Middle East and Africa at State Street, JR Lowry, says the firm’s huge investment – named Project Beacon - will see its core business processes digitise in anticipation of technologies such as blockchain and certain artificial intelligence applications becoming part of its operation.
“To some extent we are still working on foundational things but over the long run we think this is going to dramatically change our business model.”
“It positions us to be able to better take advantage of the new business as well as emerging technologies like blockchain that will come into the industry in time.”
He says while there is profound disruption underway to large financial services firms from fintech companies, he doesn’t see this as a threat.
“I don't view the fintech community as competitors, I view a lot of what they are doing as more complimentary to what we do...we partner a fair amount with some of the smaller firms because they fill solutions in areas that we haven’t got to,” he said.
State Street recently completed a survey of more than 2000 investors as well as 500 investment providers which found fintech’s emerging technologies was disrupting establishing firms. Blockchain was one of the most often expressed such technologies expected to transform finance.
“There is tremendous interest in blockchain… but we still need proof of concept and product refinement in blockchain as an industry. We are unlikely to see large scale production in the implementation of it in the near term until the industry continues to figure out exactly how it wants to use blockchain from a technology perspective,” Lowry said.
“There is a lot of complexity in the industry and blockchain...everybody has to have a shared version of the way that they record things, variation does not really lend itself to blockchain. While there is unquestionably a lot of interest in blockchain, relative level of industry investment in it is not that high yet,” he added.