As Fintech continues to penetrate the investment world, Nicholas Earl speaks to the CEO of ALPIMA, Pierre Mendelsohn, about how disruptive technology can aid asset managers globally.
“Many regard digital as a threat, but we are helping our clients turn this powerful trend to their advantage,” Pierre Mendelsohn, CEO of ALPIMA says.
His firm offers a platform designed to provide portfolio solutions and investment insight to asset managers, wealth managers and product owners through technology.
“People are realising that technology needs to be turned from being a threat into a force that can help financial firms provide a better service,” he adds.
Explaining ALPIMA’s role, Mr Mendelsohn says the ambition of the platform is to embolden asset managers, wealth managers and product providers who wish to "step out of spreadsheets" and design products on an integrated platform.
He says: “In order to harness digital to one’s advantage, one needs to rethink the business model, and one also needs to have new tools. So, new thinking and new tools is what is required and that’s where we come in. The industry contains an enormous amount of value that we believe can be unlocked. In order to be unlocked, it requires a different approach. We have built our platform to help our clients do that.”
AI: Here to take your job, or here to make it easier?
Mr Mendelsohn is aware of the wariness some asset managers feel towards digital disruptors in the investment process, but thinks that new technology can work harmoniously with wealth and asset managers.
He argues that, at this stage, artificial intelligence (AI) cannot replace the human capabilities to imagine solutions for issues. According to ALPIMA’s research, AI does not individually beat the performance of humans using a "good systematic approach" in low-frequency high-liquidity markets. Instead, such technology can be used to boost the capability of humans to make key investment and portfolio decisions, providing information and insight that they can constructively apply.
He says: "If you don’t have the technology then you are going to have to have people doing this using a programming language or spreadsheets. On our platform we can actually take a product, run through all the possible permutations of the product and see which ones are producing the best results historically. That is one example where a platform like ours can be really helpful.”
The platform is meant to benefit clients responsible for diversified assets such as a multi-asset portfolio. Mr Mendelsohn believes ALPIMA can benefit managers trying to rebalance their portfolios, citing the value of machine learning.
"People make determinations often based on experience and perhaps shortcuts," he explains. “With our platform we are able to help people be more scientific about it and make those determinations based on evidence. That’s one area where something like machine learning can help us.”
The role ALPIMA performs is almost as psychological as it is technical, reassuring managers nervous about the pace of technological change of the value of their role. Mr Mendelsohn believes the platform is helping clients "essentially validate their decisions". A prospective client of ALPIMA, such as an asset manager or wealth manager overseen by a CIO who is used to having their own way of working, may want to simply compare their decision to that of a rules-based engine.
Big Deal: Platform attracts major clients
ALPIMA are by no means the only company offering technology solutions to investment companies, but the credibility of the platform's approach has been reaffirmed by Julius Baer, a prominent Swiss private banking group.
It has selected ALPIMA to assist with the “rule-based portfolio derivation” and “visualisation within its investment management business”.
At the time of the agreement, Evie Kostakis, Julius Baer’s Deputy Head of IM, said: “We are pleased to work with ALPIMA. Their ground-breaking platform offers the adaptability and agility we need to serve our clients in the competitive, fast-changing landscape we operate in.”
Mr Mendelsohn is proud of the clients ALPIMA has brought in, and that the most recent deal with the Swiss group showed the appeal of an integrated platform for managers of multi-asset portfolios.
Investor Appeal: How is it different from its competitors?
Mr Mendelsohn believes that the company’s method of “treating a portfolio as an object” especially appeals to clients. He feels that, through ALPIMA’s programmes, portfolios and indexes can be perceived as objects, which can be coded digitally.
Explaining this concept, he says: “Treating portfolios as objects means that you are able to literally leverage technology across the product cycle, from to portfolio to sales. All of a sudden, what that means is as a provider you are able to improve your business across your delivery chain.”
“You can see history in a lot more detailed manner than you would otherwise. Secondly, you can look at the present in greater detail. Thirdly, you can model the future and critically, you can iterate a number of times on your object to see whether you can improve it,” he adds.
He also thinks the flexible nature of ALPIMA’s platform works to the advantage of his clients, arguing that its services are scalable and can be adapted to suit clients ranging from established global institutions to recently formed boutiques, which enables him to see the needs of people across the entire investment spectrum.
Closing Thoughts: ALPIMA's positive perspective on the potential of people
ALPIMA was formed in 2014 as a specialist front-office platform for both institutional and professional investors. Its team now consists of approximately 20 people, across offices in London and Tel-Aviv.
It is composed of global markets professionals, computer engineers and applied mathematicians. The platform wants to be seen as the most credible of its kind, a market leader where its products and processes are the industry gold-standard.
When it comes to technology, Mr Mendelsohn advocates a positive perspective, stating that “human intelligence is dangerously running the risk of being underappreciated”. He sees no reason why human characteristics, such as imagination, cannot work alongside technological advancements and programmes.
Instead, Mr Mendelsohn believes that the combination of technical expertise from ALPIMA with the values humans can bring to investment decisions will enhance decision making across the industry.
