Marc Schröter on the One-Platform Future (Part 3/4)
- Ebbe Kjaersbo
- 2 days ago
- 3 min read
In part three, Marc Schröter makes the case for why private markets will inevitably follow the same consolidation path as public markets, and why the shift from strategic asset allocation to total portfolio management is accelerating that change.
Key Takeaways
Private markets now represent over 20% of global AUM and more than 50% of the asset management industry's revenue pool, it's too big to manage on the side.
The industry went through this before with public markets: fragmented systems for different asset classes eventually gave way to unified platforms. Private markets are heading in the same direction.
The shift from strategic asset allocation to total portfolio approaches, managing risk factors across all asset classes, makes a single platform not just nice to have, but necessary.
AI is already helping automate traditionally manual private market processes like capital calls and distributions, where there are no global standards and heavy reliance on unstructured documents.
Full Transcript
Marc Schröter:
Private markets, it's more than 20% of global AUM now. And it represents more than 50% of the revenue pool globally in the asset management industry. That means that it's important both for the asset owners, the insurance companies, pension plans, sovereign wealth funds, but also getting increasingly important for the traditional asset managers.
So I would say if you look back a few years ago, just on the public markets, and software vendors and the platforms and the system landscapes, it was also dominated by many different systems for different asset classes. A lot of manual processes. Different ways or difficult to consolidate information to get a full overview of your business. And this is obviously no longer the case. I think generally perceived you want to have one platform for your equities, for your bonds, for your derivatives, etc.
And I think it would be the same for private markets. It's kind of inevitable. That's the direction it's going. Private markets will also be more automated, even though I agree it of course has a different nature. But just look at information flow like capital calls, distribution, something that was very or still is very manual, very data heavy, no kind of global standards, but at the same time, actually, again, AI is helping us here because now it's possible to automatically process some of these documents.
But I think the bigger driver is probably the way our clients, the asset managers, are investing. And we see for instance a lot of institutional investors, a lot of asset owners moving away from the traditional strategic asset allocation approach, where you in principle could perceive each asset class as a different and independent bucket, to a total portfolio approach where they're seeking to gain exposure to different risk factors across all asset classes.
And if you then extrapolate that into what are the needs in terms of your system landscape, your platforms, then if you think about that, the only way to actually support such an investment strategy is to have a full overview of your entire portfolio in one platform. And it's not just an aggregated view that you can create a report or create a data warehouse — you really want to manage your portfolio actively in terms of scenarios, stress testing, understanding correlations, calculating risk, validating compliance rules. Everything needs to go across all asset classes and for that you need one platform.
So I think that's the direction it will be going in here as well.
This is Part 3 of our 4-part interview series with Marc Schröter. Previously: Marc Schröter on AI From the Bottom Up (Part 2/4). Next week: Marc Schröter on Reimagining Front Office (Part 4/4).
