Allfunds’ recent stock market debut marked a noisy close to an unusually noisy period for institutional fund platforms. Recent years have seen Europe’s two large global custodians (Clearstream and Euroclear) enter the market through acquisitions of well-established platforms.

As third-party fund dealing and custody have been conflated with the management of distribution agreements, major firms have shifted strategies and formed new allegiances – marking the start of a new era for the fund industry.

Institutional platforms have enjoyed a favourable environment in the past few years. Pretty much everything that has shaped the European fund industry – from the increase in cross-border distribution to MiFID II – has been a driver of growth for them. They will also benefit from current trends (such as ESG) that are increasing demand among distributors for data (both from a compliance perspective and for fund selection).

Platforms are convincing an increasing number of distributors across Europe and Asia that efficiency does not need to come at the price of standardisation. However, things look different from the product providers’ perspective.

Our recent survey among 219 asset managers points to challenges for medium and small asset management firms. These groups are facing higher barriers to cross-border expansion, and often find themselves priced out of the market for services (such as market intelligence data) that are becoming increasingly important.

There is arguably too much choice in the fund industry. But experiences elsewhere have taught us that we should beware of a market that overwhelmingly favours large players. The danger is that it could stifle innovation in the asset management industry just when a post-COVID world needs it most.

We’re publishing our European Fund Distribution: Platforms report next week. More information can be found on our website.