"The financial sector cannot overcome all the challenges of the transition alone"

Timo Paul
Chairman and Co-Countryhead Switzerland, Natixis IM

 

The CS takeover by UBS is causing upheaval in the Swiss asset management market. Can Natixis IM compete with the new big player in terms of the breadth of its offering?

Instead of two big players as before, it has now become one big player. On balance, the breadth of the offering has not increased. With more than 15 investment managers (subsidiaries), we offer a broad and high-quality range of diverse solutions across all asset classes, styles and vehicles.

Does this strong concentration on one provider - UBS will have a market share of almost 40% in the Swiss fund business - offer opportunities for you and Natixis IM?

The merger will make some funds even bigger, while others will disappear. The question will be how this will affect performance and costs for investors. On the one hand, concentration will increase for some core products, but doors will open in many other areas where we offer outstanding solutions with innovative and flexible investment managers.

The Swiss asset management market is limited and is considered saturated: Do you share this assessment?

The Swiss asset management market is one of the most interesting and sought-after markets in the world. Competition was and is correspondingly high and there is always a certain amount of crowding out. In our view, however, the market still offers interesting potential.

What are the characteristics of the tough competition in the Swiss market that providers like Natixis IM are constantly confronted with?

The number of competitors has continued to increase in recent years. There are more competitions and events in Zurich than before the coronavirus pandemic and the pressure on margins has increased further. We are also seeing that many employees are being hired. However, after a few bad months or quarters, they are let go just as quickly. Which makes us very concerned. We are pursuing a long-term strategy and have not made any employees redundant, even during coronavirus and the challenging year 2022.

Natixis IM consists of more than 15 different asset managers operating under different names. What is the strategy behind this and how do you explain it to your clients?

We call it Expert Collective - diversity of thought fosters the development of insightful ideas. Our firm works closely with clients to understand their unique needs and deliver insights and investment solutions that fit their long-term goals. The Natixis IM Multi Affiliate Model offers investors one-stop access to active and high conviction investment managers. Clients benefit from both diversification and seamless investment expertise. We are diverse in terms of investment classes, investment styles and geography.

How do you assess the increasing use of artificial intelligence in portfolio management?

Supporting portfolio managers through faster processing of larger amounts of data, increasing productivity without giving up control. It is important for society as a whole, and investors in particular, to understand how technology works, interacts and impacts economies, businesses, institutions and our lives in general. Our priority at Natixis IM is to ensure that we focus on the needs of our clients and simplify their investment experience at every single level of our business and operations. This includes: Optimising our product offering, accelerating time to market, but also improving market intelligence and data analytics.

Where will this development lead?

On the one hand, we can hope that the use of AI could make work more productive by automating tasks, freeing up human resources for activities that create more value, thereby increasing economic output and wages. However, automation and far-reaching technological change are usually initially met with scepticism and resistance because many assume that they will destroy jobs. And this could certainly be the case with AI.

In your opinion, what steps are necessary to help sustainable finance achieve a breakthrough in terms of impact?

The lack of common standards, comparability of data and easy access to data are real challenges. Greater harmonization of terms across jurisdictions and transparency are needed to accelerate progress. The financial sector has a central role to play in enabling the transition to a greener and more sustainable future, but it alone cannot tackle all the challenges facing the world. In this context, greater collaboration between the public and private sectors is essential, and solutions such as "blended finance" based on public-private co-operation will help to increase the impact of sustainable finance. The role of governments and public institutions is crucial to drive the transition and to provide and create a firm and precise incentive framework for this development.

How do you implement sustainability in your everyday life?

I travel to work by train, cycle short distances more often, have replaced my 20-year-old oil heating system with a heat pump and PV system and buy regional products whenever possible. My favourite places are the village shop and local farmers.