Anders Kirkeby at SimCorp

In episode 4 of our podcast, host Sally Yates catches up with Anders Kirkeby - Head of Open Innovation at SimCorp.

Discover Anders’ thoughts on innovation within Banking, tech adoption across buy and sell side institutions, and, of course, what he’d put into Room 101.

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Let’s Talk: Episode 4 with Anders Kirkeby at SimCorp.

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Sally Yates: Welcome to another episode of Let's Talk, the podcast sponsored by FundApps. The compliance monitoring and reporting specialists. This season we are talking tech. How is tech future-proofing financial services? What have we learned and what do we seem to never learn? As well as talking tech this season, in each episode, we get to know our experts on a more personal level and get them to share a bit about their pet hates and what's on their wish list. It's time to meet today's guest. I'm Sally Yates and I'm your host on Let's Talk.

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Sally: Welcome everyone to this episode of Let's Talk. Today, we are joined by Anders Kirkeby. Welcome, Anders. Lovely to have you here today.

Anders Kirkeby: Thanks for having me.

Sally: Tell us a little bit about yourself and your background in the industry.

Anders: Sure. I think the last 15 years I spent at SimCorp working across different roles, product management, and enterprise architecture, and more recently in what we call open innovation. It's about co-creation and standing up a new partnership program. Before that, I have a background in the tech scene.

Sally: So very much tech background, the open innovation sounds very exciting. I look forward to talking about that a little bit later as well. Our overarching theme of the Let's Talk Podcast is future-proofing your business and this is obviously more important than ever for businesses that not only want to survive but also thrive. In your role heading up SimCorp's Open Innovation team, how do you define innovation? It's a bit of a loaded question.

Anders: It is very much a loaded question, especially in the beginning when we stood up this new function, I spent a ton of time thinking about what is innovation and why should anybody care and how do we create impact from that. I went through a lot of different definitions and in the end, I found that whole exercise a little bit not very fruitful, to be honest, because the definitions probably don't really matter that much to clients.

I think what does matter is whether innovation, that is anything that is an improvement upon what people are doing today, whether that actually gets adopted because if you look across the entire FinTech scene there's a ton of innovation going on. We can discuss some of it as a little bit like the next guide, but there is a lot of innovation, some of it incremental, some of it more breaking the mould, but the problem is that not a lot of it gets adopted. At least not as much as could be adopted.

That's really what's driving the work I'm doing, and me personally because we've done a number of surveys over the last two or three years now. Really showing that in the industry, we only serve the buy side of the institutional investment management space, but there is an interest in adopting innovation, there's an awareness of the stuff they might be missing, but there's not a lot of adoption going on.

Sally: It's trepidation, isn't it? Has someone else adopted it first? Can I prove it? Can I sell it to my firm? No one wants to be sacked for being the first, but if you are coming a little bit later, you can say, "Look, here's the proof points. It's worth us trying, it's worth us investing that time and effort."

Anders: There is definitely that element of not wanting to be fired for making the wrong choice and stuff, and this industry that we serve is quite conservative, so that makes sense. It's also a question of when you work in a corporate environment, there is only so much bandwidth for taking on change. A lot of people talk about having a bank to run so that takes priority. Then on top of that, people also have to change and you've got finite budgets, finite bandwidth, and a number of colleagues actually need to move with a different process. There's a lot of friction that is working against innovation adoption.

Sally: That's interesting. You mentioned the change in the bank phenomena there in your response, and it's something you hear a lot on the sales side. Using your budget to run the bank, which predominantly is the majority of your budget and I think particularly if we're talking about things like compliance technology, it's seen as a necessary evil, but innovation, true disruption, true change, obviously comes from the change the bank prospect. What have you seen through open innovation, but in the industry, in general, that truly is disruptive and can change the bank, can jump ahead and make the business thrive?

Anders: When we work in the FinTech industry, we obviously think that the solution to the problem is some kind of technology and I'm no different. I see that as well, I really honestly believe that there is so much stuff that we are offering across FinTech companies to investment managers which would make a massive difference, but taking it in is a challenge. You have to be able to allocate a certain capacity to work with change and as you say, there's a shepherd of competing priorities and how do you actually work with that?

I think what we've seen where it works the best are companies that actually have a very clear view on where they need to be. That sounds extremely trivial, but because everybody will have a mission statement and all of that stuff, not everybody actually lives it. There is a difference in how much direction a company puts into where they want to go. We have clients where they have a stated ambition that they want to be in that particular place.

They want to shift the business to a different way of serving their clients or making their clients happy, be that serving the next generation, for instance, in a better way. If you have that overarching vision, then you can actually slot in technology projects to support that. If it's purely about, if you will, surviving just here is provocative, then it's perhaps less exciting.

Sally: Now that makes perfect sense. As you say, stated ambition is a very different thing to activated ambition. We've just come out of 2022, so what were you expecting to see in 2022 in terms of ambition, innovation, and perhaps what didn't we see? Then also maybe take that further into what are you hoping for in 2023.

Anders: I think the most important thing that I or we see at SimCorp is really this shift towards having a clear view as to what is actually your core operational activities because if you're an investment manager, you are operating a number of different functions ranging from data management and back office to the front offices and so on, but not all of that is actually a core activity for you. It is not something where you necessarily always add value to the process, it has to be done, but the question is whether it needs to be you.

In a sense, you can say that's just classical outsourcing thinking, but we are seeing a shift now because, for many years now, we've been developing very efficient, good cloud-based solutions, so that's a technology enabler for this. Now we are also seeing an appetite trying to buy into business process services in new areas. An area, for instance, that we are looking at is compliance. Traditionally asset managers would have been responsible for maintaining a massive universe of compliance rules, investment compliance that is.

Then maintain that for whenever there's a new portfolio, they'd have to go in and reject that, and so on. Increasingly, that kind of activity is coming up for consideration for outsourcing. I think that makes a ton of sense because even a decent sized manager will still only have a relatively small compliance team and it can be difficult to actually run, if you will, a really well-motivated sustainable setup if it's only three people.

Sally: Yes, as you say, Investment management firms concentrate on what you're actually there to do, that's the investment management, and outsource what's not your speciality, but it's an agile debate what do you outsource? What do you insource? What confidence do you have to be able to outsource? In terms of 2023, what are you hoping to see in terms of ambition and innovation?

Anders: I think there's this adoption of outsource services in areas where people didn't think about it in the past. I really think that is a game-changer potentially. What we have seen in recent years is that because of technology, we've seen the shift of what is outsourced and what is insourced has actually changed. In the buy side, there used to be a lot of asset owners who would completely outsource the entire front office because again, say management you need a lot of people, you need a lot of technology, that's expensive, but because the technology solutions available are becoming so good, we've actually seen a lot of asset owners insource those activities.

Because at the end of the day, that is how they make a difference. It is their creativity. We are seeing that rebalancing of what constitutes your qualitatives. Really, I would like to see that accelerate this new view on what is important to us as an investment manager. See that change. As in actually adoption of stuff.

Sally: True adoption, true change. That makes sense, Anders. The buy side traditionally has been hesitant. The sales side has been at the forefront of technology and everything, but with the buy side, we are seeing some shifts. We are seeing that adoption, we are seeing the benefits of that drive of change. What does the industry in terms of the buy side, keep forgetting to do?

Anders: We recently ran together with InvestOps this annual survey globally about investment priorities across the industry. There's quite a number of respondents. It's got a higher level of confidence in the numbers. For the first time in all the time I've been involved in this, at least, we actually see that adoption of innovation is the top priority. It's a top priority because specifically because that's what's in the question, it is to stand out in the face of the competition. We are seeing a shift from being focused on relatively trivial, I say trivial operational matters, like honing the back office and stuff like that to actually wanting to stand out, to compete, and to differentiate. That is a significant change, I think.

As a player in the industry, anything I or we can do to support that, that's really exciting. When you then drill into the underlying priorities that people have there, some of it is the same stuff that we talked about yesterday. It's like data management and stuff. You also see some adoption of actual new technology, like bringing in machine learning to start. Sometimes to automate stuff that we actually do yesterday, but more so to do stuff that we simply could not afford as an industry to do yesterday.

Sally: No, that's really interesting. That change, that real change in attitude towards innovation, as you say, having it at the top of the agenda and continuing that theme around innovation and actually what really makes innovation. If we borrow a quote from Henry Ford who said that if he'd have actually asked his customers or asked for customer input in terms of what to do in terms of developing the Ford model T.

He famously said, "If I'd asked people what they wanted, they would've said faster horses." As we've got that focus on technology, what's the best input, advice or comment you've heard from anyone, be that peers, your team, customers, investors, that's really helped you take a leap forward or encourage your customers, the industry to adopt technology?

Anders: It's funny you pull up that quote because years later, Ford struggled because they only want to sell a black car and not multiple colours. You also have to listen to customers at the same time.

Sally: It's a balance, right?

Anders: Yes. Of course, we've all had many interactions with clients that you learn this nugget, but it's all very incremental. I think I cannot really point to any one situation. Oh, that was really an aha moment where, okay, I went back, did a proposal off the back of that, that convinced all my colleagues and then we just went on a wonderful journey from that. It's never that simple. Unfortunately, I would love it to be, but in my experience, it isn't. I think the best input I've ever gotten from a client really, and this is going to be much more boring as an answer. We recently brought a massive change to how we support multi-tenancy.

That was only made possible because a client actually bought into an idea we had for how this could be done in a materially different way, but that's five years ago. They bought into a huge investment on both sides into how to do things differently. For these guys, that was very much a leap of faith. I think the input was not so much getting the idea because we had the idea, what they did was that they expressed that problem and they gave us enough leeway to then come back with not the solution they were asking for, but actually a much better solution.

Sally: No, that's interesting because it's actually a scene that's run throughout our chat today. It's innovation, that desire for innovation. It's the ambition but then it's that all-important adoption, that leap of faith, that jumping a little bit into the unknown and it's also the option of failing fast. As you say some of these changes we're talking about like the adoption of cloud or multi-tenancy.

It's been done in other industries and with other big companies with their own security concerns and everything. As an industry, I think we don't learn enough from other industries and take that face. There's an interesting theme that's run through. No, I really appreciate that and as in terms of your thoughts around the industry. Just before we move on to a little bit of a chat about you personally, is there anything else that you think our listeners should hear around those themes of innovation, technology, adoption, leap of faith?

Anders: I think this might sound a little bit highbrow, but I think that everybody in this industry is serving somebody like taxpayers, pension holders, insurance premium holders, everything. I don't think that everybody is perhaps as focused as they could be on the responsibilities that entails in terms of how they can actually improve stuff. There's a ton of inefficiencies in this industry still. I'm not saying it's easy for anybody who's just a, if you will, a cog in the will to fix stuff, but if people want to change, they can actually help bring stuff about.

Sally: Absolutely. Galvanise the support and it will come. Thanks so much for that again. As I say in our podcast, Let's Talk, we like to get to know our guests on a little bit more of a personal level. Now, it's time for room 101 and for our listeners not familiar with the concept of room 101. It's actually a BBC series where celebrities, in this case, that's Anders, get to throw away their least favourite thing.

Their pet hate, their worst nightmares, Why room 101? It was actually created by George Orwell in a dystopian novel, 1984. For those that wanted a little bit more of a fact, George Orwell actually worked for the BBC, and this was the room that he worked in. Apparently, it was a really depressing room which is why he introduced it in 1984. Back to you, Anders, what would you put into room 101?

Anders: Does it have to be from the industry or can it be--

Sally: Absolutely not. It can be personal. Any pet hate, anything

Anders: Any day, I'd stick Brexit in there. I was miffed about the result of the referendum when it happened. We can discuss the numbers. Should you have a vote that is based on just a majority and not a qualified majority and all that, but there was a result. I never believed in it, but somebody did. They've now had, what, six plus years to try and make something of it. I completely understand that at least some of the Brexits were thinking in generation timescales, but that's not where everybody else lives, right? Change has to happen sooner and they're not delivering.

Sally: Yes. I think, look, we could do a whole podcast just on that in its own right. What's your favourite analogy about banking?

Anders: I don't think I have one. I really don't. I've actually spent a lot of time thinking about it because you do slides all the time, at least when you're in my role, you feel more like a slide jockey than anything else. Then you have all these abstract terms you want to come up with a lovely graphic for. A lot of the stuff we do is so abstract that I don't really think I have a good analogy.

Sally: I think one of my favourite ones was to do with digital transformation and it's the caterpillar to the butterfly because that's quite a nice visual.

Anders: Two or three years ago, I was involved in kicking off an internal ESG concept just like anybody else. It has actually come to this, it's quite meaningful today. In the beginning, we had to figure out what is this and how do we make sense of it? One of the things that we figured out that we would like to have, that we are missing is a purpose that even a Gen Z would be able to relate to. If you work in something very, very abstract within the depth of finance, it's really hard to pull out that purpose that gets people up in the morning, that makes them feel they're making a difference.

That said, I do actually think, and coming back to the fiduciary responsibility point I made before that actually everybody who works in this industry, they do have some kind of inferred responsibilities, somebody else. That's not an analogy, but I think that is the purpose of this industry. Most people don't really think about that on a day-to-day basis, but I think it is quite important.

Sally: That's interesting actually. Here at FundApps, we are actually a B Corp. We were the 128th, I think in the UK, and one of the first a thousand globally to be a B Corp. That whole, as you say, good people, good business, good ethics, is actually really, really important to us. I think the whole ESG is a nascent concept. There's still a lot to do there but I think it's definitely something that we want to keep talking about.

Certainly something we've looked at for our second season of Let's Talk is actually to talk all about ethics in our industry which I think will be some interesting conversations and some interesting debate there. Maybe you can come back and have a chat with us about that. In terms of coming back to you, what's the top of your bucket list?

Anders: I really want to go to the Galapagos.

Sally: Amazing.

Anders: That is most likely happening next year.

Sally: I'm going to Costa Rica in a few weeks.

Anders: Oh nice.

Sally: Maybe we can swap stories.

Anders: Yes, absolutely. [laughs]

Sally: That will be very interesting. Just finally, if you could be a fly on the wall, who would you listen in on and why?

Anders: Given what I said about Brexit before, of course, there's a ton of times when it would have been interesting to understand did they really mean this or is it just what they thought that the voting public would react to? That's an easy answer. An easy one. Actually, I think Zelensky. I have a ton of Ukrainian colleagues, and I follow Ukrainian politics and at least a bit. He was an all-right president.

He was nothing special. The most special about him was that he was an actor turned politician. I would have liked to have been a fly on the wall maybe actually, in his mind, at the time, roughly a year ago when he realised that he had to transition into full-time acting as a politician. He's done extremely well. He is so credible and he's obviously pulling on some of his acting talent as well but it works as this Churchillian moment.

Sally: Absolutely. It's definitely an example of a man that's stepped up and stepped in with broad shoulders. Thanks so much, Anders. That's been really interesting. Any final words for our listeners?

Anders: Yes, absolutely. We've touched on this a couple of times today. There is a wealth of innovation going on across the industry and it is not being adopted. Tons of companies are simply not utilising the potential that some of these technologies, some of these services have to offer. That is a shame. It's a missed opportunity and it might be this industry has one of the highest IT budgets as a vertical across any industry. If you can actually invest a little bit more, and then get a return both on investment, but also really move the business in a different direction to focus more on what the business is actually there to do rather than some of the perhaps more operational stuff. That's got to be worth it.

Sally: I like that. Throwing down the innovation technology gauntlet. Thanks very much, Anders.

Anders: Thank you.

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Sally: Thank you to everyone for tuning into this episode of Let's Talk and we look forward to welcoming you back to another episode. Past and future episodes are easy to find on the FundApps website at fundapps.co and please don't forget to subscribe either on the website or whichever channel you listen to your podcasts on. We also want to hear from you, our listeners. If you've got any suggestions on what you'd like us to talk about in this or future seasons, get in touch at letstalk@fundapps.co.

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