Investing in the future of digital
Franklin Templeton began its fintech investing efforts back in 2015, pushing the agenda of its research efforts.
As Senior Vice President of Digital Strategy and Wealth Management for Asia Pacific, Chetan Karkhanis is focused on leading the transformation of Franklin Templeton’s business in the region to a digital first, client-centric model.
“We’re a global team, which on the commercial side sees us partnering with traditional and next generation intermediaries, as well as new digital platforms to help enable or support the various digital wealth propositions that they are offering their clients,” Karkhanis explains. “We want to be the investment engine in the middle, and we want to be able to offer something different,” he adds.
The strategy, which can be boiled down into three main segments, has won Franklin Templeton the title of Best Fintech Innovation in Asia Asset Management’s (AAM) Best of the Best 2022 Awards, a second consecutive win for the firm.
First, the aim is to build out Franklin Templeton’s intellectual property through solutions such as the Goal Optimisation Engine that enables the firm to offer its asset allocation and investment expertise in a digital or technologically enabled format.
Second is strategic investments in and commercial partnerships with well-established innovative companies, to create novel products that may expand Franklin Templeton’s traditional distribution efforts. In Asia, the company’s fintech investments have included digital wealth tech platforms such as Quantifeed in Hong Kong and Bambu in Singapore, as well as insurtech platform Coherent in Hong Kong.
The third segment, which is more prevalent in the US, is to operate and own entire platforms for advisors. “Instead of just being a manufacturer of investment products, we want to add more value to advisors in the eco-system by giving them value-added tools such as practice management, CRM systems, administrative dashboards.”
Incubating ideas
Karkhanis also helps oversee Franklin Templeton’s part in the FT Singapore FinTech Incubator Progam, effectively an extension of the company’s Silicon Valley incubator, which was established in 2019.
“Launching in Singapore will allow us to tap into both the talent base as well as what we see as a very attractive market for the vision overall,” he tells AAM in an interview.
The firm has partnered with Zurich-based accelerator and incubator program manager F10, who source and vet the start-ups and provide mentoring, workshops and coaching. Franklin Templeton makes a two-year commitment to the companies, providing co-location space, seed funding and the promise of future equity.
“We also provide our own internal knowledge experts and proof of concept opportunities. Our focus is on investment management, distribution and operations and how to grow our core asset management business.”
Future trends and challenges
For Karkhanis, there are many implications for the application of blockchain technology within the asset management space, and Franklin Templeton will continue to explore these opportunities.
“In terms of product offerings, tokenisation is an exciting trend and we’re exploring ways to tokenise physical assets to create investment products. We’re also looking at ways to provide investment management and exchanges for digital assets that asset managers can participate in, as well as avenues to provide institutional and retail clients access to digital assets. There are also public and private investment opportunities and an entire ecosystem around it, including risk analytics, risk management and portfolio construction, that we are actively exploring. We don’t want to rule anything out at this stage,” he notes.
Looking forward, in terms of investment management, Karkhanis sees a world where, for retail and institutional investors and sovereign wealth funds alike, data is interconnected, powering in real-time how portfolio decisions are made. He expects continued growth too on the digital distribution side.
In Asia, however, challenges remain around digital adoption and regulation. “We need to be cognisant of local customer preferences and be ahead of the curve in terms of what we’re proposing in each local market. Also, each country has its own regulatory considerations that we need to be mindful of when designing a solution that fits the market.”
The overall demographics and size of the addressable market is another consideration. What works for countries with larger populations may not work as well for smaller markets and our approach will differ depending on the size of the market. “In markets like Singapore, you have to be focused on the broader regional picture and how you’re going to roll that out across multiple jurisdictions, which is not always easy to do,” he says.
Important Information
This document is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton. Investment involves risks.
Singapore: Issued by Templeton Asset Management Ltd. Registration No. (UEN) 199205211E., and Legg Mason Asset Management Singapore Pte. Limited, Registration Number (UEN) 200007942R. Legg Mason Asset Management Singapore Pte. Limited is an indirect wholly owned subsidiary of Franklin Resources, Inc.
Malaysia: Issued by Franklin Templeton Asset Management (Malaysia) Sdn. Bhd. & Franklin Templeton GSC Asset Management Sdn. Bhd. This document has not been reviewed by Securities Commission Malaysia.
Hong Kong and Macau: Issued by Franklin Templeton Investments (Asia) Limited and Legg Mason Asset Management Hong Kong Limited. Legg Mason Asset Management Hong Kong Limited is an indirect wholly owned subsidiary of Franklin Resources, Inc. This document has not been reviewed by the Securities and Futures Commission of Hong Kong or Monetary Authority of Macao in Macau.
Copyright © 2022 Franklin Templeton. All rights reserved.