The current frenzy over Chat GTP, AI Bots, and the latest state-of-the-art tech overlooks the fact that a broad swathe of finance still relies on antique tools and outdated systems. finews.asia takes a look. 

You can’t quite believe it at first when you see a fax and a teletype parked there, squat and rectangular, maybe even looking slightly smug.

In a typical private bank, they are frequently placed in that area near where the client advisor assistants sit. Once, maybe twice a day, an employee will walk to the teletype and type out a message or an instruction, after which they check the fax to see if anything new has come in. You don’t ask as you really don’t want to know. 

Occasionally, you go over, lured by curiosity - wondering if you even know how to operate the fax. But, daunted by the dialing pad on the side, and the fact you don’t even have a number to send anything to, you quickly give up.

Virtual Antiques

It is a slightly underhanded, albeit thinly veiled, industry secret. That talk of crypto, NFTs, AI, and fintech is just that. Just as large financial hubs such as Hong Kong use paper checks, many wealth managers and investment houses still rely on virtual antiques for basic tasks.

That state of affairs was mirrored in a research report released recently by Calastone, the British-based technology group owned by global private equity group Carlyle which dubs itself the largest global funds network.

In the report, which surveyed almost 600 respondents around the world, they indicated that a «century’s worth of different systems and processes has resulted in a complex and fragmented landscape, with manual processes and antiquated technology like fax machines remaining the backbone of many asset managers’ operations». In other words, a mess.

Prevalent in Asia

Apparently, private banks and wealth managers aren’t the only ones addicted to obsolete implements. 

Instead, it is an affliction facing the entire asset management industry around the world, with more than two-thirds (68 percent) of organizations relying on the venerable fax machine. There also seems to be precious little self-reflection of that fact going on, particularly in Asia.

«In many instances, respondents across Asia considered themselves more automated than their European counterparts, yet the use of fax – a tool many in Europe would consider outdated and irrelevant – is far more prevalent in Asia,» Calastone indicated.

Heavy Price

That would seem to imply that regional financial executives should seriously consider paying more than lip service to all the new tech out there while cutting down on the number of award dinners, fintech conferences, and panel discussions they so avidly attend as keeping that fax and teletype in the twilight zone between operations and private bankers exacts a heavy price. 

According to Calastone, citing a McKinsey study, asset managers taking advantage of the plethora of new tech, including updated APIs (application programming interfaces) and distributed ledger technology, saw very tangible benefits.

They were able to onboard institutional clients in half the time at a quarter of the cost while assets under management grew twice as fast as the industry average and profit margins were 70 percent higher.

Just the Start

But, in truth, that is probably just the start - as they didn’t even get into discussing Chat GTP, AI bots, and all that other new stuff.