Embracing Change: Ian Thompson, Fidelity International

Many asset managers have found themselves at a crossroads of change in recent years, faced with tough decisions as to how to best adapt their businesses to leverage new technologies while complying with regulation and ultimately keeping end-investors happy. It’s not an easy journey to take, let alone succeed in, as it is often one without a fixed ending, evolving alongside new market demands and technology developments.

Fidelity International has always been a firm willing to adapt to change, both within and without. The company was first established as the international arm of US-based Fidelity Investments in 1969, before it was spun off into an independent business in 1980. In the 37 years since then, Fidelity International has grown to become a global presence in 27 countries, managing $279 billion across asset classes, most prominently in equities, fixed-income and multi-asset funds.

It has been a journey of steady evolution for a firm that encourages its people to think a little differently. A notable example of this has been chief investment officer Dominic Rossi’s public campaign to reform a culture of rampant bonuses for board members and senior executives, in an unusually vocal display of opinion from a buy-side executive.

For Ian Thompson, who is charged with overseeing Fidelity’s global technologies, that evolution has recently been kicked up a notch. Having spent the better part of the last decade running the company’s global technologies since joining the firm in October 2007, Thompson has now also taken on responsibility for the operations side of the business. The combination of the two departments means a vastly enlarged sphere of responsibility, but, according to Thompson, it also offers a plethora of new opportunities for the firm to explore.

“Merging technology and operations makes for a large department, but I can’t wait, I’m really excited because the synergies that I can see are huge; they perform in the same countries, different roles obviously, but in terms of putting together a global team, they have the same business to support, so I am very excited about that,” he says.

Attitude Change

Thompson’s enthusiasm for the task ahead of him is plain to see and the language he uses when speaking about how Fidelity is positioning itself across the global markets shows that there are no signs of trepidation regarding the sheer number of programs, ongoing technology projects, and people to manage as part of his expanded role.

While it isn’t uncommon for asset managers to merge technology and operations, given the number of overlaps between the two functions, that wasn’t always the case. Thompson says that while there has been a sea change in the industry regarding the effectiveness of technology, thanks in part to the success of multinationals like Google, there are still enduring preconceptions around technology staff as “back-room boys” that means the potential of new technologies can be ignored.

“I would categorize the wider asset management community generally as previously not necessarily seeing the need for technology as much as they do now,” he explains. “Particularly investment banking—I think they saw technology as an advantage to allow them to make money, and therefore as a competitive advantage, and asset managers generally saw it as an overhead. But the way the industry has moved quickly toward technology, they see that it can be an enabler and an advantage for all firms, including asset management and Fidelity International.”

During his decade-long tenure with Fidelity International, Thompson has witnessed the evolution of technology-driven strategies across the firm’s global activities, while also learning from the ways in which non-financial technology firms have been able to encroach into almost every aspect of both professional and consumer life.

“What we are competing with now, in a firm where we have a direct-to-customer offering, is our client’s last experience on their mobile phone with Apple or Amazon, not our direct asset management competition,” he explains.

Such developments have led Fidelity International to adopt a “digital first” strategy for its front-end, something that Thompson asserts is often mistaken for how a client’s journey plays out on the web where there is a waiting game going on behind the scenes. “It’s more than that; it is front to back,” he says. “We have digital teams to design the digital front-ends for our global businesses, which I then build in technology, but there is also an onus on technology and operations—which is where I think there are synergies—to really automate front-to-back.”

The ultimate goal for Thompson, like so many other asset managers at the moment, is to lower operating costs, but also to decrease time-to-market and user-response times. Automation is a key element to achieving this, although an holistic view is required to assess progress in this space due to varying degrees of automation between the organization’s different regional presences.

As Thompson says, while clients in different jurisdictions may not see any difference in the level of service, doing the same things multiple times over is expensive and silos often mean functionality cannot be pushed out to different regions as quickly, an essential function for an investment manager seeking to offer the same levels of service to clients regardless of their location.

Global Program

It is no surprise that Fidelity International is working on a variety of technology-oriented projects—not least of which is a $250 million strategic investment in its UK platform, business and infrastructure—and Thompson prefers to look at the overall picture, both in terms of where the work is being done and its ultimate objective.

He is currently overseeing a program of work with five main concurrent streams. The first is a push to simplify the organization’s global applications architecture, while the second focuses on data archiving and retention as a result of reduced server counts thanks to its simplification efforts, while also exploring the possibilities of data rationalization to reduce costs incurred through storing data in different ways across its jurisdictions.

“There is the simplification of applications and data, and underlying that is infrastructure,” Thompson explains. “We have multiple servers supporting multiple databases and applications; the more you can take away the top layers, the more you can take away the services. On top of that you then start looking at internal and external cloud and virtualization. We are quite far into the journey on those elements and with virtualization you can start to reduce the footprint of your service. If you put those three together, it’s a hugely powerful and quite complicated program of work. Alongside that we have a stream of work within this overall program to look at automation of our development processes—Agile on the front-end, a DevOps program in the middle, and then internal/external cloud on the back-end. So my dream is that if any of the businesses have an idea on the Monday, we can go live on the Friday.”

The final stream of Fidelity’s program is optimizing its support structure, which Thompson describes as very silo-driven. Although that might work well for the end-client, backed up by a production incident record that is “second-to-none of anywhere I have ever seen,” it’s also an expensive model to maintain. The goal, according to Thompson, is to create global synergies across the organization’s back-end while maintaining the level of its client support at the front.

It’s a large body of work to undertake simultaneously; however Thompson also highlights that at the root of it all is a cultural change that must be embraced for success to be realized.

“Now the developers are in charge of production, and if you start from the premise that production is king—which it is—if you are not open for business, you might as well go home,” Thompson says. “So there is a cultural program about making the developers realize that when they press that button, this thing is going live.”

Transparency Rules

One of the inescapable agents of change across the capital markets in recent years has been increasing levels of regulation, and with Mifid II set to land in Europe at the start of next year, that trend won’t be diminishing any time soon. For his part though, Thompson seems relaxed about Mifid II’s arrival. While he says the firm has put a lot of work into its preparation and has taken the issue as seriously as it possibly can, he’s not concerned in the way many of his asset management counterparts seem to be.

“The approach to Mifid II has been to decompose every part of it and build it into every part of our normal change programs, not run it as a separate thing, because that never works,” he explains. “Therefore, it is a program that is run centrally but devolved into the businesses and the technology behind that. I’m very comfortable. It’s a big change, but with enough notice period, time to get through it all, and focus, we’re not concerned. I never want to appear complacent, but we, as a company, have taken it as seriously as we possibly could to do what we need to.”

The thrust of Mifid II is to both increase both market transparency and investor protection, something that Thompson feels fits well alongside Fidelity International’s vision. “When you talk about Mifid II, it’s about client protection, and we want more of that; we don’t want more bureaucracy,” he says. “It may cost us money, but if we can improve the client experience through automation that’s a good thing.”

Protecting client data and transparency are key elements of the challenge for Thompson, both in the operational and technology senses, and as such, cyber-security is one of his top priorities. He says that while investment banking organizations have wised up to the threat posed by cyber criminals, it took several scares for them to adopt security as a matter of genuine concern.

Now, asset managers are also on the target list and like many of his counterparts, Thompson takes the issue seriously. The firm collaborates on cyber-security issues with various governing bodies, and Thompson says he would be open to greater transparency between asset managers on the issue. For his own part, he says Fidelity International has learned valuable lessons on its own technology security systems.

“Our approach previously was to make the perimeter bulletproof so no one could get through, but then we worked out that it is impossible to be bulletproof—someone is going to find a way in, and it is often through a person internally clicking on something like spam so that data can be harvested and a month later they’ve got everything they need to go and steal the crown jewels,” he says. “That is nothing to do with the perimeter. So we assume that we have always been hacked and therefore we are always looking for suspicious activity all the time. It’s still reactive, but it is reactive right at the source.”

Old and New

Like many other technology department heads across the buy side, Thompson started out on the other side of the street, cutting his teeth in investment banking with roles at UBS, NatWest and RBS Financial Markets.

It was during his two-year stint at ABN Amro, prior to joining Fidelity International as the bank’s global head of technology, that Thompson was able to first get to grips with managing a large department and budget. While he says the role of managing the bank’s technology was very similar to that at an asset management firm, it was where he learned valuable lessons around building technology teams.

“My instinct in investment banking, even from a young age, was to build environments where people could succeed and really work on the cultural aspect to break down the barriers for people to become collaborative,” he says. “Certainly in investment banking that wasn’t necessarily seen as being useful, but I think delivery comes for free if you have the right group of people who enjoy what they do.”

Both his current role and his previous position with ABN Amro are a far cry from Thompson’s days at NatWest Markets, where he oversaw a small team running equity derivatives globally and was able to see first-hand the effects of a well-defined collaborative effort, something he also sees in numerous technology startups today. Fidelity International works with a number of global technology and financial services startups, sponsoring an accelerator program based in Hong Kong. Thompson advocates the benefits these relationships can bring to an asset management firm open to change, particularly when it comes to learning about new technology advancements and business management methodologies.

However, this doesn’t mean that he or Fidelity International will be jumping head-first into new technologies simply because the opportunity is there, displaying the kind of restraint that the buy side is more well-known for when it comes to emerging technologies.

“My take on emerging technologies is to be very prudent—not too much so, but I think we are quite leading-edge anyway in terms of how we are approaching some of our development processes,” he explains. “We can bring in talent, which is great, but let’s not jump into blockchain and try to build a consortium. Everyone says it’s the best thing since sliced bread, and it will be, but there’s no point in me building a consortium that might not work. That’s not my business.”

What is his business, however, is leading Fidelity International’s technology forward, and Thompson says keeping the firm nimble is vital to its plans. While much of the future is clouded with uncertainty for many firms across the capital markets through forces such as political divisions in Europe and North America, Thompson says Fidelity International is well-placed due to its multi-jurisdictional options, and that his aim to further evolve the organization will be executed by him plugging away behind the scenes.

“In five years’ time I want to be able to say that I can’t believe how advanced Fidelity International is terms of its speed and time to market, and people will know that it is technology behind it,” Thompson says. “I want people to think of us as a large startup.”