Asset Management as a Digital Platform Industry: A Global Financial Network Perspective

Abstract

While contemporary technological disruption is increasingly conceptualized in terms of the logic and paradoxes of the digital platform economy, discussions of “FinTech” have only engaged to a limited extent with these debates — particularly from an economic geographic standpoint. Here we fill this gap by proposing a new framework for conceptualizing the organizational and geographic logic of the digital platform economy in finance, and applying this framework to an examination of the impact of the digital platform model on asset management. As we will show, asset management is being profoundly disrupted by the rise of what we dub digital asset management platforms — or DAMPs — which encompass services including index fund and ETF provision, robo-advising, and third-party analytics and trading support. Like other digital platforms, DAMPs do not so much leverage technology to enhance their competitiveness within markets, as to radically restructure the market itself. Also like other platforms, their rise has produced a winner-take-all paradox of centralization through democratization that defies predictions of technology-enabled industry decentralization. However, the logic and implications of the rise of DAMPs diverges, in other respects, from non-financial digital platforms, with DAMPs 1) tending to asymmetrically disrupt different dimensions of market “efficiency,” 2) generally being less suited to regulatory arbitrage than tools already at the disposal of financial firms, and 3) mostly reinforcing rather than challenging the position of incumbent asset management firms and centers. Ironically, this divergence appears to reflect the extent to which finance has always possessed key characteristics of the digital platform economy.