Nick Ford, Chief Technology Evangelist at Mendix


With the UK government’s roadmap out of lockdown being recently announced, the promised land of normality draws ever closer. But COVID-19 is seemingly yet to receive the memo, with its continued shaking of mature economies in every corner of the world.

Even so, life trundles on and finance specialists still need to find new avenues to ensure they secure a return on their investments, without sacrificing on their supporting of ethical global growth.

For all the disruption of the pandemic, frontier and developing markets are set to outperform their developed counterparts in 2021. Given the volatility of economies around the world, you’d expect this to present a prime opportunity for investors.

But developing markets also bring added risk. And it’s increasingly clear that there are currently a aren’t currently enough tools for fund managers to invest in developing countries. Alternatively, it may be the case that updating existing tools for such volatile changing market conditions is too time intensive to be considered viable by investment firms. Challenges such as these are preventing many economies from reaching their potential.

Instead, hedge funds are faced by a variety of high investment barriers to these developing markets. Led, in no small part, by the fact that legacy financial software platforms and consultants have neglected to supply the solutions.

Fortunately, all is not lost and there’s a world of technology and tools out there to overcome these barriers. In this article, I’ll uncover some of the most effective means to help investors better navigate the opportunities that developing markets can provide.


Key barriers to investment

Of the many barriers facing fund managers, data – or rather a lack of data in relation to developing markets – is one. In this digital age, data has become one of the world’s most valuable raw materials and resources in business.

So, the scarcity of this commodity for frontier markets presents a unique challenge. For example, nearly all major market and investment news outlets don’t list interest rates for longer maturities in countries such as Myanmar.

Other issues include a lack of environmental, social and corporate governance reporting, with a failure to enable compliance on European Market Infrastructure Regulation (EMIR) and reporting requirements set by the European Securities and Markets Authority (ESMA).

Combined, these factors can lead to gaping blind spots and increased risk when fund managers are looking where best to invest, which is only amplified by political turmoil and the opacity of these nations’ financials systems .

In extreme instances – like that of Venezuela – there’s not even a guarantee that local markets will stand the test of time. This is due to factors such as extreme inflation rates, endemic corruption, economic and political instability, government intervention and a restrictive legal framework.

If you merge the above with legacy financial software woes (they can be inflexible and often costly to change), it would seem we’ve got an investment recipe for disaster – and fund managers will simply have to pass up the opportunities of these potentially fruitful markets.

Or will they?


Low code as a solution

Legacy systems are a thorn in the side of financial markets. Some have been around for decades which makes them difficult to do without – despite their inefficiency, increased security risks and incompatibility with new technologies. This aside, legacy systems can also be increasingly costly and time consuming to replacement – making this option less attractive.

In response, low-code addresses the needs of fund managers and funds with capability to devise or build in comprehensive functionality and specialised reporting tools that can spur investment in a growing multibillion-dollar market.

Furthermore, low-code solutions allow for platforms to be easily configured and flexible enough to address the fast-paced, rapidly changing world of frontier markets and allows anyone with limited technical skillsets to develop a business application in days.

A recent case in point that highlights the benefits of low-code is DLM Finance. Utilising the services of Mendix, the financial services provider used low-code to create Trade Manager: a purpose-built, global financial software platform for fund managers to make investments in developing countries.

Due to the relatively smaller market capitalisation in these nations, traditional financial software providers have less interest in developing market-specific tools – with the high costs and length times associated with customising legacy software not an option for many funds.

But Trade Manager is purpose-built to fulfil the needs of parties in these underserved markets.

Overall, the complete application to address EMIR reporting was devised and developed in just two months on the Mendix low code platform by Finaps, a Mendix partner specialising in financial applications, in collaboration with DLM Finance.

Today, both fund managers and developing countries have already benefitted from its creation, with its attracting of capital for emerging economies. But this is just one isolated case where low-code has contributed to emerging markets, with a wave of success stories now expected to follow.

In a pandemic-disrupted world, software, with its ability to support rapid changes in business conditions, is the new lifeblood of our daily lives and the connective tissue holding together the global economy. And owing to innovations like low-code, we might just emerge on the flipside without too many scars.



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