WEALTHTECH IN NUMBERS Trends, stats and robo-advisors

Wealth management could be compared to Aesop’s tortoise, slowly but steadily making its way to a finish line of innovative new products and services, oblivious to the excitable hare of retail banking, which scurries to and from each new tech. It will get there, eventually…

Senior Fintech Reporter Alex Hamilton


he wealth management industry is under pressure, and faced with some major challenges, including competition, fee compression, regulations and evolving customer needs. All

of these requirements have an impact in the wider shape of the sector, and lead to changes in technology, advisory models and compliance.

Still, though wealth managers have been keen to embrace the change, it seems that not many of them actually know how well they are doing it. A Capgemini study from 2017 found that although 53% of firms in their survey reported utilising a hybrid model, most didn’t rate their abilities. When asked to rank their progress out of seven (a strange scale, admittedly), they only gave themselves a three or four on average.

There are a series of new solutions emerging, which promise to change the way wealth managers operate for the next few years. High net worth individuals (HNWIs) are becoming increasingly tech- savvy, and demand digital capabilities and better advisory options. Emerging technologies like artificial intelligence, robotic process automation, the use of APIs, and implementation of blockchain, could help bridge the gap.

Domo arigato

Although you’d be hard pressed to find someone who can give you the correct differentiation between machine learning, artificial intelligence and robotic process automation, all three are helping to change the way we analyse data. Analytics, so often a staple of marketing and customer segmentation, are now being applied to deeper wells of data to identify trends and create fact-based recommendations.

The amount of data we produce is set to increase threefold by 2021, much of that customer information. It would take even the most diligent wealth manager a good few years to sift through all that

information, but a properly implemented robotic model could offer recommendations in seconds.

Let’s not forget that most important of drivers – cost. The rise in passive investing has led asset managers to invest heavily in technology, as it means lower overall operating costs and easier compliance with regulatory mandates. Often derided as one of the slowest movers in the financial services industry, wealth management is actually a fast adopter of artificial intelligence solutions. Automated advisors are expected to hold assets worth $2.2 trillion by 2020.

The robots are here to help. There are multiple basic, logic-based and repetitive procedures that can be replaced by automation in the wealth management industry. RPA is not an invasive process, and | © IBS Intelligence 2018


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