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WEALTHTECH Connecting the dots
IBS Journal looks at some of the startups making waves in the wealth management industry and asks: should incumbents be worried?
Senior Reporter Alex Hamilton
experiencing a wake-up call with the arrival of new types of technology. FinTechs disrupting wealth management set a record with 74 deals worth $657 million in 2016. Last year saw the emergence of the first-ever WealthTech unicorn in stock trading application Robinhood. The times, they are a-changin’, but what has brought about this disruption and what can existing players do to keep up?
New players have arrived in two varieties, says Francisco Fernandez, CEO at Avaloq (pictured). “On the one hand, they are FinTech companies, such as robo-advisers, online wealth advisers, online traders, algotraders or other investment platforms, such as Nutmeg or eToro.” On the other hand, you see “bankers who started out in incumbent banks [and are now] founding new lean banks or wealth management firms that take advantage of technical banking Infrastructure-as-a-Service.”
“In our view the new entrants to the wealth management market vary depending on geography,” says Nicholas Hacking, Director for Sales at ERI Bancaire. “In some parts of the world there are regional or local banks who are now choosing to address this segment, whereas in other geographies we see more startups and/or FinTechs having an impact on the overall market dynamic.”
P rivate banking and wealth management, for so long a tortoise-like, change-reluctant segment, is
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“Many incumbent solutions are based on hard-coded software that requires on-site installation and frequent updates,” says Mark Trousdale, Executive Vice President and Chief Marketing Officer at InvestCloud. “These traditional solutions aren’t optimised for other devices or personalisation.” The goal for the industry should be to “replace outdated, hard-coded solutions” that “don’t scale,” are “expensive to change” and “don’t put smiles on clients’ faces.” Wealth management is a sector “waking up” to the realities and possibilities of digital.
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