According to Ernest Young, there is a gap between customer expectations and the performance of traditional wealth management institutions. This offers a perfect opportunity for fintech companies to come in and fill the gap. The increase in the use of mobile phones in carrying out business is making it easy for fintech startups to exploit areas of underinvestment and dissatisfaction. Fintech business model relies on mobile devices to meet client needs and expectations. Fintech wealth management firms leverage technology to offer customer friendly and cost effective wealth management services. Here is what fintech firms are doing to improve wealth management:
- Redefining the interface between clients and wealth managers
- Provision of increased transparency in customer service and pricing
- Introduction of innovative products
- Application of technology to meet the needs of clients
- Redefinition of existing rules of wealth management such as face to face meetings
- Offering personalized customer experience
Fintech firms are able to achieve all these because of some key technologies including:
- Mobile Computing
Mobile computing increases the productivity of client advisers through easy access to enterprise applications. The trend is to integrate mobile as a key channel that enables wealth managers to engage and advise clients at a personal level. The effect is to shift client experience from being transactional to a relationship orientation.
- Cloud Computing
Fintech firms are using cloud development platforms to drive standardization and faster development. Most notable is the use of cloud offering for non-critical and non-core services to convert large upfront capital expenditure into much smaller and ongoing operational expenditure. Browser based technologies are increasingly being employed in non-core business applications including performance management cycle, enterprise content management, and recruitment.
- Advanced Analytics
Advanced analytics provides new insights by use of client profiles supplemented by external data such as that available on social media to provide a holistic and real-time view of clients. For instance, the data may reveal major life events of a customer and help in promoting financial products that are linked to these events. Further, fintech makes it possible to enhance risk models through the application of advanced analytics to data from multiple sources. Several wealth management firms are already making substantial investments in Big Data mainly focusing on;
- Predictive analytics
- Algorithmic capabilities
- Descriptive capabilities
- Reporting and MIS capabilities
Robo-Advisors are online financial advisor programs that use cognitive computing to understand, analyse and solve problems for customers, all without using human financial planners. Globally, Robo-advisors solutions are receiving significant funding from venture capitalists. Robo-advisors platforms such as Wealthfront, Learnvest, Betterment, Personal Capital and FutureAdvisor have attracted a lot of investors over the last few years.
A study by Deloitte notes that robo-advisors will get integrated into the wealth management sector where investors who could not otherwise afford a human financial adviser will opt for robo-advisers. Similarly, those who are keen on being independent on human advisors will also seek to capitalize on robo-advisors. This is especially likely to happen with the current young generation which is entirely technology savvy.