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The WealthTech Book
by Thomas Puschmann, Susanne Chishti
The WEALTHTECH Book
Preface
About the Editors
Acknowledgements
1: Introduction
The Augmented Investment Management Industry
Clients are Changing
Connecting Market Data and Client Data
The Fourth Epoch – The Marketplace of Wealth Management
Notes
FinTech Disruption Across the Wealth Management Value Chain – Will FinTech Dominate the Wealth Management Model of the Future or is there Still a Place for Traditional Wealth Managers?
Definition of Wealth Management
Wealth Management Value Chain
What’s Driving Disruption in the Wealth Management Industry?
Changing Customer Profile
Where is the Current FinTech Development Focused Across the Wealth Management Value Chain?
Where Will Innovation Disrupt the Wealth Management Value Chain?
How Can Existing Wealth Managers Address the FinTech Challenge?
Wealth Managers Need to Consider Partnering with FinTechs to Keep Up With the Pace of Innovation
Disruption of the Wealth Management Value Chain Has Just Started
Notes
Embracing Emerging Technology
Notes
WealthTech – Business as Unusual
The Attraction for High-Net-Worth Individuals
Collaboration with the Wealth Management Industry
Looming Danger of Becoming Obsolete
Competing Against Mutual Funds
Test of Survival for FinTech Companies
RegTech Becoming Stricter
Conclusion
Notes
Welcoming an Artificial Intelligence Robot as a Colleague
Essential Digitization in Wealth Management
Becoming Millennial-Minded is Key for WealthTech
Embrace New Technology
Realize that you Can’t Rely on your Brand’s Laurels
Notes
“To Infinity and Beyond!” – Building WealthTech Applications has Never Been Easier
“LEGO” – Enabled Bricks for Applications
So How are the “Lego” Bricks Being Put Together?
Once the “Lego” Pieces are Found, and Relationships Linked… What are the Opportunities Moving Forward? Where Can WealthTech Go Next?
Notes
2: Digitizing Client Advisory and Robo-Advisors
Ten Reasons Why Digital Wealth Management Will Become a Worldwide Market Standard
Notes
What Do Wealthy Clients Think About Digital Wealth Management?
Today’s Client Preferences
Tomorrow’s Client Preferences
Technological Affinity
Projections
Conclusions
Notes
Challenges of Digitizing Wealth Management Advisory
The Hybrid Advice Model
The Future is Now for Digital Advice
No “One Size Fits All” – Personalized Client Service and Social Selling in Wealth Management
The Era of Wealth Management /Private Client Disconnect
Starting a New Approach
There is More to Be Done in a Slowly Changing Landscape
Notes
How to Give “Sleep-Tight” Robo-Advice
Notes
How Gamification Can Attract Consumers to Sign Up
Gamification and Financial Management
Conclusion
Notes
The Counter-intuitive Reality of Robo-Advice Demographics
Millennials as a Robo-Advice Target Client Segment
Early Adopters and Baby Boomers: Certainly Not Mutually Exclusive
Online Advice Has a Value Proposition Relevant for Older Generations
The Road Ahead Provides Services Across the Demographic Spectrum
How Emerging Technologies Will Change Emerging Markets – Welcome Robo-Advisor X.0!
Robo-Advisor X.0 – Hugs and Kisses
Robo-Advisor X.0 – Mathematical Programming Problem and Optimal Solution
Robo-Advisor X.0 – Executive Officer
Summary
Notes
Presentation Technology – Enriching the Client Experience in a Physical and Virtual World
Facilitating Client Experience at Scale
Personalized Financial Content
Increasing Demand for Compliant Content
A Solution
The Future
Digital Super Powers – The Role of Artificial Intelligence in Wealth Management
Notes
Using Artificial Intelligence in Wealth Management
What is AI?
How Can AI Be Used in WM?
What About the Risks of Using AI?
Can AI Replace Human Intelligence?
Conclusion
Notes
Digital Asset Management in 2020 – Seven Theses
Robo-Advice Goes “Hybrid”
The Third Generation of Robo-Advice Gets Smarter
Robo-Advice Moves All-Finance
Specialized Robo-Advisors Will Rise
Financial Education is Increasing
Being Compliant Will Make or Break Robo-Advisor
Mass Retail Asset Management Strives for Zero Marginal Costs
Making Digital Advice Personal is as Important as Making Personal Advice Digital
Conclusion
Notes
3: Digitizing Wealth Management Operations
Digital Business Model for Wealth Management Operations as Matchmaker of Generations
Low Cost/High Value?
But What Does This Mean for Wealth Management Operations in General?
Omni-channel as the New Mantra
Beyond Systems and IT – The “Big Picture”!
Alignment of Business Perspectives
Balancing Complexity and Profitability
There is No One-Size-Fits-All Approach
Notes
How a Digital Architecture Can Lead to Tangible Business Results
Legacy Mindset Holding Us Back
And Digitization is Much More Than a Cool App
Achieving Quantifiable Business Results
Managing the Customer Life Cycle
Onboarding is Part of the Game
Digitization Benefits All Types of Customer
Ease for the Customer is Usually Easy for You
Client Service/Maintenance
Compliance and Regulators are Also Part of the Fan Base
IT as a Foundation
Identify the Utility Part of Your Business
“Backboning” Your Financial Proposition
The Personalization Pillar
The State of the Industry
The Four Pillars of Digitization
Harnessing Hyper-Personalization
Truly Personal Service
Notes
Digitizing Wealth Management
At the Blink of an Eye
Wealth Management is Already Digital
Financial Algorithms – Pillar One of Next-Level Digital Wealth Management
Automated Execution – Pillar Two of Next-Level Digital Wealth Management
Digitizing Wealth Management Progresses Rapidly
Notes
Survival of the Fittest – Cyber Resilience
Cyber Security as a Competitive Edge for Wealth Managers
Adopt a Strategy that Offers Cyber Resilience
Increase Customer Experience with Cyber Resilience
Target Your Cyber Security Investments
Put the Customer at the Centre of Your Cyber Resilience Strategy
Wealth Managers Should Learn from the Technology Firms
Notes
4: Digital Platforms, Products and Ecosystems
Wealth Management-as-a-Platform – The New Business Architecture with PSD2
Platforms are Taking Over the World
Why Banking as a Platform has Failed to Emerge
PSD2: Opening Pandora’s Box
Platform Roadmap
Conclusions
Wealth Management – Preparing for a Digital Revolution
Changing Client Behaviours
Emergence of New Technology
Emergence of Digital Platform Economy
How to Digitalize Wealth Management at Banks
Digital Financial Battlefield
Traditional Wealth Management Frameworks Under Attack
Digital Wealth Management Frameworks: New Powerful Strategic Tools
Survival in Wealth Management: Hybrid Transformation Options for Banks
Building Digital Wealth Management Frameworks: Dealing With the Complexity of Financial Markets
Three Steps to a Digital Wealth Management Framework
Keeping the “Time-to-Market” Short is Important
Key Success Factors in Gaining Market Share and Scale in Alternative Lending
Key Ingredients to Achieving Scale: TVFO
The Linking Pins and Enablers: PRVM
Interdependence Within the Ecosystem: Vulnerable to Contagion
Conclusion
Personal Financial Intelligence – AI and the Future of Money Management
Financial Forecasting and Portfolio Optimization in the 21st Century
A Very Brief History of Time and Technology
“Quant Funds”, Machine Learning and Other Trending Technologies
Supervised and Unsupervised Machine Learning
Unsupervised Machine Learning
Putting it All Together, Portfolio Sciences for the 21st Century
Notes
AI-Powered Wealth Management Products and Investment Vehicles
Complexity of the Financial Markets and Big Data
AI and Deep Learning: Adaptable and Self-Learning Capital Markets Modelling and Forecasting
Partially Versus Purely AI-Driven Investing
AI-Powered Investment Vehicles
“AI-Smart”-Beta ETFs
AI-Driven Sector (ETF) Rotation Strategies
Autonomous, Pure AI Hedge Funds and Reinforcement Learning
Plurality of Uncorrelated AI and Alternative Data-Driven Strategies
AI and the Future of Finance
Notes
Wealth Managers Can Deliver Effective Client Outcomes with a Data-Driven Investment Process
Systematization of Investment Decision-Making
Research and Data
Investment Technology and Communications
Risk Reduction
The Business Case for Gender Equality
The Case for Gender Equality
An Investment Imperative
Demand for ESG and Gender-Based Data
Methodology: Measuring the Gender Ecosystem
Setting New Standards for Gender Equality
Financial Performanceandthe Way Forward
Notes
Fiduciary Robo-Selection is Possible in a New Fund Order
Notes
5: Blockchain Applications in Asset and Wealth Management
Cryptocurrencies and Blockchain
What is “Cryptocurrency”?
What is an “Asset-Based Cryptocurrency”?
How is an Asset-Based Cryptocurrency Created?
Network Services
The Network Platform
The Wallet
The Block Explorer
Asset Supporters
Market Opportunities
Community Building
Regulatory Concerns
Token Exchange
Security Mention
Redemption Logistics
Reconciliation of Value
Conclusion
How Blockchain Drives Innovation in Asset Management
Challenges and Opportunities
New Business Model
Ecosystem of Blockchains
Adoption Stage
New Revenue Opportunities
Potential Disruptor
Exciting Times Ahead
Notes
Use Cases and Monetization Challenges of Blockchain Applications in Wealth Management
Digital Disruption in Finance via Blockchain Technology
Trust and Safety – A More Detailed Look at WM-Specific Use Cases
Challenges for Implementation and Monetization
Conclusion and Way Forward
Notes
Blockchain as a Backbone to Asset and Wealth Creation
Blockchain
Applications in Asset and Wealth Management
Blockchain as a Backbone
Blockchain Market Opportunities
Dreaming of a Ledger-Free, Globally Connected Wealth Management Industry
What is Roboblock?
Differentiating Roboblock From Other Distribution Models
Setting Up a Roboblock Network
Conclusion
Trust Arbitrage and the Future of the Wealth Manager – How Blockchain Innovations Can Crack the Code
Founding Fathers Ring the Death Knell for Autocracy with a Pen
The Story of the Firm, as Told by Economists
Blockchain Innovations Can Make the Firm Feel the Pain
Wealth Managers are Especially Vulnerable to – and Benefit from – Trust Arbitrage
Smaller Wealth Managers are Getting a Raw Deal
What If…
Predictions are Difficult, Especially About the Future
Notes
Investment and Issuance Distributed in Blockchain
Current State of Securities Practice with Pain Points
Future State of Securities Practice with Blockchain
Conclusion
6: Founders’ Success Stories
Launching MeDirect Bank as a Challenger Bank
A Good Product and Service at a Competitive Price
Partial (Re-)Bundling
Testing and Pivoting
Growth!
Client Centricity
Empowering Women Financially – The Why and the How
Why is it Important to Empower Women Financially?
Empowering Women Financially: How?
Notes
Why I Left Goldman Sachs for FinTech
Moneymeets.com – Germany’s Leading Personal Finance Management Portal
Digitization Redefines the Rules of the Game
How Two Bankers Became the Founders of a WealthTech
Wealth Management with Moneymeets
Working with Regulators
How to Scale a Successful Team
Finding “Good” Investors
WealthTech Market Germany – A Small Excursion
The 100 Trillion Dollar Market Failure
It’s Time for a Rating Platform
This Leads Us to the Question: What Do Investment Advisors and Fund Selectors Have in Common?
7: Enterprise Innovation
Just Do It! Using the Buzz Around Innovation to Empower Banks and Asset Managers
Always Strive to Generate Buzz When Promoting Your Idea Internally
Execution is the Real Game
Summary
Leveraging Corporate Innovation by Opening Banks to External Ecosystems
Definition of the Term WealthTech
Insight: The First Robo-Advisor by a Major German Bank
Corporate Innovation Accelerator as an Instrument to Enrich the Bank’s Innovation Potential
Paradigms for a Beneficial Cooperation within a Corporate Innovation Accelerator
The Need for Technical Interoperability within the Digital Banking Environment
Intrapreneurship as an Option for Accelerating Corporate Innovation Potential from Within
Conclusion
Wealth Management is Dead, Long Live Wealth Management
WealthTech Start-Up Collaboration Models
Blueprint for WealthTech Start-Up Collaboration
Future of Wealth Management in the Digital Age
Notes
8: Global Overview of WealthTech
Is the Future of WealthTech Already in China?
China, the Largest FinTech Market in the World
BAT Giant Tech Players Continue Growth by Moving to Other Markets Such as Banking
Tech Companies Also Emerge with Specific Value Propositions
Traditional Banks are Developing FinTech Solutions In-House or are Acquiring Them
The Future of Chinese FinTech
Notes
WealthTech in Latin America
What We Expect for the Evolution of FinTech and WealthTech in Latam
Why We Believe There is a Different Evolution of FinTech Activity in the Region
The Opportunity: To Grow Wealth We Need to Grow Financial Literacy First
Challenges in the Japanese Wealth Management Market – Digital Issuance and Distribution of Japanese Real-Estate Securitized Products
Japanese Financial and Real-Estate Securitization Markets
WealthTech Provides Solutions for Japan
Notes
How to Unlock WealthTech in Turkey
Notes
9: What is the Future of WealthTech?
The Networked Client
Notes
The Investment Managers of the Future are Going to be Millennials
Information Overload
Mobile and Mobility
User Experience and Digital Utility
Artificial Intelligence, Analytics and Big Data
Notes
Empowering Asset Owners and the Buy Side
The Sell Side’s Reaction to the New Era
Rest-of-Market Positioning in the New Era
Conclusion
Notes
An Industry Driven by Digital, Data and Artificial Intelligence
The Old Guard
Current Market and Innovation
The Future Will be an Industry That is Digital
The Coming Shifts
The 21st-Century Asset and Wealth Manager
New Opportunities and the Future
Notes
WealthTech – Taking Private Banking and Wealth Management Digital
The Analogue Castle of Wealth Management is Under Siege
Clients Request Tailored Solutions and “Bring Back the Fun”
Understanding the Relevant Technologies for WealthTech
Barbarians at the Gate? – The Forces of Disruption
Act Now: Strategic “Ways to Play” in WealthTech
How to Win in “High-Tech/ High-Touch”?
Final Remarks and Outlook
Notes
The Wealth Management Canvas – A Framework for Designing the WealthTech Firm of the Future
The Wealth Management Canvas
Avoiding Pitfalls Through Validation
Designing the Business Model of RoboRebalance
Concluding Remarks
Notes
The Ingredients of IKEA’s Approach for a Starry Wealth Management – Choose to Change the Competitive Arena in a Mature Sector
Stripping Out the Basic Elements
Do It Yourself and Education
Pricing
Quality, Sustainability and Risks
Credibility and Trust
Conclusions
FinTech and the Wealth Management Challenge
The Promise
Disintermediation – Always Unpredictable
Obstacles Facing WealthTech
Fintech and the Next Financial Crisis
Risk of Information Overload
When Tech Generations Collide
Cognitive Decision-Making with “Insights-as-a-Service”
How Could This Work in Practice?
Why Knowledge Digitization Will be a Norm in Investment Management
More Banking for Less Money
Back to the Future
ETFs Blaze the Trail
Pure Democratization
Undreamed-of Possibilities
How AI Will Cause Robo-Advice to Completely Outperform Human Advice
What AI Is and Why You Should Care
Real Advice – Combining Plans with Execution
New Powerful Tools in the Portfolio Manager’s Arsenal
Autonomous Execution
Explaining the Markets
Talking with Robots
Decreasing Customer Churn with Behavioural Analysis
Summary
Notes
Security in the Future of WealthTech
The General FinTech Challenge
The Technology Security Concern
The Human Capital Security Risk
The Regulation Security Risk
Conclusion
How China is Shaping WealthTech and the Future of Financial Services
The Wealth Management Opportunity in China: From HNWIs to the Mass Affluent
The Chinese Tech Dragons
Established Chinese FinTechs
Why So Successful?
Can the Same Happen in the West?
Is Data the Differentiator?
Conclusion
Notes
From the Technological to the Financial Singularity – A Journey Without Return to the Future of Finance
The Artificial Intelligence Super Explosion
When AIs Rule the Markets: The Financial Singularity
AI in Wealth Management
The Rise of the Financial Events Horizon
Notes
Welcoming the 2058 Class of the “Galactic Academy of Wealth Management”
Notes
List of Contributors
Index
EULA
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