Executive Summary

Many industries have already been transformed by digitization. Among the most prominent examples are the media or the music industry. Just as with those, the banking industry deals with information as the primary “good” delivered to customers. Thus, a networked customer equipped with technology is the starting point of all future developments. This leads to a fundamental shift from the providers to the customers – who will benefit from this development, as they will get more banking for less money. But there will also be changes on the provider side, driven by new technologies like cryptocurrencies, blockchain, artificial intelligence, etc. While many are still sceptical about cryptocurrencies, for example, we will soon see new application areas in cross-country trading or central banks issuing their own currencies as digital coins. This leads to new questions regarding security, etc. But does this mean that we can expect a new financial order? Four drivers might spur this development in the future:

• First, the emerging peer-to-peer economy will lead to a fundamental change in how economies work in the future. This peer-to-peer economy is not only characterized by transactions among peers, but also has an increasing impact on the existing digital infrastructures. First examples are AKASHA’s peer-to-peer social networking platform or Sharetribe’s peer-to-peer service marketplace. They all have in common that they are not built on centralized digital platforms like Google or Facebook.
• Second, from a technical point of view, the internet developed from the “internet of information” to the “internet of services”, and is currently taking another step towards the “internet of values”. While the first phase covered the standardization and exchange of information with the Hypertext Transfer Protocol (HTTP) and the Hypertext Markup Language (HTML), the second phase focused on standards like the Simple Object Access Protocol (SOAP). The third phase now focuses on standards around blockchain, digital payments and other areas for the exchange of value.
• Third, the development of cryptocurrencies has led to a new possibility to exchange “money” among individuals (peer-to-peer) who do not necessarily know and trust each other. Among the examples are bitcoin or ether. These cryptocurrencies all have the advantage that they provide a standard for exchanging money across country borders in almost real time, without the limitations of the existing financial infrastructures that require currency exchange platforms and banks.
• Fourth, many national regulators started to decrease hurdles for FinTech start-ups, and their solutions might lead to a deregulation of this market. Examples are London, Hong Kong, Singapore and Switzerland. All these countries, for example, introduced so-called regulatory sandboxes, where start-ups can test innovative solutions in a protected area.

All these changes together will lead to new, globally connected cross-industry ecosystems. The question is still open as to whether the large technology companies like Apple, Google, Amazon, etc. will take a big part in this. China for example, with its large technology companies Ant Financial and Tencent as the dominant players, is driving this change to a new scale. This will force both WealthTech start-ups and the incumbents to reposition themselves along the value chain. In addition, regulation will play an important role nationally and globally to enable this new financial system. To do all this, companies, regulators and all other involved stakeholders will need new development “tools”. The ideas, frameworks and models presented in this part will support this challenge: “The best way to predict your future is to create it” (Abraham Lincoln).

In summary, this part focuses on how the future of the global investment management industry and WealthTech may look from different angles.