Executive Summary

WealthTech can be narrowly defined as the technology/software used to help investors make better decisions when it comes to where they should put their money. In this book we define WealthTech much more widely as the impact that technology has on the global investment and wealth management industry, including private banking and asset management. WealthTech includes known business-to-consumer (B2C) models such as crowd-funding, alternative lending and robo-advisory.¹ However, it also includes business-to-business (B2B) enterprise innovation and technologies in the areas of blockchain, artificial intelligence and big data analytics, which empower asset managers to achieve better returns at lower costs for the benefit of their customers. This part will provide you with an introduction into the future of this sector, which controls global assets of more than US$70 trillion.²

As much of the financial industry from the retail sector has started to transform, the asset management sector is now experiencing the changing tides of technology too. But this type of disruption is different from what we have seen in the past, as it is now more about FinTech partnerships and how to counter threats from new business models and tech giants. Alibaba’s four-year-old Yu’e Bao, for example, now has more than US$200 billion of assets under management and thus is the world’s biggest money market fund, overtaking JPMorgan’s U.S. government money market fund, which has US$150 billion of assets under management. Another example is WeChat, which already offers wealth management services to its clients over its platform.

WealthTech is not just for millennials, even the older generations of high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) are taking a keen interest in it. Too often, wealth management firms try to appeal to millennials using the same marketing strategies that worked on baby boomers, by relying on their brand name and email communication. This “one-size-fits-all” approach does not work. Otherwise, firms risk losing the US$30 trillion in generational wealth transfer set to occur over the next several decades. Profitability is a major concern, and 2017 has tested FinTech companies – especially in the robo-advisory space – that are relying solely on lower costs to compete. Robo-advisors will challenge existing financial advisors and private banks long-term, but to be effective, the robos have to offer both “digital services” and strong credibility. However, WealthTech does not just include robo-advisors. To help you visualize the future, this part also includes a fictional email from a CEO to his company employees highlighting how artificial intelligence (AI) will be integrated into the company. The CEO’s message reflects new organizational priorities in the company around AI, technological choices and job creation.

Summarized, in this part you will get an introduction to WealthTech, both why consumers are driving digitization in wealth management and how established businesses can respond to it with innovative solutions. Following this introduction, the second chapter focuses on digitizing client advisory and robo-advisors, the third chapter on digitizing wealth management operations, the fourth chapter on digital platforms, products and ecosystems, and the fifth chapter on blockchain applications in asset and wealth management. While these four chapters each have a focus on digitizing specific areas of wealth management, the sixth to ninth chapters refer to more general areas like founders’ success stories, enterprise innovation, global WealthTech markets and the future of WealthTech.