FinTech Trends: Asset and Wealth Management

By Sebastian Brandner | April 10th, 2017
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  • In the last couple of years, the banking industry has been influenced to a large extent by innovations, often contributed by emerging fintechs. Segments such as payment, insurance and banking have been subject to major technological changes. As stated by a recent PwC analysis, however, Asset and Wealth Management (AWM) seems to be the exception to the rule. Many traditional AWM business CEOs do not consider technology as a factor with game-changing impact. They believe that at least for now AWM is not a subject to the major technological changes happening across the banking industry. Only 52 percent of CEOs in AWM think that technology will have a strong impact on how their industry will look like in the future compared to 74 percent of banking and capital market CEOs that share the same opinion. Therefore, the role of technology seems to be highly underestimated in the AWM industry. At the moment, only 30 percent of AWM businesses are actually engaging in partnerships with fintechs but one can expect that number to increase in the near future. And here is why:

    The AWM segment is not only steadily growing but also highly lucrative. In 2015, about $78.7 trillion in assets were globally managed in the AWM industry. And the projections for the future are even better: The volume of managed assets is expected to rise, mainly due to the strong economic growth in Asia.

    Although only 27 percent of CEOs in the traditional AWM business are thinking about collaborating with fintechs in the future, more and more new technology driven businesses are founded in order to reshape the industry. One of these upcoming ventures in AWM industry is FinLeap’s Elinvar which aims to provide a platform for digital AWM and is just awaiting its BaFin license. Central elements of upcoming companies in the industry are digitisation, the automation of processes and the integration of Robo Advisors. These changes will not only increase the efficiency of AWM but also revolutionise the customer experience. Customer centricity is already on its way to become a major aspect in banking and will probably be just as important in AWM.

    It took some time for many traditional financial institutions to fully realize and also accept the impact of fintechs in banking. Regarding the growth and potential of the AWM industry, it is likely that this segment will see changes quite similar to those in banking in the future. According to PwC’s Global FinTech Report 2017, these changes will primarily increase operational efficiency and innovation for analysis and research tools.

    For more insights on AWM and fintech check out the PwC’s report “Asset & Wealth Management: a new era of growth, disruption and opportunity” here.

    Sebastian Brandner