Digital Wealth management will take off in 2016. Fintechs, Financial institutions, IT firms and Regulators; will all contribute to the reshaping and acceleration of this process.
As more than 80% of our readership will be accessing my last post for 2015 from their smartphones (on the ski slopes, in another city or their hometown), I’d like to share an outline of the themes that I foresee dominating:
- Regulators will innovate to stay in business. Singapore, UK, and Australia, seem to be the most likely frontrunners.
- Regulatory risk for Fintechs will increase in 2016 in a few verticals (asset mgt, origination, private markets, Sovereignty of data). Regulating Innovation is in the 2016 Fintech constellation.
- Financial institutions and their suppliers, will be confronted with the reality that “Doing nothing is not Safe any more” (The Icarus deception).
- Fintechs will be confronted with the reality that in some verticals, they simply have to become another arm of the “monster” they set out to replace.
- Central Banks have been the least involved stakeholders in the Financial transformation underway. In 2016, they will publicly join in some lite way, as their ties with regulators tighten and citizens become even more mobile. Singapore and India, seem already leading the way.
- More Supranationals, like the Financial Innovation Now (FIN), will be born. Maybe JP Morgan will consider joining the FIN coalition by the end of 2016. Huy Nguyet Trieu elaborates on the inexorable nature this coalition.
- Micro multinationals will become more common from launch as scaling geographically but also into adjacent product/services will be vital.
- The Freeway for stock trading will become busier. Robinhood is leading the way to free online brokerage of stocks and ETFs. Online asset managers, investment advisors, social trading platforms will start integrating free brokerage into their offering.
- % of DIY investors will increase; % of passive investors will remain stable; Alpha robo-advisory will be the focus instead of Beta robo-advisory. The new norm for fees will be around 50bps, and 12bps respectively (e.g. Quantopian is one leading example the DIY space; Motif Investing in the Alpha advisory space)
- Picks and shovels & Home Depot style stores for wealth management B2B solutions, will open everywhere. We will see growth in this space as part of the scaling up sprint process (e.g. SigFig is one example; and Investcloud is another type).
- More Buy side and Sell side bridges will be built in 2016, to solve liquidity and market making problems that will become more acute (e.g. Algomi is one leader in this space).
- Conventional wealth managers will shift from experimenting with incremental innovation (PA consulting reports that roughly 2/3s of financial services globally focus on incremental innovation rather than radical) to a more strategic adaptation of the new business practices.
- IT firms wanting to move into Digital Wealth management, will become aggressive in their offering even though it may cannibalize their existing offering (e.g. Why Salesforce chose Wealth Management as first vertical market).
I look forward to elaborating on each of these themes during the upcoming year and interacting with you all on our open source research platform.
It has been a fantastic year for the Daily Fintech platform and I wish to send wishes and thanks to all those that have contributed to us developing a global and comprehensive perspective of the Financial ecosystem developments.
We look forward to growing our network and supporting the stakeholders in this evolution.
Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Efi Pylarinou is a Digital Wealth Management thought leader.
Great article Efi – there are several key themes emerging and will breakthrough in 2016. I agree with you that alpha robo solutions will prevail. After all, alpha is superior to beta. We just can’t fall into the trap of the average fund manager that calls themselves alpha, but under-performs beta.
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