Reflections on last year’s WealthTech predictions

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Evaluating our predictions in wealth management from last year with a correct, incorrect, nothing material happened.

  • Regulators will innovate; SingaporeUKandAustralia, seem to be the most likely frontrunners. Correct but stronger and more global than predicted.
  • Regulatory risk for Fintechs will increase in 2016; Regulating Innovationis in the 2016 Fintech constellation. Correct (new charters) and will continue.
  • “Doing nothing is not Safe any more”(The Icarus deception). Correct (more collabs) and will continue.
  • 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. Correct 100%; we saw more collaborations and more funding to ventures with collaborations potential.
  • 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 mobileSingapore and India, seem already leading the way. Correct and this will continue.
  • More Supranationals, like the Financial Innovation Now(FIN), will be born. Correct (e.g. Google, Facebook, Microsoft, Amazon and IBM formed Partnership on AI) but the impact of these coalitions is yet to be seen.
  • Micro multinationalswill become more common from launch as scaling geographically but also into adjacent product/services will be vital. Not that strong a trend; scaling didn’t accelerate significantly due to the tough political and macro environment.
  • The Freeway for stock tradingwill 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. Correct (the Robinhood Baidu summer partnership).
  • % of DIY investorswill 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). Nothing really happened (i.e. no significant increase in DIY or major switch to alpha etc). Fintech didn’t manage to penetrate in 2016 these long engrained behavioral patterns.
  • 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. SigFigis one example; and Investcloud is another type). Correct; B2B was the name of the game in 2016 in the US and Asia (Future Advisor; Bambu).
  • More Buy side and Sell side bridgeswill 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). Incorrect prediction for the bond market. Relevant more in asset management; Goldman is leading the way and there is a long way to go.
  • Conventional wealth managers will shift from experimenting with incremental innovation (PA consulting reportsthat roughly 2/3s of financial services globally focus on incremental innovation rather than radical) to a more strategic adaptation of the new business practices. Didn’t happen; wealth managers remain the big laggards.
  • 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). Didn’t happen; we only saw microservices added.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Efi Pylarinou is a Digital Wealth Management thought leader.

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