Susanne Chishti, Fintech Circle CEO and co-editor of ‘The Fintech Book’, gives us her take on wealthtech and the opportunities with start-ups in this space.
The asset management industry is not immune to the influence of technology. The financial technology revolution within asset and wealth management – more concisely referred to as wealthtech – is driven by fintech firms that provide a more personalised user experience, commoditise existing products such as asset allocation and create new innovative services that shake up the market place.
Many investment managers believe that the good times will not continue. Over the last 20 years, inflation has been reduced, hugely benefiting global stock markets. Now, inflation is at historic low levels and cannot be reduced any further. At the same time, interest rates have fallen to record lows, which has boosted asset prices.
Going forward, interest rates will either stay flat (ie low-return world) or rise, which normally has a negative impact on equity and debt prices.
Finally, the media and regulators have been very critical on high fees levels. At the end of April 2016, even the UK’s then-Prime Minister David Cameron joined the debate on fund managers’ charges, attacking hidden fees when he said: “I think one of the things that saps people’s enthusiasm for saving in investment products is just a sense that they do not understand the fees and charges.”
This anxiety about people’s financial future combined with our ever-growing use of technology in our daily lives, has resulted in the willingness to try out new innovative investment solutions offered by fintech start-ups – not just across the UK, but globally.
‘We selected innovative fintech start-ups whose goal is not to disrupt existing players but to work with them’
At the WealthTech Practice of Fintech Circle Innovate we believe that fintech solutions have an important role to play both for servicing existing clients and, equally, for addressing segments that are currently underserved. Maintaining the high-touch client relationship while enhancing the high-tech wealth and asset management platform can enhance performance and customer loyalty.
Wealth and asset management firms have to review their internal processes and communication with clients and decide where tools provided by the fintech industry can be applied to enhance their proposition and operations. These can be client-facing tools (for example, providing more accessible information in digital formats), portfolio management tools that enhance performance, or tools providing the relationship manager with powerful solutions so that she can serve her clients more effectively.
Wealthtech start-ups to watch
As part of our WealthTech practice we selected innovative fintech start-ups whose goal is not to disrupt existing players but to work with them – forming long-term, strategic win-win partnerships. These companies follow below, in alphabetical order.
The future success of asset and wealth management firms in our evolving digitised world will depend on their ability to leverage fintech innovations to achieve better performance at lower costs combined with better customer service.
It is safest not to underestimate the seismic shift fintech will have on the global asset management industry. This sector has the opportunity now to challenge its own structures, business and revenue models to reinvent itself, fight complacency and act now to accelerate the internal pace of innovation and collaboration with the fintech ecosystem.
AlgoDynamix is an innovative risk analytics company that detects disruptive events in global financial markets and anticipates price movements, thus providing advance warning to asset managers to improve higher risk-adjusted returns.
Delio provides investment platforms that better connect a financial institution’s high net-worth clients with private market opportunities.
DriveWealth is a FINRA-registered broker-dealer that provides low-cost global retail access to the US equities market.
InvestGlass offers a robo-advisory model via an automated selling tool fully customisable for retail and private bankers. Its artificial intelligence-based solution helps professionals generate the right investment case for the right client at the right time, compliant with MiFID II.
Investivity empowers wealth managers by capturing the essence of the best funds at a fraction of their costs and allowing them to personalise for their clients’ needs.
KYC3 develops solutions using machine learning, big data and blockchain in order to transform regulatory and reputational KYC risk management.
From the flood of financial, markets and economic data, Prophis identifies those emerging developments that are most likely to have an impact on the performance of a particular portfolio and communicates them in a novel and visual way.
Quantesys identifies and interprets behavioural anomalies to enhance investors’ profit and reduce their portfolio volatility.
Tradency is a pioneering financial technology provider, focusing on B2B product development of a full-stack digital investment and trading ecosystem.
The Videodesk platform reinvents how companies sell to and service their customers by enabling experts to have rich conversations around investment products with qualified prospects.
Multi-award-winning Walnut Algorithms provides advanced machine learning and applied mathematics for absolute return quantitative investment strategies.
Susanne Chishti is the CEO of Fintech Circle, founder of London Fintech Tours, and chair of Fintech Circle Innovate. Selected as one of the 100 leading Women in FinTech and top 15 FinTech UK Twitter influencers, she was recognised in the European Digital Financial Services ‘Power 50’ 2015, an independent ranking of the most influential people in digital financial services in Europe. Chishti is the co-editor of The Fintech Book: The Financial Technology Handbook for Investors, Entrepreneurs and Visionaries (Wiley), which dedicates several chapters to fintech innovation across capital and investment.