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FST Media Leadership Insights – AI in robo-advice is coming, but just not yet

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“While AI promises to change the future of investing, the robo-advisor industry isn’t quite there yet in terms of integrating this new technology into its investment models. In fact, it may not do so for a while.”

“AI in robo-advice is coming, but just not yet, Alex Ypsilanti, Chief Executive Officer, Quantifeed”

Published by FST Media, 21/11/2016

Could artificial intelligence, AI, outperform humans when it comes to investing? This is a question on the minds of many in the finance sector right now. But while AI promises to change the future of investing, the robo-advisor industry isn’t quite there yet in terms of integrating this new technology into its investment models. In fact, it may not do so for a while.

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Industry Moves – Q&A with Quantifeed’s Senior Exec for Strategic Partnerships

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“Rather than disrupting, we see Fintech as enabling wealth management solutions. It allows financial institutions to enhance engagement with clients through a digital investing experience, accessible anywhere, anytime and on any device.” Quantifeed Senior Executive for Strategic Partnerships Australia, Graeme Brant

“Q&A with Quantifeed’s Senior Exec for Strategic Partnerships”

By Industry Moves, 10/11/2016

In his new role with Hong Kong-based fintech firm Quantifeed, Graeme Brant is charged with building strategic relationships with Australian financial institutions. He tells Industry Moves about his goals and growth plans for the region, and what makes Quantifeed’s offerings unique. He also names the man who taught him the importance of hard work, why he prefers the term ‘enable’ over ‘disrupt’, and shares a lesson in never taking nature for granted.

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A Digital Roadmap to Reaching Life Goals

I always found jogging dull. But a little app on my phone has changed that. It is called “Zombies, run!” and simulates a pack of hungry zombies chasing me during my run through the deep dark forest. The app creates a whole new experience: I find jogging much more engaging – and I also run a bit faster.

What virtual zombies can do for a runner, digital wealth management might be able to do for the mass affluent that lack personal advice. Creating an engaging and stimulating experience, and accompanying the customer through her investment journey.

A good example of how such a piece of technology can help is when considering the process of investing in life goals. Customers often save for specific near-term or long-term goals. We all save for retirement. In addition, some people might save for a holiday, a car or a home. Education, too, can be a worthwhile goal saving for. There are many examples.

Digital wealth management can offer a tool to the customer to understand the funding needs and time horizon of her financial ambition. However, simply putting money into a savings account might not accumulate enough money to reach the goals within the desired timeframe – especially in times of record low interest rates. We cannot save ourselves to prosperity, we need to invest. But how?

Common wisdom recommends more equity at the beginning of the period and a gradual shift into bonds towards the target date – without much more specifics than that. However, technology takes a step further and specifically quantifies the optimal asset mix and the risk of not reaching the goal (shortfall risk). While sophisticated Monte-Carlo simulations run in the background, the customer is guided through a friendly and engaging user interface to intuitively understand the dynamics involved in asset accumulation through investing.

Once parameters, like initial and monthly contribution and goal horizon, have been decided on, the plan is put into action seamlessly. At the push of a button the customer can make an initial investment on the same platform. And that is not the end of the story.

Interaction takes place over time: once an initial investment is made, and regular contributions are made, the customer can check her progress. What if a few payments are missed, or what if markets drop sharply? The goal-based investment tool may present the customer with different options on how to get back on track. Be it higher contributions, a longer time horizon, or an investment with a higher risk/return profile. Again, changes to the allocation can be implemented directly on the platform. This interaction is an experience, and a journey that a financial institution can take with its client towards a financial goal.

Of course, a human advisor can interact and offer good advice too. But he cannot scale across hundreds of thousands of clients with accounts too small to warrant a sustainable relationship. A human could not provide the appropriate level of attention to each customer, and react in time when change is necessary. Only a digital wealth management platform provides the stability needed for an ongoing profitable relationship. A prospective customer with the intention to invest in a life goal represents an opportunity for the financial institution to successfully convert a banking relationship into a long-term wealth management relationship. A relationship that can be profitable for both parties.

To learn more about how goal-based investing can enhance the wealth management experience of your customers, contact sales@quantifeed.com.

Fintechnews.hk – Top 12 Fintech Startups in Hong Kong

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“Top 12 Fintech Startups in Hong Kong”

By Fintech News Hong Kong, 04/11/2016

Hong Kong’s long-established financial center, burgeoning startup scene and developed business center connecting Mainland China with global markets, have made the location one of the world’s top fintech hubs in world.

Today, we take a look at some of Hong Kong’s hottest fintech startups.

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Money Management – Quantifeed makes HK and Australian appointments

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“Quantifeed makes HK and Australian appointments”

By Staff Writer, 2/11/2016

Hong Kong-based digital wealth management solutions provider, Quantifeed, has announced a number of senior appointments in both Hong Kong and Australia, including chief operating officer and chief financial officer, as part of a regional expansion.

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CFO Innovation – Quantifeed Appoints Audrey Wong as COO and CFO

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“Quantifeed Appoints Audrey Wong as COO and CFO”

By CFO Innovation Asia Staff Writer, 01/11/2016

Quantifeed, a provider of digital wealth management solutions in Asia Pacific, has appointed Audrey Wong in the combined role of Chief Operating Officer and Chief Financial Officer, alongside several other key senior hires in Hong Kong and Australia.

The Hong Kong based company is moving ahead with regional expansion after announcing successful completion of a US$4.5 million Series A round in July.

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Quantifeed makes key hires from leading banks as expansion in Asia Pacific continues

HONG KONG, Nov. 1, 2016 /PRNewswire/ — Quantifeed, a leading provider of digital wealth management solutions in Asia Pacific, today announced the appointment of Audrey Wong in the combined role of Chief Operating Officer and Chief Financial Officer, alongside several other key senior hires in Hong Kong and Australia. The Hong Kong based company is moving ahead with regional expansion after announcing successful completion of a US$4.5 million Series A round in July.

Audrey Wong brings strong financial and operational experience, coming from Bank of America Merrill Lynch, where she was COO of Asia Pacific Equities in Hong Kong. Her career spans more than 15 years in the investment banking sector, including roles as CFO and COO.

“I’m delighted to be joining a fast-growing FinTech company that has already established a strong reputation and track record in the region,” said Ms Wong. “As the company grows across Asia Pacific, I will be focusing on working with the management team to deliver on Quantifeed’s business strategy, and achieving growth in a sustainable way.”

Quantifeed’s technology is rapidly gaining traction among financial institutions who are looking to offer an enhanced online wealth management experience for their customers and advisors via robo-advice. The company’s highly scalable digital solution for financial institutions, has been designed to integrate with existing systems, reducing the time and cost of implementing new technology for corporate clients. The platform offers automated investing functions based on life goals, risk assessment and investment themes for consumers and wealth advisors.

Key appointments also include

Graeme Brant, based in Sydney, is Senior Executive for Strategic Partnerships and drives the company’s business in Australia. Graeme brings strong expertise in investment products and distribution to institutional, high net worth, and retail investors. Graeme’s career in financial services covers over 20 years, with senior posts at Merrill Lynch and Macquarie Bank;

Dominic Chan, based in Hong Kong, will be joining by year end as a Senior Executive for Strategic Partnerships responsible for distribution in North Asia. He has over 16 years of experience from leading financial institutions including Standard Chartered Bank and JP Morgan; and,

Chi-Leung Fung, based in Hong Kong, is Senior Developer of Operations. Chi-Leung, a former Director at Bank of America Merrill Lynch, brings expertise in platform engineering and technology in electronic trading and derivatives.

“These hires demonstrate the company’s commitment to helping wealth management businesses in Asia execute their strategy in a digital world,” said Alex Ypsilanti, CEO and co-founder of Quantifeed. “We are tremendously fortunate to have people of this caliber on the team. They will be instrumental in helping us grow and scale our business across Asia.”

About Quantifeed
Quantifeed’s automated investment platform allows financial institutions to offer advisors and customers a digital wealth management experience under their own brand. Quantifeed’s software and financial models provides banks, brokers and wealth planners with a configurable solution to suit their wealth management objectives. Firms can reach hundreds of thousands of consumers quickly and economically. The platform holds portfolios of stocks, funds and other asset classes across all major global markets. Investing solutions can be based on risk assessment, life goals and thematic ideas. Quantifeed offers a library of portfolios for asset allocation, thematic investments and other trading strategies.

The company was founded by former investment banking executives Alex Ypsilanti, CEO, and Ross Milward, CTO, in Hong Kong in 2013.

eFinancialCareers – Eight former Hong Kong bankers now making their mark in fintech

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“Ypsilanti is somewhat of a fintech pioneer in Hong Kong – he entered the sector back in 2012”

“Eight former Hong Kong bankers now making their mark in Fintech”

By Simon Mortlock, 31/10/2016

Hong Kong is trying to boost its credentials as a fintech centre. The city’s regulator is liberalising its approach to monitoring the industry, while global and local tech firms are expanding.

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Robo-advisors: Disciplined but Not Intelligent (Just Yet)

Einstein dies and goes to heaven only to be informed that his room is not yet ready. “I hope you will not mind waiting in a dormitory and you will have to share the room with others” he is told by the doorman. “See, here is your first roommate. He has an IQ of 180!” – “Why that’s wonderful!”, says Albert. “We can discuss relativity theory!” “And here is your second roommate. His IQ is 120!” – “Why that’s wonderful!”, says Albert. “We can play Go!” “And here is your third roommate. His IQ is 80!” – “Why that’s wonderful!”, says Albert. “Say, where do you think the market is headed?”

Excelling at investment strategy would seem to be a low bar for an artificially intelligent machine: Earlier this year, a machine trained by deep learning beat Lee Sedol, one of the world’s best and most experienced players, at the ancient board game Go. Yet, digital wealth managers, or robo-advisors, are not beating humans at the investment strategy game; they are not even playing. And here is why:

Today’s digital wealth management solutions are based on the same investment principles and models used for the past three decades. 21th century technology is using 20th century concepts to decide on asset allocation and portfolio diversification. And there is nothing wrong with that – those models are based on timeless insights. Technological advance can refine them and bring more computing power to the table but the core concepts remain the same. It is telling that Wealthfront, a leading digital wealth manager, has Burton G. Malkiel serve as its chief investment officer. Dr. Malkiel is an 84 year old finance professor, best known for his book “A random walk down wall street”, first published in 1973.

So, if not in investment strategy, where did the digital revolution take place in wealth management?

Technology has made it possible to efficiently roll out portfolio management solutions to a large number of accounts. This brought down cost, resulting in low fees and a reduced minimum deposit requirement. Thus wealth management can be delivered to a client segment that did not have access to such services under traditional wealth management offerings.

In addition, cleverly designed investment tools and easy-to-use interfaces create a user experience rivalling and even surpassing that of a human advisor. What the ATM has done for bank branches and online banking to off-line money transfer is now being done for wealth management: a service that’s available anytime, anyplace and on any device. And while risk tolerance questionnaires, low cost diversified investments, such as ETFs, and immediate market access through online brokers have existed for at least a decade – it is only with digital wealth managers that all these elements are integrated on a single platform.

There is another area in which robo-advisors can outperform a human investment manager: digital wealth managers rely on rules-driven investment decisions, governed by mathematical formulae and quantitative criteria. While a human advisor consults similar models, automation brings discipline to the table. Human bias is taken out of the equation and decisions are consistent and unemotional. Nobel-prize winning psychologist Daniel Kahneman notes in his book ‘Thinking, fast and slow’  that, in general, formulae trump human judgement. And digital wealth managers rely on formulae.

Low cost, an integrated user experience and discipline are forecasted to attract up to US$ 300Bn* in assets by the end of the year to firms such as Betterment, Wealthfront, Motif and Personal Capital. This success lays the ground for further sustained technological advance in the sector. Digital wealth managers are already beginning to experiment with the application of artificial intelligence (AI) to their marketing (if not their investment) strategy. Salesforce already applies AI to customer relationship management. Their product is called Einstein.

*Source: AT Kearney

 

 

 

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