Digital wealth management technology, more commonly known as robo-advisory, has enabled financial institutions everywhere to offer innovative and relevant financial services and reach underserved customers. It has encouraged more first-time investors to start their wealth journey and democratised wealth management previously only made available to HNW investors. Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. A typical robo-advisor asks questions about your financial situation and future goals through an online survey; it then uses the data to offer advice and automatically invest for you. (Source)
Revive Tech Asia 2022 Panel Discussion
On August 24, 2022, Alex Ypsilanti, Co-Founder and CEO of Quantifeed took part in a panel discussion together with Aqumon and Kristal AI at Revive Tech Asia 2022. Moderated by Arthur Shek, Managing Director of McKinsey & Company, speakers contributed to a rich discussion around major shifts in investor behaviour, their expectations from wealth managers today, and bold predictions for the future.
The session kicked off with an observation on the biggest change in investors in light of the COVID-19 pandemic. Wealth management and financial services have experienced at least some degree of digital transformation, with the masses becoming comfortable banking or receiving investment advice on the internet and mobile devices. From this, Alex noted that it is critical for financial institutions to create investment experiences that lead to loyalty and trust. “Investors want choice. The choice also needs to be given delightfully, simply, and conveniently”, he added.
Hong Kong Investors VS Other Regions
Not all investors want the same thing. Hong Kong investors differ slightly from other regions in the world. In fact, Mainland China’s wealth management landscape looks very different. Kelvin Lei, CEO and Co-Founder of Aqumon noted, “There is not much of an advisor market in Mainland China compared to the West. Robo-advisory in Mainland China is still a new concept with a low adoption rate. Chinese investors also prefer guaranteed returns from the bank”.
Alex added, “Asian consumers are not monolithic. It’s evident in our solution offering to Taiwan’s Cathay United Bank, where they prefer to invest in a way that allows them to personalise and customise their portfolio. While in Singapore, QEngine enables DBS to offer their investors simple and straightforward investment options based on their risk appetite. That has worked well for them.”
There are also differences between the East and West in the way investors like to manage their portfolios. Vivek Mohidran, Founder of Kristal AI shared, “Money in Asia was made in this generation so Asian investors tend to prefer making investment decisions themselves. They enjoy independent trading and expect higher returns from their investments. But in the West, current investors are at least in their second generation and don’t mind lower returns as long as it means they can be less hands-on”.
Will Robo-Advisors take over Wealth Managers?
The technology and intelligence behind robo-advisory has automated advice, providing relevant investment portfolios to customers, making it easy for them to make investment decisions. So what does it mean for human advisors and asset managers? The discussion panel members made it very clear that robo-advisors and wealth management platforms do not seek to replace professional advisors but aim to equip and empower them.
“We want to empower advisors our there. There will always be a need for a human relationship manager or advisor, but they can benefit from automation and more data analytics. Then advisors would have more time in the day to build their business and develop stronger relationships with their current clients”, Alex explained. He added, “The emergence of hybrid advice, the combination of digital servicing and an advisor, is something that is increasing in popularity”.
Robo-Advisors and Private Banking
Although digital wealth management benefits the mass affluent, there is certainly a place for it in Private Banks. Vivek noted that digital wealth management technology can be used to reduce the cost of delivery. Private Banks can then provide more products at a lower entry cost. The advisor will be more technologically enabled, capable of managing 100 clients instead of just the 15. Adding to that, client retention can be ensured as they’re tied to the platform and not the advisor.”
Quantifeed also serves private banks such as Thailand’s Phatra Private Bank, enabling their advisors to service more clients, scale their business, and improve productivity. Powered by QEngine, private wealth advisors can work seamlessly on a single platform and be equipped with data analytics that will help them make accurate and relevant recommendations to their clients. Read more about our Advisor-Led solution for Private Banks here.
Final Thoughts
In a nutshell, wealthtech has been a catalyst in wealth management, and is here to stay. Wealth management will never be less digital and Quantifeed looks forward to pushing the boundaries of what wealthtech can do for everyone. The panel discussion closed with Moderator Arthur Shek, asking for bold predictions for the next 5-10 years. Alex shared his final thoughts, “Although digital wealth management is still in its early stages, things are moving fast. In a few years, there will be very few differences between financial institutions and FinTechs. The different fragments of consumer banking services will eventually unify and there would be no reason why all of it cannot be accessible on a single platform.”
Thank you Revive Tech Asia 2022 for having us on this exciting panel discussion! We are excited to create more innovative wealth solutions and continue to contribute to the FinTech community of Hong Kong.