It comes with little surprise that Asia continues to lead the way in the adoption and innovation of fintech solutions. After all, regulators in the region tend to be a little less draconian than some of their Western counterparts, and the infrastructure, especially in banking, is generally less burdened with the legacy systems that often encumber their global peers.
For Russell Andrews, Head of Solutions UK, Europe & Asia, Asset Management Distribution at SEI, when comparing Asia and Europe, the gulf between how technology is developed and—more crucially—consumed in wealth management remains prevalent.
A relatively stark cultural difference exists in how European markets, especially the British, and Asian markets behave when it comes to their wealth. For example, in the UK it remains taboo to discuss—even within families—income, the value of investments and debt, and the success of any investment plan. Conversely, in Asia wealth is approached in a more competitive, even sport-like way, with a growing community of wealthy individuals openly aiming to outsmart their peers.
How does this cultural difference influence the two regions’ tech agendas?
Firstly, we can look at how culture is driving a different kind of advice model. For a number of years, the European advice market has been evolving to become more holistic in nature, with greater emphasis on overall financial well-being. We have seen this first hand with the continued expansion of behavioural science-led advice processes and goals-based investing.
Compare this to the core Asian markets and what you’ll find is a continued focus on return generation through high conviction and high turnover security (or sector-level trading) and less focus on dedicated goal achievement through long-term well-diversified global portfolios.
When we distil this down into technology strategies, we’re left with a fundamental difference in focus and value.
The role of technology is to better equip advisers to change the nature of the client relationship to one of client advocacy, enabled through tools and methods of creating empathy, as well as understanding a client’s situation, pains and gains. The adviser should use data to further analyse the client’s health and wealth prospects in a way they cannot even foresee and to curate a personalised long-term investment solution that can deliver both the experience and outcome that the client is seeking.
Switch to an Asian focus, and technology is much more about offering seamless access to all corners of the markets, whether that’s traditional, alternatives, physical or digital. Like in the West, data and artificial intelligence play large parts; however, this time the focus is more towards investment analysis and investment idea generation. Both markets are using more and more gamification aspects in their technology solutions, but again, they serve a different purpose. In Europe, it is typically intended to mitigate traditional human biases and drive next-best actions. Whereas in Asia, it’s a more puritan focus on creating a gamified experience, playing on the competitiveness of the audience.
There are of course some common areas that span both markets, such as how technology is being deployed to deepen engagement between clients and their wealth, enhance investors’ financial education and meet the new expected standards of “always being on”, omni-channel delivery and “meet me where I am”.
How do WealthTechs satisfy both markets?
For some, the answer is that they cannot, so tech builders must pick a lane and run down it. To others who have the resources to run two separate value propositions and development strategies, it’s a no-brainer as the markets individually offer sufficient opportunity to justify the effort and inevitable expense of going after both.
The other approach is potentially one of patience, especially for those WealthTechs going from West to East.
While the cultural difference is unlikely to change materially anytime soon, and the market infrastructure in Asia does offer different possibilities, there is likely to be shift towards the holistic client-centric approach at some stage, or at least some form of hybrid model.
Wealth in Asia is big and growing fast, but it’s also relatively young from an investment perspective and will inevitably mature in the future, as will the regulatory landscape. So it is key to remain true to what you believe, consistent with what you can deliver, and if you can, stay patient and help shape the future rather than following the herd and risk becoming a casualty of timing.