Jon Dawson, Manager, haysmacintrye for The Fintech Times.
What technologies have the biggest potential to improve asset and wealth management industries? (data analytics and automation of asset allocation, areas typically associated with “robo advisors” etc)
As with professional services, wealth management is a people-led industry where quality relationships, expertise and trust command a high premium. Artificial intelligence in the form of robo-advisers, algorithmic trading and smart asset allocation represents a significant opportunity for businesses in this sphere to enhance their product offering, and should not be seen as a threat.
These new technologies and their applications have the potential to offer increasingly sophisticated investment products to consumers at a lower cost base than currently available active portfolios and can also be marketed as being lower-risk, having removed human judgement and error from the equation; a very attractive proposition.
The result of this is that previously exclusive products aimed at high net worth and sophisticated investors can be rolled out to a far wider base.
Where does this leave the industry of the future?
Certainly, lower quality offerings will be squeezed out with a concentration high quality (and likely larger) players remaining. Those incumbents looking to succeed in a post-AI environment will embrace the opportunities technology offers while continuing to demonstrate they possess those same qualities that have always been the fundamental to success: quality relationships and excellent client interaction and above all, trustworthiness.
Will ICOs disrupt the angel investor model?
ICOs are likely to open the world of angel investing to a broader range of individuals who may not have necessarily had the appetite to invest under the more traditional model. The opportunities for existing angel investors are likely to continue to exist but we expect, similarly to the way crowdfunding broadened the landscape for companies to access capital, ICOs will be another route to funding that companies will consider. Notably, the regime is currently relatively unregulated, again not dissimilar to the way crowdfunding started, and we expect this will change in the near future; although the task is likely to be much more complicated than for crowd funding due to the global platform of ICO’s. We expect increased regulation will help in developing the perception in this new source of funding and will possibly lead to more interest from institutional investors.