By FINTECH Books Contributor, Peter Guy
It’s not fanciful to say that the entire meaning of wealth management and private banking services is being turned upside down by technology that offers unprecedented access to data and information, and increasingly efficient means of delivering advice out of a growing array of complex inputs.
Regulatory changes and new technologies such as artificial intelligence have altered competition in everything from payment processing to asset management. Financial institutions are already shifting some activities from the conventional banking system to non-bank platforms. This has led to the emergence of a class of “shadow banks”, such as peer-to-peer lenders and robo-advisors for wealth management. Traditional lines between products and services have been blurred.
Technology has surfaced as an enabler, lowering barriers to entry so new institutions can challenge large private banks. Big data analytics and new distribution channels have allowed technology start-ups to disrupt traditional banks. The greatest disruption has occurred in the consumer lending space. But the effect of these twin forces is altering the landscape in private banking and high-net-worth wealth management as well.
Major bank technologists explore the disintermediation inflicted by technology and how it has affected wealth management in unpredictable ways. Although retail banking only has a distant relationship with wealth management and private banking, what is occurring can be described as ‘modularisation of supply’, meaning each customer has their own delivery channel (smartphones, for example), potentially allowing them to demand products and services that are perfectly suited to their needs.
Increasing digital capability and availability is taking out once-essential aspects of wealth management. Clients are shifting.
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