Without a doubt, China is the global leader in B2C FinTech. But Chinese innovators also stands to overturn the traditional asset and wealth management sectors, shaping the future of the industry.
Large Chinese technology firms and FinTech players have already transformed the practices of asset and wealth management. Chinese consumers now have access to hundreds of different products, many of them highly tailored, and seamlessly integrated onto smartphones. The key to their success has been a solid focus on user experience design, matched with the utilization of big data for smarter services. They understand their users far better and can use that data to comply with KYC regulations, conduct credit checks, and manage suitability and pricing. They are truly shaping the wealth management industry of the future.
While large Chinese tech firms like Ant Financial and Tencent have focused mainly on the mass market segment, others like Lufax have focused on the upper middle class. Ant Financial’s money market fund, Yu E Bao, has already more than 150 million single investors. Lufax has thousands of funds on its platform and is valued at US $19 billion, substantially more than most of the traditional wealth managers. One of the reasons for their success is that unlike the incumbents, these are first and foremost big data tech firms that just also happen to be involved in asset management industry. Incumbents players have had often no choice but to partner with these firms and use their platforms.
The same is likely to happen outside of China as well. Large tech firms like Facebook or Amazon may provide the wealth management interfaces of tomorrow. These platforms not only have direct and daily touchpoints with their customers but also hold their trust and confidence. Few of us would disagree that Facebook knows more about us (and our families, activities and interests) than the best intentioned traditional private banker.
Author: Henri Arslanian