#Roboadvisor #Betterment is not interested in having its own national #bank #charter, Bank Innovation has learned. Last week, alongside the endorsement of the US Treasury, the OCC was finally opened the application process for fintechs seeking a special national banking charter. The one major stipulation from the Treasury was that the charter only be open […]
Bank Innovation
EXCLUSIVE- #Cryptocurrency is not having a great year. And while many institutions (including big #banks) have distanced themselves from the phenomenon, roboadvisors in the country remain divided in their opinion on cryptocurrency as an investment. Take New York-based financial adviser Betterment, for instance. The company’s CEO Jon Stein told Bank Innovation that while he is […]
Bank Innovation
EXCLUSIVE- Royal Bank of Scotland becomes the #first bank in the U.K. to go live with an #investment #robo-advisor under its #NatWest Bank brand, RBS said in a release today. Starting today, the digital service is available to NatWest Bank’s five million customers #through NatWest #Invests‘ platform online. Since the tool is geared towards “customers […]
Bank Innovation
Alternative investing service NSR #Invest will combine with roboadvisory #LendingRobot to form a new #roboadvisor platform in the alternative lending space, the companies said today. “The two companies were formed with very similar services in mind,” Bo Brustkern, CEO of NSR Invest, told Bank Innovation. “NSR was a tool for the more sophisticated investor, the […]
Bank Innovation
#Robo-advisors are coming, just in time for the next generation. #Morgan Stanley is launching its own robo service in the fall of this year, as a way to more directly benefit its clients, the incumbent recently announced. The service is geared more towards the coming wave of consumers than the current, according to Andy Saperstein, […]
Bank Innovation
#Hedgeable, the #roboadvisor geared to you-know-who, is expanding its target audience to #small businesses. The nation’s biggest generation– yes, it&8217;s millennials again — wasn&8217;t big enough. Hedgeable isn&8217;t the only #startup looking beyond millennials and consumers in general to pitch its wares. In the past decade, many fintechs in wealthRead More
Bank Innovation
Over the years, there have been many quants and poets who tried to define the term ‘#robo advice’, and so why not add our small version too to the list. Our version goes like this…..Any automated investing or financial planning solution that takes into account client’s personal circumstances and delivers suitable and appropriate guidance to help them achieve their life’s financial goals….we would happily call them all roboadvisors. And we are not afraid to use the word “#Robo Advisor” on our website, although we would prefer ‘Automated Investing and Planning’.
We believe delivering automated digital client centric solutions and not being too product focussed is the way to move forward, and we think this strategy will become the norm for all retail focussed financial services firms in the future. Assuming you are with us on that belief, let us try and give you our version of how to launch your own client centric robo-advisor. Firms can move forward in any of the following ways:
Building Solutions In-house
Firms such as BMO, Charles Schwab and Vanguard launched their own robo advisor platforms by building the solution in-house. However, most firms usually take longer time to #build competitive digital products primarily due to the arduous internal processes. Efficient companies build solutions in-house preserving IP but companies are vulnerable to operational risks of failure and taking long time to get to market.
In our view, all Tier 1 firms start with this thought process, and quickly realise the various bottlenecks associated with such deliverables. Moreover, it is often found that company’s culture stifles innovation making it difficult to stay competitive and to stay in tune with customer trends. To keep up with the changing customer trends, companies should launch digital propositions at a faster pace. Firms usually have limited know-how to move forward at that pace and hence require the talent, #technology, and capabilities of the #FinTech firms, which they have recognised now.
Buying Innovative Start-ups
Larger Institutions have numerous products and offerings across digital channels. Acquiring another FinTech firm allows firms to innovate their digital journeys and definitely give a quick leg up against the competition. In the last few months, we have seen numerous acquisitions in the robo advisory space – Invesco acquired Jemstep, Blackrock acquired FutureAdvisor, Envestnet acquired Upside, enabling these institutions to deliver client centric advice in an innovative way. All these startups that were acquired had completely different business models to each other but the suitors found value in how to use them for their needs.
Acquisitions help large institutions enter new markets with new technologies but M&A deals are very capital intensive, and post-acquisition, it is challenging to maintain the innovative culture of the acquired firm within a large organisation. Disparate company cultures are a common cause for the acquisition to not realise its full value. Having said that, some companies have started to take a partnership approach in acquisition providing necessary independence. Such partnerships help companies align their goals and work collaboratively, keeping the innovative culture intact.
Collaborating with B2B Fintech Startups
We believe incumbents partnering with B2B FinTech startups who have an open, agile and innovative culture without any conflict of business interest, enables them to go to market faster and at a fraction of the cost without losing out to their competition in this digital race. Another level of competition, often ignored by the incumbents is coming from small and innovative B2C robo advisory firms who are slowly starting to gain the trust of the customers, and it is only a matter of time for these small ones to become part of the trusted establishment. Once these small start-ups reach that stage, it would be hard to stop them, and the ones who refuse to transform their strategy in this digital age would be on a downhill path.
Institutions large and small can and should leverage the capabilities and technologies of Fintech firms to gain competitive advantage, stay relevant, and to reaccelerate growth across segments. These days the API driven seamlessly integrating propositions enable institutions to quickly bring a superior proposition, and one that helps to serve and retain clients providing them with the best of the digital experience.
At WealthObjects, we think its best to collaborate with B2B Fintech firms, understand each ones role in the relationship, and respect each other’s strengths. Only partnerships where both firms create addition value and share together in the growth story are the ones that will be truly successful in the long term. What we are suggesting is not new; in fact all along firms have been collaborating in various forms such as a supplier, investor, or joint venture relationships.
So why stop now, especially when the need for collaboration is greater than ever, when the entire financial services sector’s unbundling and disintermediation process has started, and when all existing business models are on the verge of or are already being disrupted.
Let’s start to collaborate and create more value together!
WealthObjects is named among the top 100 European FinTech companies 2016!
WealthObjects offers B2B2C digital robo advisory, and engagement platform for Wealth Managers, Retail #Banks, Private Banks, and Investment firms. We help firms launch a bespoke next generation digital or hybrid digital wealth or investment manager or enhance their current offering quickly and at a fraction of the cost using our customisable modular platform.
Our aim is to be ‘the Custom Cloud-based Open Architecture for Wealth and Investing Technologies’. Our purpose is ‘Taking Wealth Digital’.
Source: http://wealthobjects.com/blog/launch-your-own-robo-advisor/
Much like vegetables, we should all be concerned with the Kind of #Data and the Quality of Data. Choices of data (and veggies) abound and we need to pick the appropriate set-combo. Quality of Data is a more complex issue that troubles mostly risk managers and regulators but should alsoRead More
Bank Innovation
I have visited quite a few #innovation centres at #banks, accelerators, labs and #FinTech startup offices: from the highest floors of mighty skyscrapers in Manhattan, to the folksiest office spaces in suburban warehouses. Everywhere I met enthusiasm, imagination, desire, hard work and openness to discuss global trends and detect:
There are two major yet antithetic drivers that turn new FinTech ventures into successful businesses (hopefully unicorns): PERSONALISATION and COMMODITISATION.
Yet, as I sat down today at my own kitchen table to write this post, I serendipitously spotted a share by Richard Joye which appeared on The Verge: “How Silicon Valley helps spread the same sterile aesthetic across the world“. Indeed I faltered and thought how true it is!
So do not expect many more insights about innovation, disruption and digital trends in the remaining of this article. We are going to talk a bit about casa, moda and buona tavola in the world of startups! Notwithstanding so much travel, speaking at more than 30 banking and FinTech conferences a year … and living in Germany … I remain Italian, born in Milan … and I have a weak for dolce vita stereotypes: design, fashion and food.
Here three summer recommendations to all my Fintech friends:
1. IDEAS DO NOT COME OUT OF THE FRIDGE
I happened to visit innovation labs at established banking institutions, and walk through rigorously decorated corridors just to feel amazed like Alice in the wonderland by crossing the last door, and find myself in front of super designed kitchens, see people playing table tennis, hear the latest lyrics of Taylor Swift (I know, Millennials account for almost 70% of Spotify clients).
True say, Bill Gates made his first Microsoft steps in a garage, Zuckerberg and fellow roommates in their dormitory kitchen at Hayward University. I also do most of my work as #book author in unusual places, like airplanes, my kitchen, the corner table of the Turkish bar which recently opened at the end of the street where I live. However, watch out! The FinTech world can be self-referential in many regards, and you risk to get trapped into a mechanism of emulation instead of autonomous innovation.
Here is the first recommendation: while it is convenient to work in the kitchen, ideas don’t come out of the IKEA fridge. So be DIFFERENT as much as possible. I don’t mean different from banks (that already comes by working in the kitchen …), I mean different from mainstream FinTech and its social media loudspeakers.
2. DON’T MAKE CLOTHES, DRESS WOMEN.
I find it fascinating to speak at FinTech conferences. The parterre is usually made of 80% FinTech entrepreneurs (wearing some sort of shabby cloths) and 20% bankers (in suits but without ties). While FinTech guys tell their audiences “HEY, I AM THE NEW MILLENNIALS-MINDED BANK“, bankers try to scream loud “HEY, I AM A TECHNOLOGY COMPANY NOW“.
Truth might lay in the middle, but one thing is certain: banks are still troubled banks, and FinTech companies are still fabulous software firms trying to use new technologies to service innovative business models. Since B2C businesses and revolutions are easier dreamt than won, most FinTechs’ future might feature their institutionalisation, as banks’ partners or service providers.
Here is the second recommendation: while it is cool to wear sneakers, a good woman’s wardrobe always features a Chanel. Fashion designer Valentino famously said “I don’t make clothes, I dress women”. So do the same: do not just build a Fintech, conceive a business which comes with genuine products, good pipelines, sound business plans and key partnerships.
If cloths don’t make the Monk,
FinTech attire doesn’t make the Unicorn!
3. DON’T EAT SOCIAL MEDIA JUNK FOOD.
The digital economy makes it truly possible to scale new businesses faster than ever across international borders, however “one man’s meat is another man’s poison“. I am fascinated during my travels and business conversations to learn what can work globally, and what instead makes sense only locally.
Here my third recommendation: copy and paste Silicon valley might not be a good innovation strategy that works everywhere. Luckily enough, you can eat a decent pizza almost everywhere. However, although Starbucks is a fabulous brand, it might work in the US but has not yet successfully landed in Italy. US might be an easier B2C market for #Robo-Advisors than continental Europe, because regulation, banking infrastructure and investors behaviour are not equal across the pond.
Copy and past Silicon Valley might not always
be a good innovation strategy
Elevator’s pitch to executive search companies: should you ask what is the role of a global FinTech though leader, here is what I do …
I sell the finest FinTech Furniture, FinTech Fashion and FinTech Food!
Read more about the topic? Check on Amazon my new book “FinTech Innovation: from Robo-Advisors to Goal Based Investing and Gamification“.
[linkedinbadge URL=”https://www.linkedin.com/in/paolosironipso” connections=”off” mode=”icon” liname=”Paolo Sironi”] is IBM Thought Leader – Wealth Management FinTech Analytics
Paolo Sironi, IBM Thought Leader – Wealth Management #FinTech Analytics
According to Albert #Einstein, gravity is a property of the universe that regulates the interaction between energy, mass and spacetime. What would happen if gravity would not be there? … most likely an unregulated system!
Today’s financial markets seem just that, a universe without gravity, where Market Authorities and Central Bankers attempt to revise the risk/return forces and their time interactions within a workable model: by increasing costs of capital and strengthening fiduciary standards.
What is gravity in Wealth Management? Good Advice indeed, hence Goal Based Investing.
The Global Financial Crisis has shown that financial institutions were “defying gravity”, by interpreting the asymmetry of information inherent in the Wealth Management relationship like a marketing process centred on financial products only loosely related to actual client needs, instead of advice centred on customers&8217; goals. This transformation will differentiate successful Digital Advisors from traditional firms.
The Wealth Management universe contains three major &8220;sources of energy&8221; which must relate the one to the other: risks, returns and fees.
– The value of a financial investment (whose projection is always uncertain) should be aligned to its potential return over time;
&8211; The price of risk of a financial investment (which is derived from the estimate of the potential loss) would be what is put at stake over time;
&8211; The cost of a financial investment (made of transaction costs and fees) should be the price to pay to enter an informed financial transaction.
Way before the Global Financial Crisis, the system started to deviate from a viable equilibrium among the forces: the value of financial assets got disconnected from underlying economic conditions, exacerbated by a deluge of global liquidity (think of the consequences of Quantitative Easing); costs have been soaring for taxable investors, without being reflected in effective added value (think of active versus passive management); risks have been mis-priced leading investors to buy risky assets without understanding the underlying risks (think of sub-prime backed securities &8230; but also FinTech-like Peer to Peer lending).
Why a need to change the Wealth Management relationship and centre it on clients first? Because clients are the major mass in the Wealth Management universe and should not be neglected in modeling financial relationships!
&8211; In a product centric industry, the potential value of financial securities tend to be oversold (ever higher expected returns) to induce transactions (hence revenues).
&8211; In a client centric industry, personal ambitions tend to be cautioned to facilitate more reasonable risk management of portfolios and more realistic financial planning for the long term (hence less AUM volatility).
Nowadays, the only way to reinstate gravity is to transform Wealth Managers from product-centric marketing channels to client-centric advisory mechanisms. That is, Goal Based Investing or placing the client at centre stage.
#Robo-Advisors have sincerely made a first attempt to realign the gravitational system for they:
&8211; reduced the costs of investments;
&8211; simplified the value proposition of financial products;
&8211; exploited goals/thematics to engage clients on seemingly more personal investment decisions.
Yet, Robo-Advisors are far from being good enough mechanisms to truly personalise personal finance. Financial institutions, willing or needing to follow their path, should learn very fast to do more when digitalising their businesses, if they truly want to achieve more sustainable cost/incomes.
This is not easy, because the change is not about #technology but business models.
Albert Einstein will pardon me for the analogies.
If you want to read more about the topic, you can pre-order on Amazon my new book &8220;FinTech Innovation: from Robo-Advisors to Goal Based Investing and Gamification&8220;.
Interested in Robo Advisors? Attend Robo Advisors Congress in London this September 14. SPECIAL OFFER: Sign up now with code &8220;FTN10&8221; to get 10% discount!
This article first appeared on Linkedin Pulse
The post Paolo Sironi: &8220;Albert Einstein and My Robo-Advisor&8221; appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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