How Has Fintech Impacted the Wealth Management Industry?
The concept of fintech appears to always be in the news at present, particularly as Brexit negotiations continue to unfold.
After months of speculation that German cities such as Berlin and Frankfurt could supersede London as the capital of fintech once the UK has extradited itself from the EU, Bank of England (BoE) chairman Mark Carney also generated headlines by claiming that British firms active in the market could soon be subjected to more stringent regulatory guidelines.
Make no mistake; fintech has impacted on every conceivable aspect of the UK financial market, including the wealth management sector. In this post, we will look at this impact in more careful detail.
Fintech and the Wealth Management Sector: A Marriage Made in Heaven
Fintech is best described as disruptive technology, as it has altered the fundamental way in which businesses and individual investors access the financial markets. If we look at contemporary fintech solutions such as crowdfunding and peer-to-peer lending, the disruptive nature of the technology has eradicated the need for traditional middlemen and offered direct access to a variety of markets, products and asset classes.
The same principle can also be applied to the wealth management sector, in which brands have leveraged increasingly complex fintech software to connect clients to domestic and international options. In this respect, established wealth management firms no longer act as direct middlemen, but they do serve as conduits that enable users to benefit from tailored and diverse portfolios.
This can include everything from international stocks to employee benefits, so long as it simplifies the wealth management process and helps clients to achieve their core financial objectives.
If this explains the general impact of fintech on the wealth management sector, we must delve deeper to identify more precise influences. Perhaps the biggest impact of fintech is that it has enabled wealth management firms to seamless access a wider range of international asset classes, providing clients with far greater scope to make their most of their capital.
This would not be possible without fintech software and technology, that has broken down many barrier to entry that once surrounded the financial marketplace as a whole.
The Last Word: How Will More Stringent Regulations Impact on the Wealth Management Sector?
On a final note, it is interesting to note how more stringent regulations (should they come into force) impact on the wealth management sector. In general terms, this could force global brands to consider relocating abroad, perhaps to Europe and whichever city begins to compete with London as a fintech hub.
More specifically, more aggressive regulatory measures could also restrict access to some of the assets accessible overseas. This would be something for service providers to watch with interest, particularly if they are required to tailor their available packages and ultimately remain compliant.