Wealth management is embracing technology like never before, but nowhere is this truer than in Asia. Home-grown technology answers to long-standing problems are cracking open the industry in new ways, and traditional wealth managers should look to the region for a glimpse of how the world is changing.
Over the last two years, the pandemic has added fuel to the technology fire in Asia. As the US and Europe have started to return to normal, many parts of Asia remain under lockdown or with in-person activities heavily restricted, leaving people to rely almost completely on technology for remote access to investing, among other activities. And those in Asia have embraced mobile banking options at new rates. In the Philippines, for example, digital payments were up by more than 5,000% in 2020. In India, Mastercard
Such a digital mindset is being applied to wealth management as well. EY noted in a February blog that of global investors, Asians are the most likely to use digital solutions for wealth management. KPMG found in its 2020 CEO Outlook Survey that 81% of financial services sector CEOs believe Covid has accelerated the industry’s digital drive, including the creation of next-generation operating models.
In contrast to the West, Asia has been using Big Tech wealth offerings and digital banking platforms for some time, and “lifestyle” has become a buzzword associated with these products. South Korean internet company Kakao, for instance, has long attracted Koreans to its chat app with its adorable lineup of cartoon animals known as Kakao Friends. The company has since expanded to include Kakao Bank and Kakao Pay, and investors can even tap into Kakaopay Securities.
In China, Ant Group, an affiliate of e-commerce giant Alibaba, has an investment advisory platform that allows users to pick robo advisory services. The company has also partnered with Vanguard, as the latter tries to tap the Chinese retail market.
Global tech companies such as Google
Asian investors like the ability of these new entrants to provide ease, speed and personalized approaches to investing. Innovative apps and AI help personalize investing in a way that Asia’s digital natives want, as they seek to communicate remotely and take a more active role in their money management. The digital platforms also allow for a better quality of interactions and customer experience, leaving investors happier with the provider.
The demand for personalization is key to the development of wealth management related technology, like in the West. Investors want sophisticated options and financial advice that reflects their changing and developing needs. The region is heavily reliant on e-wallets, mobile payments and all-access apps (you’d be hard pressed to find a cab in China that takes cash) so it makes sense that there would be a clear demand for more digital options in wealth management.
This is especially true for the young and newly wealthy. As KPMG wrote in its report, the key to bringing in and keeping these investors will be to use AI, create seamless integration between banking and investing, offering insights and enhancing virtual communication and access.
While the speed of developments in Asia may seem intimidating, there are opportunities for traditional firms to play a role in the region. KPMG wrote that many wealthtech companies are offering B2B solutions, meaning that these will be potential partners and solution providers to the traditional firms, not straight competitors.
With a focus on local advisory teams and a development of local market awareness, foreign wealth managers will certainly have a role to play in the next generation of Asian wealth management. And those keeping their focus on their home markets can learn a less or two from Asia to better serve their clients in the West.
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