FinTech Innovation

Chapter 1The Theory of Innovation: From Robo-Advisors to Goal Based Investing and Gamification

“People don't want to buy a quarter-inch drill. They want a quarter-inch hole.”

—Theodore Levitt (1925–2006)

This chapter sketches the main arguments of this book. The theory of innovation provides the framework that helps to explain why robo-technology (disruptive) and the gamification of Goal Based Investing (sustaining) sit together as key determinants of today's banking transformation. The search for personalization is the fil rouge that links the main elements of wealth management innovation. Industry decision-makers are therefore addressed with some useful action items, which allow them to tackle with clarity and rationality the challenges of robo-technology transformation.

1.1 Introduction

The history of banking is clearly the history of money, hence the history of trade which can be traced back as early as 12,500 b.c. to the usage by Anatolians of obsidian, a raw material used to build stone-age tools. But banking, as we know it today, is a more recent industry which was forged during the 12th century and early Italian Renaissance to facilitate commerce and manage personal finance for wealthy families in rich cities such as Florence, Venice, and Genoa; Monte dei Paschi di Siena being the oldest bank operating continuously since 1472. During the 17th and 18th centuries North European cities such as Amsterdam and London took the lead, fostering systemic innovations like central ...