FinTech Innovation

Chapter 3The Transformation of the Supply-Side

“Silicon Valley is coming.”

—James Dimon (1956–)

The supply-demand chain of the investment management industry connects the offer-side to the demand-side of the wealth management game. The functioning of this highly regulated business requires the interaction of a variety of professional players, among which active and passive fund managers, ETF providers, platforms, discount brokers, retail and private banks, personal financial advisors, and Robo-Advisors. Roles, incentives, and modality of interaction are described, to highlight their critical challenges in today's digital world. Discerning how intermediaries make money is essential to learn how to make best use of technology and innovation to dispute or transform their business models.

3.1 Introduction

Banking, including investment management, facilitates many aspects of commerce and trade, the funding of governments and corporations, the financing of personal needs, and the settlement of all payments. Investment management relates to the origination, structuring, and management of financial assets. Personal wealth, owned by the richest few or the millions of retail bank customers is globally worth hundreds of trillions of US$ equivalent assets and contributes to most of its income. The industry targets to make profits by linking the offer-side to the demand-side: issuers of financial products (governments, financial institutions, or corporations) can access modern financial ...