The WEALTHTECH Book

FinTech Disruption Across the Wealth Management Value Chain – Will FinTech Dominate the Wealth Management Model of the Future or is there Still a Place for Traditional Wealth Managers?

By Boudewijn Chalmers Hoynck van Papendrecht¹

Senior Manager, EY

Wealth management is one of the few segments of the financial services sector that, to date, has been relatively unscathed by digital disruption. In contrast, banks have led the digital transformation charge, spurred on by customer expectations of greater convenience in their often daily financial transactions. Meanwhile wealth management, with its lower-frequency, more discretionary customer contact – and an older customer demographic – has retained many analogue processes.

The lower levels of innovation can also be attributed to the scattered nature of the wealth management value chain. Owning all aspects of the B2C value chain, banks have been more vulnerable to disruption with new, digitally enabled entrants picking off prize elements of the chain, such as loans or payments. In wealth management, multiple players tend to own specific parts of a B2C chain, making these markets more complex and less attractive. For example, in superannuation, incumbent players include trustees, investment managers, custodians, super administrators and insurers, leaving few toeholds for would-be entrants.

With less of an imperative to change, while other industries have invested in digitizing legacy systems, the wealth management industry has had ...