Renowned research house Frost & Sullivan recently released a study into the future of ‘Fintech’ in Australia. The study – Australia – Trends, Forecasts and Analysis 2015 – 2020 highlighted that wealth management solutions would continue their rise and rise to making up 35 percent of the local fintech market by 2020. This week we take a look at the results and interestingly review the wide range of wealth management solutions they have identified as being influential. The report outlined the ‘key to fintech and traditional bank success’ includes artificial intelligence-powered and, complex digital ecosystems a core part of improving customer experience and retention.
The seminal figure of artificial intelligence, Professor John McCarthy of Stanford University described artificial intelligence as “the science and engineering of making intelligent machines, especially intelligent computer programs.” He stressed that AI is however based on common sense and so with this grounded definition let’s take a look at the various ecosystems the Frost & Sullivan report identified:
Digital is the customer service nirvana for wealth managers, delivering convenient platforms and ease of use for consumers and business. Peer-to-peer networks and algorithm based investment planning are designed to deliver fast and highly cost-effective access to investment opportunities. AI in this instance can analyse customer behaviour and detect the patterns of behaviour behind fraud and other financial crimes.
AI systems with data analytics modules, algorithm-based banking with complex projection algorithms and robo-advice will become the bedrock of financial planning, significantly disrupting the sector.
They have the ability to transform the underlying data into structured information, produced tailored financial advice plans much faster than is humanly possible. The outcome will be virtual robo-advice teams replacing financial advisors.
Algorithm-based banking will enter the superannuation arena, relying on the overall size and stability of the sector to grow funds larger and faster.
‘As consumer confidence grows and the adoption of short-term lending, digital financial planning, and mobile-centric investment tools become more prevalent in the market and grow in popularity, Frost & Sullivan anticipates the Personal and Business Finance segment will significantly expand its revenue share to reach AUD 1.48 billion by 2020.’
Digital Payments & Blockchain Technology
Mobile payments, (payer and payee services) will have a resounding impact on the Australian market – in fact ANZ bank has already introduced Apple Pay digital wallet accessibility for iPhones, iPads and Apple Watch. This is expected to be a sound area of growth over the next 12-18 months. In fact the forecast is that “Apple Pay and Google Pay will revolutionise this market.”
‘Smartphone prevalence facilitates a high adoption rate for a more convenient and secure form of paying compared to physical cards or cash,’ said Saranga Sudarshan, research analyst, ICT Practice, Frost and Sullivan Australia and New Zealand.
And also newer digital technologies like blockchain and biometric analysis to improve security and connectivity for financial services will grow in popularity as financial settlements review the benefits of decentralised ledger technologies for more secure settlements. Frost & Sullivan believe blockchain will impact financial systems in late 2017 and early 2018.
Within the report, the research house identified a short list of influencers and those to watch – some may be familiar and some may not. They include Prospa, Society One, OnMarket BookBuilds, Nimble, Stockspot, Yourshare, Pocketbook, Vashwerkz, Investsmart, and TradeFloor.
Time will tell.