Apple, Google & Facebook: The big threat for wealthtech?

With digital disruption the dominant trend for the wealth management industry this year, one key debate is whether start-up firms such as Nutmeg and Scalable Capital will unseat the traditional larger players such as Investec and Brooks MacDonald.

A third group of future winners in the space could however be the next group of pretenders to the throne in the form of BigTech.

That at least is the rather original prediction contained deep within the pages of Capgemini’s latest research into the industry the Capgemini 2017 World Wealth Report.

It said further major disruption is on the horizon owing to the possible entry into the wealth management space from established technology players such as Apple and Facebook, perhaps even Netflix.

These firms, already making substantial profits in a diverse variety of niches within the tech spectrum, as well as investing tens of billions in more avant-garde R&D.

Big tech firms launching into wealth management presents "a potentially more serious risk", it stated, as richer investors have high expectations of increased efficiency (64.2 per cent) and transparency (54.4 per cent) from 'BigTechs' in wealth management.

While wealth management firms are aware of the threat as 78.3 per cent see BigTech entry as certainty or strong possibility, their perceptions on the extent of the impact on industry vary widely.

Executive Vice President Anirban Bose, Head of Global Banking and Capital Markets at Capgemini, said, “With global wealth at record highs, the 2017 World Wealth Report findings are especially critical for wealth managers moving towards delivery of hybrid advice. Firms can jumpstart their hybrid journey by focusing on transformation related to people, processes, and propositions.”

The annual report tracks high net worth individuals (HNWIs), their wealth, and the global and economic conditions that drive change in the Wealth Management industry. This year’s findings are based on responses from over 2,500 high net worth individuals across 19 major wealth markets in North America, Latin America, Europe, and Asia-Pacific, the Global HNW Insights Survey explores HNWI investment behavior including asset allocation, fee models and investment preferences.

The survey also measured current HNWI investment behavioural patterns of global HNWIs, including their asset allocation, HNWI confidence levels, and asset allocation decisions.