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Wednesday, January 17, 2018

Future of Fintech Platforms: Innovation and Disruption

The latest global fintech market study shows that the insurance segment will drive revenues for platform providers, which is the largest proportion of revenues in 2018. This is based on the vast potential for digital distribution within the traditional insurer industry.

That said, wealth management will also grow rapidly, based on the increasing popularity of intelligent software agents called 'robo-advisors'. As the underlying technology improves, roboadvisors will become increasingly autonomous.

Roboadvisor Market Development

The new study from Juniper Research found that roboadvisor platform revenues will reach $25 billion by 2022 -- that's up from an estimated $1.7 billion in 2017, as the automation of wealth management revolutionizes the way individuals invest.

Their research discovered that roboadvisors will make investments more compelling to high net worth individuals and lower income individuals, with average fees estimated as low as 0.6 percent of assets under management in 2022, with disruption from new players such as Moneybox and Nutmeg.

Roboadvisors are broadening the appeal of the wealth management market, with their delivery method via intuitive smartphone apps making the investment process far more convenient, offering a compelling reason for millennials to invest.


The Juniper study found that this will drive total assets under management by roboadvisors upwards twelve-fold, to $4.1 trillion in 2022, from an estimated $330 billion in 2017. Juniper predicted that roboadvisors will become increasingly more automated over time, as artificial intelligence and machine learning based approaches mature.

"The technologies powering roboadvisors will mature to such an extent that they move from their current human supervised role to being utilised in a fully automated way. This will be aided by track records of performance automated roboadvisor systems are establishing," said Nick Maynard, research analyst at Juniper Research.

Outlook for Fintech Innovation and Disruption

While new entrants are disrupting the market, traditional wealth management players are also adopting new technologies to evolve their business models.

Providers such as BlackRock and Aberdeen Asset Management have invested in roboadvisor start-ups, such as Scalable Capital, FutureAdvisor and Parmenion. The appeal of these technologies is clear to established players, as automated systems will enable significant cost reductions and therefore increase their overall quality of service and profitability.