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Would ‘Google Wealth Management’ be a threat to the industry?

HNWIs in Asia-Pacific are most likely to adopt wealth management offerings from big tech firms.

Wealth management firms are advised to not underestimate “big techs” from becoming potential competitors in the industry, according to Capgemini’s latest world wealth report.

Only 26% of wealth management executives globally surveyed by Capgemini believe that the threat of new entrants, particularly big techs, is a disruptor in the industry. Big techs are large, data-driven technology companies, such as Amazon, Apple, Facebook, Google and Alibaba, according to the report.

“Potential competition from big techs did not rank among the top disruptors, though this may be an area that requires more considerable attention,” the report said.

The report noted that high net worth individuals (HNWIs) globally are willing to consider “big tech wealth management” offerings if firms such as Google, Apple or Tencent were to offer wealth management services.

HNWIs in Asia-Pacific (ex-Japan), as well as Latin America, expressed the highest likelihood to adopt wealth management offerings from big techs. In Asia-Pacific, 93% of HNWIs surveyed by Capgemini indicated that they would consider becoming a big tech client and 98% said they may switch to a big tech firm from their primary wealth management firm.

Likelihood to adopt wealth management offerings from big techs

Source: Capgemini

The report added that globally, HNWIs expect big techs to deliver personalised information or services better than incumbent firms.

“Big techs have clearly taken a step ahead in terms of the ability to collect customer data, analyse it using algorithms and AI and use it to personalise services and product offers,” Pierre Dulon, CEO at wealth tech firm Azqore in Switzerland, said in the report.

% of global HNWIs who strongly agree that wealth management/big tech firm is more likely to provide excellent service at the touchpoint

Source: Capgemini

“As big techs gain financial services ground, wealth management firms will have little choice but to enhance digital customer engagement – quickly,” Capgemini added.

Similarly, the Boston Consultancy Group’s latest annual wealth report also noted that big techs are expected to enter the wealth management sector in the coming years, posing a threat to established advisory companies and offering customised services to investors.

According to the report, Amazon, Google and Microsoft have already built the infrastructure backbone and cloud environments for many wealth-tech firms. Meanwhile, Alibaba and Amazon are already offering a range of financial products.

“In time, their financial muscle and scale could allow them to move up the stack and provide wealth management services to affluent individuals and those in the lower HNW segment, Boston Consultancy said.

“These shifts are already happening in China, which has few incumbent wealth management players,” it added.

In Asia-Pacific, the number of HNWIs grew 7.6% to 6.5 million in 2019, with their total wealth rising 7.9% to $22trn, according to the Capgemini report.

Part of the Mark Allen Group.