Coming into the 2015 year-end I thought several notes would be of value relative to what I, and my colleagues, have seen this year in FinTech that warrants focus going into 2016. As a prelude, let me begin with this quote: "Remember, in a death-match, Dragons Eat Unicorns."
That said, and in no particular order:
- Blockchain will be the FinTech darling of 2016, and one of the least understood by the masses…until they buy a house using it. If you don’t know Ripple you should.
- The strategic FinTech CEO will emerge. The new CEO leaders will be the ones who horizontally integrate their organization’s respective business silos (i.e. equity trading). Watch Australia's banks for the FinTech trailblazers. Also, get familiar with Fidor ASAP.
- Australia will lead the way down a few FinTech fronts. While not a FinTech pure-play, Atlassian was just the start of the realization of how far ahead the Aussies really are in technology.
- Smart Beta will continue to grow as an asset class/category as more and more successful retail implementations occur. Here's the horse we have in the race.
- Payments will be a battle of the goliaths. Unless you have something that no one has thought of before, save your money and just sit back andwatch (literally).
- The romance of virtual advice (“Robo-advisors”) will have dramatically subsided. 2016 will witness robo consolidation, especially B2C, as VC capital dries up.
- There will be a significant uptick in B2B robo-advisor implementations. This will be due in large part to the ubiquity of APIs. Look for the brands to emerge as the B2C market leaders (i.e. Schwab, Vanguard, etc.) and for the custodians, product platforms, and BDs to implement enterprise ready solutions for their advisors.
- Picks and shovels will become sexy again in wealth management. Watch Morningstar carefully.
- Wealth management will bifurcate with premium fees associated with larger complex relationships. Conversely, fees will decline significantly for the mass affluent globally. Look to 0.50% as the new “norm”. Models like the USA’s XY Planning Network should proliferate globally as the profession standardizes around planning services and pricing.
- There will be substantial consolidation of smaller US based RIAs (sub $100 million) due to higher year-over-year regulatory costs
- Look for the “Uber of financial advisors” to emerge. Not in the USA, but Australia (I cannot share/link this company due to our NDA).
- Free trading, and its availability will become the norm in 2016.Lead horse? Robinhood. Following this activity, we expect to see a re-birth of social trading and its associated data. (FYI: Several social trading platforms are for sale at deep discounts now and might be worth a look again. Contact us if interested.)
- As markets continue to trade sideways, and more pension systems remain under water, governments and regulators globally will become more involved in following the lead of Australia’s Superannuation system and model
- Regrettably, defaults will slow some of the activity in the P2P debt space. But, outside of some headline risk, the larger P2P players will continue to grow. Watch the big data credit scoring companies.
- The SEC will revisit its decision on crowd funding for non-accredited investors. The fiduciary standard they set is too lax.
- One regulator (most likely Singapore) will lead the global innovation charge and set the regulatory tempo globally. Hong Kong will immediately follow.
- Mobile/telecom companies will become the new “banks”. Look for this to be led out of China, Korea, and India.
- FinTech technology will continue to be led by Silicon Valley, but the successful implementation will be led by Asia's giants via Alibaba and Tencent.
My advice? If you are a small institution, sell. If you are a large firm, innovate yourself out of business (look to Aviva as a model for constructive disruption), and acquire the small innovators. If possible, move to Asia immediately...Singapore and Hong Kong are your beach heads.
From a user experience standpoint, remember: the innovation is the removal of the legacy process. Think how Uber removed the payment experience…there is none. That was the innovation.
Lastly, as I begin my second holiday season in Singapore, I want to send my very best to everyone worldwide whom I have had the opportunity to work with in 2015. Your insights, honest feedback, and global perspective were invaluable. I wish you and your families the very best this holiday season and I look forward to our collaboration in 2016!
Frank Troise is one of South East Asia's leading voices on FinTech. He is an active advisor to many of Asia’s leading financial firms, start-ups and technology firms. He is the founder of SoHo Capital LLC a US-based Registered Investment Advisor and holding company.
Mr. Troise has over twenty years of experience managing multi-billion dollar portfolios for corporations, endowments, foundations, and high net worth individuals.
Mr. Troise’s research, work op-eds, and career have been published in The Economist, Institutional Investor, The Wall Street Journal, Barrons, The Sacramento Bee, The Pacific Coast Business Times, Noozhawk, Derivatives Weekly, Pension & Investments, and Investment News. His investment letter has over 12,000 accredited readers and he is a frequent commentator on CNBC in the USA and Asia regarding market strategy for Squawk on the Street, The New Retirement Series, Power Lunch, and Street Signs.
He is married, has two young children and recently relocated with his family to Singapore. He is extending his family office experience to South East Asian families. He is originally from New York and remains a devoted (frustrated) Yankees fan. He has an MBA in Finance from New York University and a B.S. in Managerial Economics from Carnegie Mellon University.