Despite their gargantuan budgets and networks, banks still lack the know-how to be technology leaders, according to Saxo Market’s Asia chief Adam Reynolds on why digital wealth offerings are still lagging.
Even with all the rage about technological advancements in the financial sector, digital wealth management capabilities have remained limited with a static classification of investors and little to no customization.
«Typically, digital wealth managers have been very focused on client acquisition and delivering low cost, low complexity solutions that are really quite basic,» said Saxo Market’s APAC CEO Adam Reynolds in a recent conversation with finews.asia.
«There are some players that have moved above and beyond that but by and large, there is still a very little degree of personalization and integration of life goals into portfolios and asset allocation processes.»
Market Gap
Uncompetitive fees, and misaligned incentives from traditional money managers, including insurance firms, independent financial advisors, and external asset managers have driven the emergence of digital wealth managers. who fill a market gap for low-cost, customized solutions.
At the same time, smaller budgets have limited many up-and-coming fintech companies from developing large-scale projects that aren’t directly focused on obtaining new business.
«Weak Technology Skills»
And even if a major bank decides to change things, Reynolds believes that it will be an uphill challenge.
«[Banks] have very large tech resources, brand recognition and client bases. But while it may sound funny, banks usually have weak technology skills and their solutions are limited by their aging internal IT systems,» he explained.
«That’s why they partner with players like us. Banks may not have the skills for digital infrastructure. They also tend to lack the risk appetite to build such solutions themselves from the ground up. Most of the robos linked to banks are outsourced to third parties.»
SaxoWealthCare
In a response to this environment, Saxo Markets decided to launch its own offering in Singapore – ‘SaxoWealthCare’ – which Reynolds boldly calls «possibly the most important innovation in the personal finance industry in the last 30 years, since the launch of ETFs».
Unlike most digital wealth offerings in the market, Saxo’s new platform allows users to dynamically create portfolios that account for the sum and timeline of financial goals while adjusting and rebalancing accordingly.
«When people think about their finances, the first thing they think about is what they need their money for. How to achieve their goals creates stress in people’s lives. The stress is not about how much I have but more so about how much I need in the future and when I need it,» Reynolds said.
«That is where SaxoWealthCare is fundamentally different. The entire ethos behind it is to create unique, personalized portfolios that take into account the goals you have and the proximity of those goals as well as all aspects of your risk appetite and how you want to invest. This approach maximizes the chance of achieving your goals and minimizes the stress and time from investing at the same time.»
Asia Ambitions
The offering has already been launched in European markets like Netherlands and Belgium where SaxoWealthCare has 1 billion euros ($1.08 billion) in assets under management from around 30,000 clients.
Within Singapore, it seeks to become one of the top two digital wealth managers and the offering will also be launched elsewhere in Asia, including in Hong Kong, Japan and Australia.
