MY FUTURE BANK: FROM CAPITAL ACCUMULATION TO ENABLEMENT

The Mass Market Segment

The millennials (born between 1982 and 2000) who are mostly at prime working age now, are often the focus due to the segments importance in sustaining the chain of disruptions. According to Teaching Financing Tools concept (source: https://www.joe.org/joe/2013february/tt6.php) this group who have a tendency to overuse credits, lacks emergency savings/funding, lacks insurance protection, focused on current needs instead of the longer term needs, etc. Hyperbolic discount tendency is largely at play here. Being economically less viable and out of reach by mainstream financier, alternate financing method such as usage-based services, peer-to-peer and crowd-sourced becomes more appealing. Take-up rates of these services indicates this group’s willingness to go for higher-risk options in order to satisfy consumption needs. Arrival of fintech platforms coincides well with many (if not all) of them. With a strong appetite for debt driven instant gratification, many will be left with little cash for shocks in later life. Such group represents risky but attractive high-interest paying market segments for emerging platform players.

The Traditional HNW or UHNW Segment

Over the years, many established investors have grown wary of financial advices delivered by FSI. Clients are no longer satisfied with receiving monthly statements of paltry investment return in their mailbox. Investors want to be able to use their data to look at outcomes in real time.  Customers can now quite easily obtain reports and insights that would have previously been hidden or expensive to obtain. Technology is the primary enabler – the use social media, search, and mobile apps during an investment journey, and the proliferation of seamless, omni-channel digital experience lets them interact with service providers anytime, anywhere, and on their own terms. Customer can now shop and compare in the open marketplace to determine which product or service offers the best value for money. This group may stay on course but are increasingly more adept at engaging fintechs, P2P, crowdsourcer, etc. as net financier. Robo-advisors are now gaining grounds and providing really low-cost fees in financial investment areas that require little or no advisory services.

The Emerging HNW Segment

With the old economy disrupted and new class of wealth created, we will be seeing an emerging group of young U/HNW entrepreneurs who is armed with plenty of liquidity and know-how. Having carved out their own existence and survival in a highly volatile and hyper-competitive world, this group of generally young individuals will drive unique wealth management needs – it will be highly international, dynamic and complex in nature. They are probably the least tolerant of time-consuming and complicated processes; have very low trust and are especially vulnerable to exploitative motivation shown by traditional wealth managers, e.g. selective information disclosure and not given proper advise/control of financial decisions. To make it even more challenging, the kind of value they place on life is more subjective than that of the earlier generation. ​

Enablement Driven

As the ability of robo-advisors and robo-managed investments improves further in the coming years, the need for human intervention will be reduced. Although the promise of ultrahigh returns will be diminished as these programs are algorithmically built to balance risk with returns, it remains attractive as it promises long term growth. This frees up critical human capital to consider and tackle the issue of complex investment needs.

As better endowed generation grows to favor quality of life over wealth and capital accumulation, they will increasingly consider putting their money on social causes, believes and create meaningful impact. Although personal and family financial need is still the main priority, this emerging group takes a mixed world view: one that is driven by the hardship seen in the past decades and one that considers money as just a means to an end. With the passion and intent to drive ‘meaningful change’ this group of like-minded people presents an emerging opportunity. There are already various avenues in the market that caters for their needs. RBC that provides investment products to investors around the world released a survey report in November 2016 entitled Near-Term Uncertainty, Long-Term Opportunity. The report indicates that investors want more information showing how they can use their capital to achieve positive change while growing their assets.
 
To start with there is the impact investment or socially responsible investment platforms. Such investment platforms are spearheaded by either market-benchmarked performers or non-profit believe groups. This would have appealed to HNW individuals and HNW family institutions.

Then there is the smaller retail investment groups, the mass affluent who will collectively make smaller impacts. Through such platforms as kickstarters, peer-to-peer and online investment platforms, they too are able to drive impact without sacrificing returns. 

The shift is small, but the trend may be lasting and will continue to grow. The emerging HNW and UHNW groups will set the investment tones for coming years, one that is bound to focus on the qualitative factors surrounding socially sustainable and regenerative wealth. Equipped with A.I., robotics and wealth management expertise, the generation seeks not just returns but a platform that 'enables' them to realize their own world vision.