Cutting edge innovation and experimentation in wealth & asset management is happening and Blockchain is the enabler. The potential is twofold: to fundamentally change wealth and asset management, both by replacing the infrastructure in the management of existing asset classes and as the backbone for new alternative assets.
We all acknowledge that digitalization is threatening traditional business models in finance and that it is unstoppable. Blockchain is powering up the second wave of disruption in Capital Markets which goes deeper and behind the scenes. These threats naturally, also present opportunities to wealth and asset managers.
But what exactly is wealthtech?
A portmanteau of the words wealth and technology, the term wealthtech refers to those digital solutions that aim to enhance the wealth-management process. Falling under the fintech umbrella, wealthtech is specifically concerned with technology that can improve wealth management and investing, especially with respect to affordability, convenience and accessibility. And it has proven increasingly popular over the last few years as wealth management has had to accommodate major changes, including shifting customer tastes and expectations, greater regulatory responsibilities and compliance requirements, and heightened competition from tech-savvy start-ups that continue to threaten—and indeed, transform—the investment-management business model.
Said so, we, The Wealth Mosaic and myself, embarked on a journey to provide wealth & asset managers with updates and insights on this trend which is live, evolving, and dynamic. We echo the views of thought leaders and various market players sharing evidence that Blockchain, has the potential to fundamentally change wealth and asset management, both by replacing the infrastructure in the management of existing asset classes and as the backbone for new alternative assets.
We started speaking to players and asking them `How Distributed ledger technology and Blockchain is currently reshaping wealth and asset management? Where is the industry today and how do they foresee things changing in the future?` Along with the products and services of the participants the inaugural report we have finalized, a thought leader from each company shares her/ his views on these questions.
Now is the time for the wealth and asset management industry to start preparing for the changes in business process and in investment products that are coming from the adoption of Blockchain technology. Surely, some of these will come later and some are already here. Regulation and mass scale adoption takes time. In the current environment, things happened slowly, gradually, but then Suddenly. So, keep learning, understanding the changes that are underway.
The report can be downloaded here. It includes, opinion pieces from ARK Investment Management, the manager of the first ETF that included Bitcoin in its holdings in 2015, and from MAMA, the Multichain Asset Managers Association, a trade association focused on the development of on-chain management.
We profile 10 solution providers from across the globe, with participants based in Switzerland, Liechtenstein, Luxembourg, the UAE. The companies are – Area2Invest, Chainalysis, Consensys, CrescoFin, DSENT, FiCAS, FundsDLT, Lykke, SEBA Bank, and Securrency.
As this is the first report on this topic it is by no means covering all the activity in the area as the space is evolving fast, with some subsectors maturing (e.g. custody), and other nascent ones emerging (e.g. DeFi – Decentralized Finance). Given the level of innovation in this area we plan to publish updates and/or sequels to this report on an on-going basis and will make this an annual WealthTech Views report for the sector.
Blockchain is a digital business transaction ledger that cannot be manipulated or altered. Digital currency markets have seen new emerging digital assets and trading platforms built on blockchain since the introduction of Bitcoin almost a decade ago. It is designed to record not only financial but all other activities with a set value. This technology enables the distribution and copying of digital data across different nodes. Any wrong change or modification will alter the hash connections, and it is easy to detect a failure. This is because of the complicated and intricate cryptography behind it. A decentralized peer-to-peer network with virtual currency sounds very appealing, especially now when cryptocurrency is being increasingly recognized as a useful asset.
The Wealth Mosaic is the digital marketplace & intelligence resource for the global wealth management sector.
Dr. Efi Pylarinou is an ex-Wall Street professional who has become a thought leader and recognized global influencer in Finance.