Pioneering Unexplored Areas

Japan has been at the forefront of innovation in the asset management—and the broader financial services—industry in Asia, with a number of new and incumbent players rolling out robo-advisory services. Robo-advisors are online platforms that offer investment advice based on sophisticated algorithms mapping portfolios that can look at investment performance across asset classes in real time.

While there is vast potential in this area in Japan, the gains made by the robo-advisory industry may be limited if it does not strive to improve investment literacy and enhance accuracy and transparency of information.

Current robo-advisor initiatives in Japan are largely tailored to support the sales of mutual funds. As easy-to-use, non-face-to-face services, they are garnering interest from investors comfortable with information technology and a degree of financial literacy.

Moving forward, further advancements that draw on both asset management options and technology are expected in the following areas:

  • Diversity of products. Expanding the range of products offered from general, publicly offered mutual funds to a variety of asset classes.
  • Diversity of services. Online onboarding, portfolio management, reports and alerts. Operation support that is a hybrid approach, harnessing both existing contact centers and face-to-face services.
  • Automation. Automated reinvestment and rebalancing. Supporting small-value and high-frequency trading.
  • Accommodating business-to-business (B2B). Pro-level sales support tools developed to offer the advanced features professionals want. Vendor-supplied cloud services and financial institution-supplied white-label service offerings for other financial institutions.

 

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Robo-Advisory in Japan: A Need to Push the Envelope

Robo-Advisory in Japan: A Need to Push the Envelope

Robo-advisors: Booming in Japan
http://asianbankingandfinance.net/financial-technology/commentary/robo-advisors-booming-in-japan

Fintech and Robo Advisors: Booming in Japan
http://celent.com/reports/fintech-and-robo-advisors-booming-japan

THE FUTURE OF ROBO-ADVISOR SERVICES IN JAPAN

Technology and New Business Frontiers

Megabanks, startups, and dedicated online brokers are all jockeying to leverage their strengths in a way that accords them the most advantageous position possible. The latest iteration in the ongoing battle to be first, to move early, and to outdo the competition is unfolding around robo-advisor services and technology with a key point being which customer categories to target.

Historically, the asset management business in Japan has revolved around the relatively lower-hanging fruit: customers that have both assets and financial literacy. Moving forward, that will change. It will be important for players to expand the market’s reach to include customer segments in the stage of asset creation, namely younger generations in the midst of becoming financially literate and the senior demographic of customers with little experience with technology. Early robo-advisor movers pushing the boundaries of the market and acquiring new customers will be crucial if robo-advisory services are to gain traction and not become a fleeting phenomenon. Many progressive global examples of companies and markets are responding to diverse investment and technology needs and, in doing so, helping to boost financial literacy across the market.

The robo-advisor initiatives that have hit the market in Japan so far largely appear tailored to support the sales of mutual funds. As easy-to-use, non-face-to-face channels, they are garnering interest from investors with a level of comfort with IT and a degree of financial literacy. Moving forward, further advancements that draw on both the asset management facet and technology are expected in the following areas.

  • Diversity of products: Expanding offerings from general, publicly offered mutual funds to multi-asset classes.
  • Diversity of services: Online onboarding, portfolio management, reports, and alerts. Operation support that is a hybrid approach harnessing both existing contact centers and face-to-face channels.
  • Automation: Automated reinvestment and rebalancing. Supporting small-value and high-frequency trading.
  • Accommodating B2B: Pro-level sales support tools developed to offer the advanced features professionals want. Vendor-supplied cloud services and financial institution-supplied white-label service offerings for other financial institutions.

 

Sell Side Business Model

Overcoming the first obstacle presupposes a shift in the competition among firms marketing mutual funds. This would entail a move from the conventional model, under which they vie for short-term sales commissions, to a longer-term model in which revenue is generated from discretionary investment fees. Already, the number of wrap accounts is growing quickly as major players migrate rapidly to a wrap-account approach premised not on sales commissions but on discretionary investment fees (for investment services offered on a contractual discretionary basis that include investment choices, actual purchase or sale, and regular reports).

FIG 4: Surge in Wrap Accounts

robo4

This surge in wrap accounts has spurred debate. Observers point to issues in products, service content, and management performance; in concrete terms, this means the fee structure (major firms say that they typically charge a total of around 3% for mutual fund advisory fees, transaction and management fees, and fees related to mutual funds), minimum contract amounts (major players accept contracts from 3 million yen in increments of 10,000 yen), and investment types (wrap account-dedicated mutual funds, programs combining actively managed funds, programs combining index-managed funds, etc.). Celent would like to believe that the proliferation of robo-advisors will enhance product offerings and advice across the investment cycle overall. The advent of mutual fund sales professionals (major banks and securities brokers) adopting robo-advisory technology can be expected to be the dawn of a new technological era not solely for wrap accounts, but also more broadly for the mutual fund business and the asset management business.

Celent believes that Japan’s asset management business sector currently faces two challenges that must be addressed particularly on the sell side.

  • Information imbalance: This refers to an imbalance or asymmetry in the quantity, quality, or use of information related to investment products or services. The market is flooded with investment information. However, there is a shortage of information and advice to cut through the noise to aid in reaching investment goals and to help prospective investors select products that match their risk appetites among the vast array of investment choices.
  • Know-how imbalance: This refers to an imbalance in recommending appropriate investment products and services as well as know-how related to investor management and development. The market is awash in investment know-how. Nevertheless, there is a shortfall of accurate understanding of investor orientation and experience. This is coupled with a lack of help for investors to optimize their portfolio holdings, subsequent follow-up, and advice to achieve investment objectives.

 

Just published the new Celent reports:

Fintech and Robo Advisors: Booming in Japan

 

END DESTINATION OF THE BOOM

Robo-Advisor Services: The Road Ahead

The fundamental essence of financial system services will remain, but with innovation, the inconvenient and irrational elements of the industry will be eliminated, falling by the wayside. The first touchstone for this will likely be the battle among robo-advisor services. With Japan’s highly integrated industry, mutual funds have from the beginning grown in the context of a modular (or unbundled) business structure. In the future, the insurance industry is expected to experience a similar change. It is only natural that bancassurance accelerates such structural change.

On the demand side, robo-advisor offerings are expected to play a supporting role in particular with retail investor asset management in terms of the (PDCA) cycle (which in this context refers to setting fund management goals, selecting and purchasing products or services, post-purchase review “checks,” and ongoing action). On the supply side, expectations are high that robo-advisors will yield benefits in B2B via functions that enable support tools geared toward professionals in the asset management arena. Moreover, observers have even loftier expectations that robo-advisors can play a role in enabling the asset management market to evolve into a sounder and more cyclically sustainable market.

Celent expect that robo-advisors in Japan’s market will work to supplement investment literacy on the demand side, heighten accuracy and transparency related to information (including price, quality, and risk) about asset management products and services, and supply technology that will help to solve the incentive problems that interfere with efficient business transactions on the supply side (and the oligopoly of the value chain).

From a technical perspective, there are three important points that would make the robo-advisor initiatives become widely accepted and profitable:

  • Use of refined smartphones with easy operability and robust security, providing a high-quality user experience.
  • Ability to provide diversity of products and services, low-value and high-frequency trading support, and automation.
  • Ability to (conduct / carry out) traceability and rebalancing, where assets are vigilantly monitored, and plans can be reviewed and revised accordingly.

FIG 7: Expectations for Robo-Advisors

robo7

 

Shift to the Modular Structure

It is incumbent upon the financial industry as a whole to shift to a modular demand structure to meet new demand spawned by new digital technologies and new demand in the digital industry. Institutions should ease their dependence on vertically integrated, direct sales — that is to say, keiretsu sales channels — to establish more dynamic and open delivery models. The demands and challenges of omnichannel transcend choosing an open or closed channel; rather, these demands proffer an ideal opportunity for companies to review and reconsider the optimal delivery model for their needs. Moreover, this means that financial institutions can collaborate with a wide range of non-financial sector entities including startups to broaden access to and the scope of the market that they can potentially claim as their own.

Financial institutions should strive to become trailblazing purveyors of financial services that leverage digital technology. In the financial services value chain, areas coexist where firms can and should go it alone to generate their unique in-house high-value-added services and products as well as other areas where they stand to benefit by collaborating with other firms to thoroughly drive down costs. Also, if firms thoroughly consider economies of scale and economies of scope, they can possibly parlay their cost centers into new profit centers and play a role in the industry infrastructure by collaborating with other firms. In the actual operation, after deliberating and implementing such initiatives, big-data analytics and automation of all processes will prove key. Here as well, a shift to a modular supply structure will be required, and a critical factor in determining the success of financial institution management will be alliances — namely how adroitly they select and choose to partner with other entities.

Fintech is much more than the application of novel technology in the sphere of financial services. Rather, it portends nothing less than a wholesale structural overhaul of the financial services industry that is an opportunity to envisage anew and redefine the industry’s future. There can be no doubt that Fintech transcends the mere establishment of a digital channel. Instead, it will clearly affect products, services, IT units, and sourcing models and, in so doing, provide the financial service providers of the future a chance to seriously consider exactly what kind of companies they would like to be and the corporate cultures they would like to foster.

FIG 8: Key Transformative Points in the Financial Services Industry

robo8

 

Just published the new Celent reports:

Fintech and Robo Advisors: Booming in Japan

 


JAPAN’S WEALTH MANAGEMENT MARKET

Japan’s wealth management market differs significantly from the global market in a number of ways.

Individual financial assets are managed with an emphasis on security and primarily allocated toward deposits, while potentially highly profitable securities — in particular, equity — are not typically preferred. The asset management emphasis toward savings deposits has persisted through the nation’s deflationary phase, but with the introduction of inflation targets and drastic monetary easing, this approach increasingly makes less sense. This leaves one wondering when the tide will change and who or what will trigger a change.

In January 2014, the government introduced a new initiative to encourage a shift in behavior from saving to investing. Called the Nippon Individual Saving Account (NISA) the program is designed to support the stable growth of household assets while boosting the availability of capital available for economic growth. While a combination of macroeconomic factors — including changes in exchange rates, a rebound in stock prices, and an upturn in the economic environment — seems to have the market headed in a more positive direction, Japan’s investment market still differs significantly from Europe’s and North America’s, particularly in areas such as the diversity of the composition of individual asset holdings, the investment environment for individual investors, and investment literacy.

FIG 2: Individual Financial Asset Breakdown: Japan-US Comparison
robo2

 

Growth in the Mutual Funds Market

Against this backdrop, the growth in funds allocated to publicly offered mutual funds has been particularly prominent. In May 2015, total assets under management topped 100 trillion yen for the first time, driven by an influx of money into open-ended mutual funds. As of the end of September 2015, this had reached 75 trillion yen, up 60% from 2012. This rise has been spurred not only by market value factors (a rise in asset prices) driven by increasing stock prices and a weaker yen, but also by trade-related factors — that is, new inflow of capital. Open-ended mutual funds turned positive in the first half of 2014, and in the second half of 2015, they returned to levels seen prior to the 2008 collapse of Lehman Brothers.

Two core factors are behind the growth in the mutual funds market: increases in channels and products. Channel growth principally signifies a diversification of intermediaries and intermediary types for bringing together mutual fund management firms and investors. The market was opened to banks in December 1998. After an eventful subsequent period, the formidable growth of the banking channel has put it nearly on par with the securities firm channel. As of the end of 2015, banks’ mutual fund sales, including private placements, had reached 64 trillion yen, accounting for 46% of the market; moreover, at the same time, the banking channel has similarly diversified its collective product lineup, including the following areas:

  • General mutual funds: Typical mutual fund sales through traditional channels
  • ETFs: Brokering analogous to listed securities brokering
  • Discretionary investment mutual funds (wrap account): Brokering for discretionary investment services
  • Dedicated DC (defined contribution pension) mutual funds: Dedicated sales for defined contributions to pensions

 

Wrap Accounts

Among these, the inflow of funds into discretionary investment mutual funds wrap accounts has been particularly prominent. Following 2012, the sector saw an influx of 1.4 trillion yen in the second half of 2014, and more than 1.2 trillion yen in the first half of 2015. This flood of funds has been fueled not only by the growth of products that meet consumer needs and more channels offering greater convenience, but also due to a shift in emphasis in sell side strategy from stressing sales commissions to one putting more weight on asset management balance and performance.

Until now, retail investors in Japan have exhibited a preference for major brands and the stability associated with them, resulting in investors becoming comfortable with an investment environment with a high degree of reliance on the sell side, namely the strategies of major financial groups. Further fueling the current surge in low-cost investing, which can expect high if unstable returns, will require raising investor financial literacy, providing novel products and services, and forging new sales channels that harness technology. There is vast “blue ocean” potential here for robo-advisory services to gain a foothold and thrive in the Japanese market.

 

Just published the new Celent reports:

Fintech and Robo Advisors: Booming in Japan

 

GLOBAL TRENDS IN WEALTH MANAGEMENT

The year 2016 proved a watershed for Fintech. It saw Fintech move from discussion and concept to implementation in the real world. Below are four key global trends in wealth management, the central theme of this post.

  • Fragmentation of retail services: There has been increasing diversification among purveyors of asset management services including major securities firms, discount brokers, and independent asset management companies. These include a rich variety of services and technologies that span online and self-service services as well as technology-based advisory services.
  • Emergence of next-generation investors: So-called Generation X individuals (those born between 1961 and 1981) are comfortable with technology and have adopted an investment style that accommodates schedules with steep time constraints. Meanwhile, millennials (people entering the workforce in 2000 or later, in the US, primarily those born from 1980 to 2000) are gradually becoming the core investment demographic, with more than 80 million individuals of the so-called digital native generation emerging as next-generation investors.
  • A shift to passive investing: There is a broad market shift afoot to index-driven investing from active asset management, which has peaked and is declining. Exchange traded funds (ETFs) are emerging as the next stage of passive investing.
  • Digitalization: Investors, brokers, and asset management companies are demanding applications with greater mobility and automated processes. Key issues here include investor-broker communication, social media, social trading, and crowdsourcing.

In addition, fragmentation is occurring in the asset management sectors of mature markets. Robo-advisor-driven services are gathering greater attention as a technologically advanced, low-cost means of automated asset management in a market that is increasingly crowded with players including traditional brokers (such as banks with domestic and international networks and comprehensive securities firms), independent investment advisory firms, and online securities companies.

 

Automated Advice

The definition of a robo-advisor can be slippery, differing by service provider and analyst. For the purposes of this report, Celent defines robo-advisors as new services from financial institutions that possess the following characteristics.

  • Key features seen in 2015: The three primary features are automation of onboarding and analysis, portfolio management, and reporting. Gradually, in addition to online assistance, human customer response initiatives, such as call centers, are beginning to appear. While in principle a non-face-to-face approach, automated initiatives are increasingly being expanded and coupled with manned support and full-line support a la those conducted by traditional operators.
  • Non-human advisors: Algorithms are used to support investment and portfolio-building based on the risk appetite of customers including tax optimization, all based on a customer profile developed from an online questionnaire.
  • Easy to understand: The process is streamlined to reduce customer anxiety and give customers peace of mind by using simple, typically three-stage processes that support investors from application stage to portfolio creation.
  • Small-value, low-cost options: Caters to small-value amounts in the range of $5,000 to $25,000 with investment (automated robo-advisor) fees in the neighborhood of 0.3%. These small-value, low-cost investments are customized services but automated and do not involve any manual (human) attention.

Robo-advisor services are evolving at a rapid clip, particularly at the cutting-edge of the industry, and much of the effort in this area is being concentrated in the three areas below.

  • Easy-to-use non-face-to-face channels: Eliminate the tradeoff between price and convenience, offering services that are both low in price and highly convenient.
  • Full service investment support from onboarding to reports: Automating services will enable greater processing efficiency that allows industry players to break through existing limits in their capacity to handle small value investments.
  • Hybrid operation support catering to diverse needs and levels of literacy: Online self-help services combined seamlessly with existing contact centers and face-to-face channels.

 

Segment Targeted by Robo-advisors

Initially, the demographic segment targeted by robo-advisors was a fragmented portion of the retail investor market, but this has changed. As noted above, in North America robo-advisor services are most embraced by traditional and active retail investors (individuals around age 50 located somewhere in the mass to low-mass affluent demographic).

However, this demographic is not static. With age, experience, and increases in investable assets, the need for investment advice rises. In addition, advancements in technology and investment literacy are blazing a trail to undeveloped market areas for robo-advisor services. Indeed, investor segments such as seniors and the affluent, which have until now been largely untouched by robo-advisor developments, can be expected to increasingly hop on the robo-advisory services bandwagon.

FIG 1: Automation of Advice Market Segmentation (US)

robo1

 

Just published a new Celent report:

 

今春のカンファレンスを振り返る(その2)

本稿では、今春のアジア3都市での6つのカンファレンスを振り返ります。銀行、保険、証券、ウェルスマネージメントの各業界の議論に共通したキーワードは、フィンテック、デジタル、そしてモダナイゼーションでした。

 

Legacy Modernization Seminar (47日:東京)

http://www.celent.com/news-and-events/events/legacy-modernization-seminar

グローバルなITサービスベンダーの主催するコミュニティミーティングで、「レガシーモダナイゼーション」のプレゼンテーションをしました。

昨年セレントが実施したサーベイ結果は、日本の保険業界におけるレガシーシステムの現代化について、以下の示唆をもたらしました。

  1. 現代化の検討は本格化、既に実施ステージに:置換戦略は、新システムへの置換がバージョンアップやラッピングを凌ぎ、置換理由は、コスト、ITスキルや能力との合致、リスク許容度、が主流である。
  2. 置換プロジェクトの進捗は評価から実施段階へ入るも、新たな解決策(SaaS、BPO)の検討は十分とは言えない。
  3. 最大の課題は自社に最適なプログラムの選定にある。
  4. ビジネスケースの検討は不十分:ビジネスケースはプロジェクトの進捗管理ツールに止まり、ライブドキュメントとして機能していない。
  5. 現代化の進展による、ビジネス部門、IT部門の役割変化は、未だ責任分担を変化させるには至っていない。

この現状認識に基づき、カンファレンスでは、以下を議論しました。

  1. レガシーモダナイゼーションのフレームワーク
  2. 組織の優先課題と自社のリスク許容度の掌握
  3. スコープ定義

そしてレガシーの再生産をしないモダナイゼーションのKFSとして、以下を提唱しました。

  • 自動化とその複雑系への適用
  • コアスタンダードの確立と、ローカルバリエーションの許容
  • ソーシングモデルの見直し

ここでもまた、「フィンテック」「デジタル」が共通の話題でしたが、IT部門の最大の課題は、やはり「レガシーモダナイゼーション」にあります。それはITシステムの更新や新技術の導入だけでなく、IT部門の体制やイニシアチブの在り方にも大きく依存します。カンファレンス参加者の問題意識は、「データ移行」「プログラムコンバージョン」「コンフィグレーション」から「クローズド・ブック」のBPOまで、実に多様なテーマに及びました。

4

http://tekmonks.com/beta/beta/brochure/FI-Consulting.html

 

Tokyo Financial Information & Technology Summit  (412日:東京)

http://www.celent.com/news-and-events/events/tokyo-financial-information-technology-summit

キャピタルマーケットのトピックスも変化しています。

例年同様、東京金融情報&技術サミットのパネル運営をサポートしました。今年のカンファレンスでは、ウェルスマネージメント、フィンテックを新たなトピックスとして加え、「信託ビジネス」と「ブロックチェーン」のパネルをモデレートしました。

「信託ビジネス」パネルでは、以下のトピックスで議論しました。

変貌する個人金融市場と資産運用ビジネスの現状認識について:

  • 「貯蓄から投資へ」の潮目の変化(NISA、投信、ラップ口座)
  • ゼロ金利の影響
  • ターゲットとするセグメント

個人向け資産運用ビジネスへの取り組みについて:

  • 新チャネルの状況(対面チャネル、非対面チャネル、ハイブリッド)
  • プロセスの改革の度合(分析と自動化の活用度合)
  • オペレーション革新の状況(商品・サービス、IT、組織・体制の革新)

資産運用ビジネスにおけるイノベーションのドライバーと挑戦:

  • テクノロジー活用(チャネル、分析・自動化、商品・サービス)
  • データ活用(投資サポート情報、投資商品データ、投信データ)
  • FinTech活用(組織・体制、新市場とコミュニティの拡大)

日本のリテール証券・信託マーケットにおいても、ウェルスマネージメントビジネスとそこでのテクノロジー活用が重要テーマとなっています。

 

「ブロックチェーン」パネルでは、「資本市場」を中心とした「ブロックチェーン」の可能性、POCへの期待を議論しました。論点は、以下の3点でした。

  • 取引の透明性、コスト削減への効果期待と実現方策
  • 金融サービス事業適用の条件、POCに期待する成果
  • 期待される、ビジネスケース

ブロックチェーンを巡る議論は、「探索」の段階から「実証」の段階に入ったと感じました。また、カンファレンスの議論を通じて、以下の示唆を見出しました。

  • この技術は、多くの市場参加者が共有すべきもの:プライベートもしくは、小規模なコンソーシアムでこの技術を適用しても、そのメリット享受は難しい。
  • この技術は、グローバルに実装すべきもの:グローバルな制度変更を伴う、標準化のイニシアチブのなかでの設計と実装が本来の姿である。ビジネスケースは、国際送金、トレードファイナス、マイクロペイメントなど想定されるが、ビットコイン(の信任が増し)若しくは、新法定通貨が定まれば、金融取引の大半はそれでよく、後は、非金融情報をタグ付するだけで、その多くはXMLの範囲で解決する。
  • この技術は、アプリケーションではなく、プラットフォームの技術:従って、①基礎研究:新プラットプラットフォームの構築と、②応用研究:その上でのアプリケーションの構築作法、とを峻別し、POCの多くは、R&Dとして①を主に、②はサンプル・ユースケース程度であり、制度設計は皆無。多くのベンダー(や金融機関)は、旧態依然として、新標準が定まった後のAP構築方法論及びAP構築から利益を出す構造である。

そこでの課題は、以下の3点に集約出来ます。

  • 透明性:技術の特性として、秘匿性の高い情報の管理には向かない。大半の金融取引は秘匿性が伴い、法改正も必要。
  • 制度設計:大規模金融基盤適用には、制度設計、制度改定が不可避で、個別金融機関にはその動機がない。
  • 技術者の人口:メインフレームからC/S、Web、モバイル、AI&IoTへの変遷と全く同様に、広範な普及には開発者の人口が必要。

5

http://www.financialinformationsummit.com/tokyo/jp/static/programme

 

17th Asia Conference on Bancassurance and Alternative Distribution Channels (5月10日:ジャカルタ)

http://www.celent.com/news-and-events/events/17th-asia-conference-bancassurance-and-alternative-distribution-channels

今春2回目のジャカルタでは、このバンカシュランスのカンファレンスに参加し、保険業界におけるデジタル化をセレントの「デジタルフレームワーク」を用いて提唱しました。加えて、InsurTechの動向を、ソーシャルメディアのデータ分析、保険会社以外のデータ収集とその活用、IoTを活用した新たなデータソースの拡充、構造化データ以外の分析ツールの活用について紹介しました。また、銀行と保険会社のレガシーモダナイゼーションについても言及し、自動化と事務処理のSTP化の重要性を述べました。バンカシュランスの文脈においても、銀行、保険会社に跨る事務処理をシンプルにすることが鍵で、プロセスのデジタル化はすなわちコアシステムの現代化を誘導することを提言しました。

カンファレンス・チェアの役割を通じて、全プレゼンテーションを紹介し、質疑応答をモデレートしました。登壇者の顔ぶれは、現地の金融当局、保険業界団体、東南アジアで活躍するグローバル銀行と保険会社、再保険会社の現地法人、そして当地でのデジタルバンキングに商機を見出すテクノロジーベンダーとフィンテック・スタートアップ企業。各社の発表に共通するコンセプトは、デジタルエクスペリエンスが変える銀行と保険会社、そして保険契約者の関係でした。

社会インフラの制約条件は、シンプルな顧客関係を要求します。金融とITのリテラシーが未成熟な地域では、顧客の文脈での推奨や支援が必要とされます。それらを満たすプラットフォームとして、モバイルを中心とした顧客接点が取り組みの中心でした。Financial Inclusion(金融包摂)は、金融当局の強力なバックアップもあり、銀行、保険、そしてテクノロジーの業界にとって、大きな活躍の舞台とみなされます。今回も、アジア新興市場のダイナミズムを大いに実感しました。

6

http://www.asiainsurancereview.com/airbanc2016/Programme

 

From the Celent Innovation Forum, Tokyo

At Celent we have been focusing on financial services technology since our inception. Now of course all eyes are focused on fintech, which we might inversely call the use of technology to disrupt (traditional) financial services. Investment in fintech startups is significant, and the financial markets involved are huge – US$218 trillion annually in the capital markets alone. Celent recently held our latest fintech event in Tokyo to a full house, an indication of the intense interest in fintech in the Japanese market. The day consisted of two Celent presentations on fintech in the retail and institutional securities industries, followed by a discussion panel. Celent senior analyst John Dwyer presented on blockchain technology and its potential use across capital markets. Smart contracts powered by this technology could conceivably replace existing means of executing market transactions, and by enabling direct ownership might displace custodians and other intermediaries. As if this weren’t food for thought enough, governments including the US and UK are taking a serious look at putting the dollar and the pound on blockchains. Talk about fundamental disruption! Senior analyst Will Trout provided an analysis of how automated advice (robo advisory) is reshaping the wealth management industry. After the financial crisis many individuals quite naturally want to manage their assets themselves, but also require investment advice. Robo advisory, which perfectly suits the self-service, mobile lifestyle, is an answer to this dilemma. SoftBank, Nomura Asset Management and The Bank of Tokyo-Mitsubishi UFJ joined the panel discussion, bringing their respective views on cognitive computing; the potential of fintech to lure Japan’s famously reticent retail segment to participate in the markets; and how to mobilize a large organization for innovation. A fundamental question about fintech is who will ultimately derive value from these innovations: fintech startups; technology giants like Alibaba and Google; or the incumbent financial institutions? Due partly to the regulatory stance, in Japan more than in most markets financial institutions may be in the best position to end up in the winner’s box. Only time will tell, for Japan and for markets across the globe, but you can rely on Celent to continue to provide our clients with insights in the rapidly developing world of fintech.

「ロボアドバイザーはアイスクリームのように…フレーバーは多種多様!」

Six ice creams in cones on white background 来週、11日に東京で開かれるセレントイノベーション・フォーラム にスピーカーとして参加することになっており、今からわくわくしています。 それに先立ち、注目度が急上昇するこの分野のキーワードを紹介したいと思います。まず、最も基本的なコンセプトから始めましょう。
  • ロボアドバイザー: この言葉は自動投資アドバイス(Automated Investment Advice)の略語のように使われることがありますが、正確には全くの同義ではありません。「ロボアドバイザー」は人的介入が全くないことを前提としているのに対し、「自動投資アドバイザー Automated Investment Advisor」は完全に自動化されたモデルと人間のアドバイザーを補完して自動化テクノロジーを使うモデルの両方を指します。スタートアップ企業の多くは、「自動投資アドバイザー Automated Investment Advisor」を好んで使っています。こちらの方がよりプロらしい(かつより正確な)響きがあるからでしょう。
ロボアドバイザーには基本的に2つのモデルがあります。
  • B2Cモデル: ロボアドバイザーの第一世代は、個人顧客向けで、ほとんどが人的介入のない、完全自動化モデルでした。しかし、個人顧客の獲得コストが嵩んだことから、人間のアドバイザーをロボで補完するハイブリッド型モデルにその多くが移行しました。
  • B2Bモデル: 2007年頃に登場したロボアドバイザー企業のうち、人的介入のない完全自動化モデルを固持しているのはWealthfront(運用資産残高は30億ドル超)だけです。その他のプレーヤーは、B2Bまたはハイブリッド型モデルに転換することで成長を実現しました。例えば、BettermentはFidelity Investmensと提携し、同社の数千人のアドバイザーをロボテクノロジーでサポートしています。
このように、ロボアドバイザーのビジネスモデルの強さと独自性を決めるのは、提供する商品自体(多くの場合はプレイン・バニラのETF)ではなく、どのように提供するか、デリバリー方法におけるイノベーションであるといえます。ロボアドバイサーの特長は、スムーズで直観的なユーザーエクスペリエンス、そして手数料の安さ(および透明性)にあります。どのロボアドバイザー企業もイノベーションを継続し、米国では退職金の資産運用をサポートするまでに成長してきました。現在はB2Bモデルが最も勢いを強めていますが、今後は、より強力な完全自動化モデルを持つプレーヤーがこの市場に参入してくることは間違いないでしょう。    

Pushing beyond apps

It struck me while I was driving this morning: First-gen mobile apps are fine, but virtually everyone is missing high-volume opportunities to engage with their customers. Allow me to back up a step. I was stuck in traffic. Not surprisingly, that gave me some time to ponder my driving experience. I found myself thinking: Why can’t I give my car’s navigation system deep personalizations to help it think the way I do? And how do I get around its singular focus on getting from Point A to Point B? I explored the system while at a red light. It had jammed me onto yet another “Fastest Route,” disguised as a parking lot. My tweaks to the system didn’t seem to help. I decided what I’d really like is a Creativity slider so I could tell my nav how far out there to be in determining my route. Suburban side streets, public transportation, going north to eventually head south, and even well-connected parking lots are all nominally on the table when I’m at the helm. So why can’t I tell my nav to think like me? I’d also like a more personal, periodic verbal update on my likely arrival time, which over the course of my trip this morning went from 38 minutes to almost twice that due to traffic. The time element is important, of course. But maybe my nav system should sense when I’m agitated (a combination of wearables and telematics would be a strong indicator) and do something to keep me from going off the deep end. Jokes? Soothing music? Directions to highly-rated nearby bakeries? Words of serenity? More configurability is required, obviously, or some really clever automated customization. Then an even more radical thought struck. Why couldn’t my nav help me navigate not only my trip but my morning as well? “Mr. Weber, you will be in heavy traffic for the next 20 minutes. Shall I read through your unopened emails for you while you wait?” Or, “Your calendar indicates that you have an appointment before your anticipated arrival time. Shall I email the participants to let them know you’re running late?” Or (perhaps if I’m not that agitated), “While you have a few minutes would you like to check your bank balances, or talk to someone about your auto insurance renewal which is due in 10 days?” What I’m describing here is a level of engagement between me and my mobile devices which is difficult to foster, for both technical and psychological reasons. And it doesn’t work if a nav system is simply a nav system that doesn’t have contextual information about the user. But imagine the benefits if the navigation company, a financial institution, and other consumer-focused firms thought through the consumer experience more holistically. By sensibly injecting themselves into consumers’ daily routines—even when those routines are stressful—companies will have a powerful connection to their customers that will be almost impossible to dislodge. Firms like Google have started down this path, but financial institutions need to push their way into the conversation as well.

On the cusp: regional integration in Asia

It’s 2015, the mid-point of the decade and a good time to start looking at major trends in Asian financial services over the next five to ten years. One of the major themes will be regional integration, which is another way of saying the development of cross-border markets. There are at least two important threads here: the ongoing internationalization of China’s currency, and the development of the ASEAN Economic Community (AEC) in Southeast Asia. RMB internalization is really about the loosening of China’s capital controls and its full-fledged integration into the world economy. And everyone seems to want a piece of this action, including near neighbors such as Singapore who are vying with Hong Kong to be the world’s financial gateway to China. The AEC is well on its way to becoming a reality in 2015, with far-reaching trade agreements designed to facilitate cross-border expansion of dozens of services industries, including financial sectors. While AEC is not grabbing global headlines the way China does, we see increasing interest in Southeast Asia among our FSI and technology vendor clients. From Celent’s point of view, both trends will open significant opportunities across financial services. In banking, common payments platforms and cross-border clearing. In capital markets, cross-border trading platforms for listed and even OTC products. In insurance, the continued development of regional markets. Financial institutions will be challenged to create new business models and technology strategies to extract the opportunities offered by regional integration. It’s the mid-point of the decade, and the beginning of something very big.