Transformation Of Conventional Banking Opportunities And Risks Of Fintech Companies In Asset Management

Master's Thesis from the year 2019 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, Berlin School of Economics and Law, language: English, abstract: The purpose of this work was to find out whether Fintechs are able to compete with Banks in the field of Asset Management. Companies providing Robo Advisory services are considered to be the banks of the future. Several interviews with companies working in this field have been conducted to investigate if the algorithms are prepared for the next financial crash. This work contains 7 chapters, starting with the motivation and research question. Sec-ondly, the general situation on the market will be described, including the changes of customer behavior. This serves the purpose to give an understanding about the current market conditions. Thirdly, the banking sector will be described, considering definitions and regulations. In this work the focus will be on the German market, therefore, con-sumer behavior and details about the German retail banking industry are relevant. Sub-sequently, chapter 4 deals with asset management and the new trends in the industry. Chapter 5 describes the development of the fintech industry. Definitions and regulations of the fintech companies are part of this chapter. In chapter 6 the scientific investigation will be conducted and presented. The results will show how stable the new technologies are, in order to give an outlook for the future in the next chapter. Prospects for the future of retail banking and especially asset management will be mentioned in chapter 7. General current trends and forecasts are also part of this chapter. Since only limited literature is available about the fintech industry and especially robo advisory, the investigation part includes a qualitative approach with interviews that have been conducted with qualified specialists that work or research in the robo advisory industry. The question of whether and how the robo advisors will survive the next fi-nancial crisis, is topic of the interviews. There has been no financial crisis that might have caused unforeseen problems for the systems, ever since the creation of robo advi-sory. Thus, it is unknown how those technologies will react to chaotic market situations. The idea was to ask companies to what extent they are prepared for a financial crisis. The findings of this investigation will deal with the possible future outline of those fintechs providing algorithm-based asset management. The question about the security framework has been answered with a view to examining the future development of the robo advisory industry.

This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies. The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.

This book provides both practice-oriented and academic insights into the disruptive power of fintech for the banking industry. It explores (1) whether and how the banking industry can use newly emerging technologies in the financial sphere to its advantage while managing any associated risks, (2) how these technologies affect traditional banking service formats as well as the pricing of these services, and (3) whether the emergence of fintech in the banking industry calls for a rethinking of existing banking regulations such as the Basel Accords as well as country-specific regulations. Prior publications in this area typically examine both current applications of fintech in the banking industry, as well as its future prospects, by analyzing actual cases or exploring the impact of a single emerging technology on the banking industry. They often ignore the interdependence between emerging technologies and overlook the connection between fintech as a whole and the future of the banking industry. This book addresses this gap by providing a comprehensive overview of various fintech applications and by analyzing what they mean for the future of banking. Given the potentially disruptive power of fintech, the book will focus on the challenges banking supervisors are likely to encounter as a result of fintech’s continual ascent. It will thus encourage readers to think about and explore how to find a balance between the beneficial aspects of fintech and the challenges it creates in terms of supervision, regulation, and risk management.

Emergent innovative financial technologies are profoundly changing the way in which we spend, move and manage our money, unlike ever before, and traditional retail banks are facing stiff competition. The global financial crisis in 2007–2009 led to large losses, and even the collapse of a significant number of established banks shaking the trust of financial customers worldwide. The Digital Banking Revolution is an insightful look at how financial technology and the rapid rise of financial technology companies have brought welcome changes offering flexibility to the banking industry. The book offers a unique perspective on the consumerization of retail banking services. It delves into the many changes that financial innovations have brought about in banking, the main financial disruptors, the new era of "banking on the go," and financial innovations from countries around the world before concluding with a discussion on the future of banking including optimizing structures, new strategies for business outcomes, and human resources in the digital era.

Digital financial services are starting to become increasingly popular with consumers, thereby fostering a favorable climate for digital entrepreneurship: mobile payment, Blockchain, etc. Research trying to understand and explain this phenomenon focuses on FinTech. Some scholars regard “FinTech” as financial innovations that upset the market while others view them as startups, based on financial innovations, that have changed the ecosystem. There are many open-ended questions about FinTech’s business models, how it relates to blockchain, and whether this is a collaborative relationship between traditional financial players or a competitive relationship. Noting the lack of research work on these themes, this book attempts to shed light on this area to bridge the gap between the discourse of practitioners and the literature. Influence of FinTech on Management Transformation is an innovative reference book that defines FinTech and its ecosystem as well as concepts in relation to management transformations caused by FinTech and shares new theoretical and empirical frameworks, useful experiences, and best practices to deal with new technological changes. The chapters are divided into three interrelated sections: “Insights From the Blockchain Technology”; “Managerial and Cultural Transformations in the Era of FinTech”; and “Empirical Experiences and Applications.” This book is a valuable reference tool for financial planners/advisors, managers, accountants, financial analysts, compliance experts, practitioners, researchers, academicians, and students interested in the influence of FinTech on management transformation.

The book “WealthTech: Wealth and Asset Management in the Fintech Age” is the primary resource for the wealth and asset management technology revolution. It examines the rise of financial technology and its growing impact on the wealth and asset management industry. Written by thought leaders in the global WealthTech space, this volume offers an analysis of the current tectonic shifts happening in wealth and asset management and aggregates diverse industry expertise into a single informative book. It provides practitioners such as wealth managers, bankers and investors with the answers they need to capitalize on this lucrative market. As a primer on WealthTech it offers academics clear insight into the repercussions of profoundly changing business models. It furthermore highlights the concept of the ongoing democratization of wealth management towards a more efficient and client-centric advisory process, free of entry hurdles. This book aggregates facts, expertise, insights and acumen from industry experts to provide answers on various questions including: Who are the key players in WealthTech? What is fueling its exponential growth? What are the key technologies behind WealthTech? How do regulators respond? What are the risks? What is the reaction of incumbent players? This book not only seeks to answer these questions but also touches on a series of related topics: • Get up to speed on the latest industry developments • Understand the driving forces behind the rise of WealthTech • Realize the depth and breadth of WealthTech • Discover how investors react to the growth in WealthTech • Learn how regulators influence the evolution of WealthTech business models • Examine the market dynamics of the WealthTech revolution • Grasp the industry’s potential and its effects on connected sectors • Build acumen on investment and entrepreneurial opportunities A unique product for the market place Digital transformation is creating game-changing opportunities and disruptions across industries and businesses. One industry where these game-changing opportunities will have profound impacts is wealth and asset management. For generations, wealth and asset management was a privileged service provided to co-operations and wealthy individuals. The informational advantages that wealth managers held vis-a -vis their clients provided a key competitive differentiator. In the current digital transformation climate, this differentiator is vanishing and the setting is changing. A top priority on the agenda for any wealth and asset manager must therefore be how to respond and prepare for the ramifications of this fast changing business environment. This book (one of the first to be published in this area) will provide the reader with a head start in adapting to this new digital environment.

Technology-driven innovation in financial services has been attracting global attention and interest. FinTech innovation is presenting a paradigm shift in financial services affecting a wide range of products, processes and services but also sparking a broader evolutionary transformation, growth opportunities and foundational systemic and structural changes in light of technological interdependencies among market players, infrastructures and ecosystem stakeholders.Transformation Dynamics in FinTech contributes to the intellectual curiosity around the symbiotic relationship of finance and technology by focusing on the multidimensional and multidisciplinary role of open innovation within FinTech innovation, observing and communicating the latest technological, managerial, governance, policy and regulatory perspectives, trends and developments.This book is an essential reading for anyone interested in the growing and evolving development of FinTech ecosystems based on new capabilities and structures that create new dominant architectural designs, which determine competitive dynamics, products, services, processes, business models, markets, value chains, within an open and transformed financial services industry landscape.

The financial services industry is being transformed by heightened regulation, technological disruption, and changing demographics. These structural forces have lowered barriers to entry, increasing competition from within and outside the industry, in the form of entrepreneurial fintech start-ups to large, non-financial technology-based companies. The Technological Revolution in Financial Services is an invaluable resource for those eager to understand the evolving financial industry. This edited volume outlines the strategic implications for financial services firms in North America, Europe, and other advanced economies. The most successful banks, insurance companies, and asset managers will partner with financial technology companies to provide a better and more innovative experience services to retail customers and small businesses. Ultimately this technological revolution will benefit customers and lead to a more open and inclusive financial system.