The Digital Revolution of Investments The rise of direct-to-consumer platforms Low-cost robo-advisor sustainability Grow AUM via the digital experience Market insights from our digital investment experts financialintelligence.informa.com 2019 Digital Investment Insights Introduction Can robo-advisors stay in the game with The new wave of direct-to-consumer (D2C) digital investment platforms launched by banks, fintechs and traditional investment providers has brought unprecedented change to the investment landscape. low fee strategies? A focus on making it easier for consumers to invest New fintech providers have certainly acquired Informa Financial Intelligence monitors and reports on digital investment developments and offerings. at the lowest cost would appear to be a winning customers at an impressive rate; Nutmeg became Find out how we can help you build a leading user experience - www.financialintelligence.informa.com strategy – right? It appears the answer is far from the first UK robo-advisor with more than 60,000 simple, or maybe it’s just difficult for providers to customers.1 However, whilst not to decry this address all types of customers. growth, it should be remembered that market- leader, Hargreaves Lansdown, which has some of Until last year, a lack of volatility, combined with the highest fees, signed up 29,000 net new clients The rise of D2C platforms rising stock markets, appeared to make investing during its last quarter with over 1.1m active clients.2 an easy, risk-free alternative to traditional savings A range of propositions have been brought to the UK, accounts. A recent report in the Financial Times It appears that providers must choose where they targeting consumers such as first time investors through highlighted that a number of low-cost robo-advice want to play in the investment platform market. to confident self-directed investors seeking a full service providers failed to deliver market beating returns Positioning a ‘one-size fits all’ platform to potential platform to execute trades across a range of assets over the past year. Investors in the lowest risk customers looks like a significant challenge. classes. portfolios would have been better off in a cash ISA.1 Nutmeg, Wealthify and Moneyfarm target new investors by demystify the process through simple to use platforms. These robo-advisers typically create a discretionary portfolio aligned with the investor’s risk appetite. The account is usually a Stocks and Shares ISA with a portfolio comprised of ETFs to keep costs low. Wealthify: Looking to demystify investing At the other end of the scale, providers including Barclays and Hargreaves Lansdown developed platforms providing self-directed investors with the research and execution capability to manage their portfolio. Will robo-advice investment providers remain in the marketplace? Banks and specialist investment providers, such as asset managers, are launching platforms that fall somewhere between the simplest fintech propositions and full-service platforms, in terms of complexity and target users. Lastly, several major asset managers, such as Fidelity, Vanguard and M&G, have developed their own platforms to target UK investors. 2 | Informa Financial Intelligence: AI Applications for Retail Banking financialintelligence.informa.com | 3 Digital Investment Insights LONDON HONG KONG Blue Fin Building Level 5, 28 Hennessy Road 110 Southwark Street Admiralty London, SE1 0SU Hong Kong T: +44 20 7017 5402 T: +852 2234 2000 Digital experience is the key to growing AUM NEW YORK TOKYO The fintech providers make it easy for the market The providers with more comprehensive platforms, 605 Third Avenue Shin Kokusai Building 4F to discover and engage with their propositions, including Fidelity, Interactive Investor, Barclays 20th Floor 2-4-1 Marunouchi, Chiyoda-ku offering a slick application and onboarding Smart Investor and Hargreaves Lansdown, face a New York, NY 10158 Tokyo, Japan 100-0005 experience that often makes full use of mobile and different set of challenges. Providing a compelling T: +212 907 5802 T: +813 6273 4273 native app functionality. customer experience, incorporating research and analysis, and combining this with execution and SINGAPORE SHANGHAI portfolio performance is challenging, but one that However, the simple propositions they offer - with the best providers are delivering successfully. a discretionary portfolio – present a challenge to 111 Somerset Road Room 2201 & 2204 provide an engaging ongoing experience. #10-05 TripleOne Somerset Hong Kong New World Tower Singapore 238164 No. 300 Huaihai Road Middle Our view is that providers that fail to deliver T: +65 6411 7788 Shanghai PRC 200021, China platforms which are intuitive and easy to use, The full-service providers, where customers are T: +8621 2326 3766 will not see customers numbers or Assets Under actively involved in monitoring and managing their Management (AUM) grow as quickly as those that portfolio, offer a very real reason for customers to successfully meet this challenge. log back in. References 1. Financial Times - Robo-advisers fail to beat market benchmark 25/26 Aug. 2018 2. Hargreaves Lansdown trading update 11 Oct. 2018 Like what you see? If you found this insight piece useful, you’ll be pleased to know that Informa Financial Intelligence has a wealth of readily available material to digest, visit - www.financialintelligence.informa.com 4 | Informa Financial Intelligence: AI Applications for Retail Banking.