The next generation of consumer-oriented fintech tools could look quite different from today’s budgeting, personal finance and robo-advisor offerings. Schwartz said that the development of online investment clubs or communities could change the model of wealth management altogether.
“This is a movement beyond robos, a movement beyond advisors, towards the development of social and communal views around wealth management,” Schwartz says. “We’re moving away from the old one-on-one approach of a client and an advisor towards a social approach.”
Gamification is another area ripe for development — fintech developers are exploring ways to make investing competitive and more engaging, through something like a “fantasy sports league of investing,” for example, or contests where consumers attempt to build portfolios to outperform investors like Warren Buffett or George Soros.
The collision of finance, fintech and social media is creating possibilities for social trading, where groups or individual investors follow a successful portfolio manager based on their performance, investment style or personal relationship. These could be similar to strategies that attempt to mimic active mutual fund managers, except financial technology would allow investors to automate and accelerate the process.
“There’s such a distaste around larger institutions and banks; things like gamification and social wealth management help address some of those behavioral issues,” Schwartz says. “They’re useful for breaking through that engagement wall.”
The old model of financial advice, a personalized investment advisor, is falling out of favor in lieu of self-directed investing, social investing and hybrid digital/human solutions, says the report.
Robo-advisors were just the first wave of a sea change that could sweep the traditional advisor away. Advisors’ failure to adopt technology, with just 25 percent of advisors offering digital channels beyond e-mail, could be their undoing, said PricewaterhouseCoopers.
“Wealth management is a lagging area of fintech adoption,” Schwartz says. “Very small shifts in consumer behavior can add up, yet firms are only now starting to think of the potential wealth transfer to the younger generation and how to engage young consumers.”
Insurance technology — dubbed insurtech by PricewaterhouseCoopers — is another area for potential growth. Even as overall funding for financial technology declined, insurance technology funding grew by 12 percent in each of the last two quarters.
“The companies that are getting funded are looking at distribution to smaller organizations, or are looking around the 1099 space,” Schwartz says. “Insurance companies recognize that the sharing economy has created new opportunities for growth.”