What are the main types of disruptive technology influence the wealth management market in Asia? Cerulli tries to answer the question.

There are three types of financial technology firms that are changing Asia’s wealth management landscape but so far the disruptive impact has only influenced the distribution end of the value chain, Cerulli Associates says in a report.

Cerulli identifies three types of “digital disruptors”: “Aggregators; disintermediators, and innovators harnessing front-end tech platforms.

In the case of aggregators, the report said these make up most of the disruptors – such firms give users a “bird’s eye” view of a wide range of products with more transparency on pricing and services. Prime examples of aggregators are online fund supermarkets, such as Korea's online supermarket, Fund Online Korea (FOK), and India's MF Utility (MFU).

Disintermediators, meanwhile, eliminate the need to go through traditional banking channels. Fintech start-ups, such as Nutmeg, Wealthfront, and Eight Securities from Hong Kong, are examples of such disruptors in the wealth management industry. They offer pre-packaged customized solutions to investors for a fraction of the usual fees, the report continued.

In the third case, innovators make use of front-end technology platforms to meet changing client behaviour and needs. "While these are not applicable in Asia yet, there are social trading platforms, where investors mirror real trades of successful individual or professional traders," Shu Mei Chua, an associate director at Cerulli Associates, said.

Examples of the third type of fintech company include Covestor, eToro, and Ayondo. Investors from all over the world are linked to a single network, whereby each investor benefits from the collective wisdom of the crowd.

Big data analytics or consumer behaviour data are offer the possibility of asset managers structuring a product or service based on the collective "unspoken" needs of clients, Cerulli said. “We are now only in the early stages of the use of big data and analytics across all industries. Many see it as the next big thing. It seems unavoidable for asset managers too, especially on the back of the ubiquity of social media and the internet,” it said.

“It may help them understand why mutual fund penetration is low in Asia compared to other financial products such as savings and deposits, and stocks, and come up with an action plan to bridge the gap, Yoon Ng, Cerulli's Asia research director, said.

Asia is, in some ways, leading the digital banking revolution. For example, when Credit Suisse unveiled its new digital banking strategy earlier this year, it chose Singapore as the first centre for the rollout; DBS, the Singapore-listed banking group, has made technology innovation a core part of its overall strategy.