This past week it was reported that UBS is looking to beef up its wealthy client business with its new “My Way” platform that is currently catering to customers in Switzerland with other European countries forthcoming as well as Asia. According to Reuters, the wealth manager is offering a hybrid service that pairs tech with real people. While many Fintechs seek to democratize access to financial services for the underbanked or non-banked demographic, UBS is going upmarket.
Launched in May, My Way is offering digital banking services to Swiss clients and has already captured over $1 billion in assets – an amount that is said to top expectations. Andre Spycher, head of sales management for UBS wealth business in Switzerland told Reuters:
“Since launching in Switzerland, we’ve never seen so many non-clients reaching out to us. We still see massive upside potential in Switzerland; and as the largest wealth manager in Asia, we see huge potential there, too.”
Sprycher says that customers are willing to a premium for the service. All that it takes is a Swiss Franc 250,000 deposit. Customers still can call the shots on their money but can also benefit from UBS advice.
Meanwhile, UBS was out with a note on 2021 – calling it the “Year of Renewal” following the year of COVID. Included in the note is a prediction on the “next big thing” and Fintech is included in the list.
UBS states:
“We think the next decade will reward investing in the companies using technology to disrupt other sectors. We expect “The Next Big Thing” to materialize within the Fintech, Healthtech, or Greentech spaces, or to be enabled and accelerated by the global rollout of 5G technology. Since 1973, if a US equity sector was a top two performer over the previous 10 years, it had only an 8% chance of staying there over the next 10 years, and a 25% chance of falling into the bottom two. This pattern suggests that “The Next Big Thing” probably won’t come from the top two sectors of the last decade: technology and consumer discretionary. We’ve worked to identify market segments containing stocks that could see earnings more than triple over the next ten years thanks to a large potential market (over USD 200bn), a disruptive catalyst to spur growth for the decade ahead, and a cyclical catalyst to kick-start things in 2021. Our conclusion: If the last decade was about investing in the technology sector itself, we think the next decade will reward investing in the disruptors in sectors undergoing a technological transformation. We expect “The Next Big Thing” to materialize within the fintech, healthtech, or greentech spaces, or to be enabled and accelerated by the global rollout of 5G technology.”
While we tend to see Fintech as the current big thing, innovation in financial services is still very much in the first innings of play.
UBS believes that Fintech revenues will book 10.5% CAGR during 2018–2030. Perhaps a bit obvious, UBS states that the ongoing pandemic has “triggered a dramatic shift toward contactless and mobile payments, and e-commerce.” And once a Fintech gets a customer it is easier to cross-sell additional services and products.
Digital payments will continue to grow as cash and checks still account for 39% of the $225 trillion in annual payment flows. UBS posits that once you go digital you probably won’t go back to physical cash.
Other areas with promise include Proptech, Insurtech, online lending, investment services, etc. The gangs all here. Central Bank Digital Currencies (CBDCs) are given a shout out and utilization should boost Fintech adoption even further. Of course, artificial intelligence will play a role too. Sounds like the Year of Renewal will be pretty transformational.