BigTech: The next frontier for high-net-worth investors

High-net-worth individuals could soon turn to Apple, Google, Amazon and Facebook for wealth management needs according to latest research from Capgemini.

In its 2017 World Wealth Report the consulting firm found BigTech is casting a long shadow in wealth management, as 56% of high-net-worth individuals (HNWIs) globally said they would be open to working with these firms.

"This is especially true for younger and emerging-market HNWIs," the consultant said.

Capgemini noted HNWIs have high expectations of increased efficiency, transparency, online excellence, and innovation, as is often offered by BigTech.

However the consultant did reassure everyone not to panic yet as respondents expressed some trepidation about privacy, security, and lack of human involvement.

Setting aside the potential for widespread disruption and the risk that initial partnership could give away to outright competition, Capgemini called on wealth management firms to partner with BigTech to win over HNWIs with "truly innovative offering build on the latest technologies."

To date, only a few BigTech firms have forayed into wealth management in a significant way. Yu'e Bao, an investment product of Alibaba's payment affiliate Ant Financial, became the world's largest money market fund in April, surpassing JPMorgan Chase's US government market fund to reach a total of US$165 billion ($211 billion as of September 2017).

Yu'e Bao, which was originally promoted as a way to invest money left over from online payments, now has more than 370 million account holders, the vast majority of which are under the age of 30.

The fund currently produces a seven-day annualised yield of 4.02% and is managed by Tianhong Asset, an Ant Financial subsidiary.

In June, Amazon also announced that its lending service had surpassed $3 billion in loans to small business since launching in 2011. Its cash deposit service has also been expanded to the UK, allowing shoppers to load between £5 and £250 into their Amazon UK account in a single top-up transaction.

Read more: BigTechAmazonCapgeminiHNWIAnt FinancialYu'e BaoAlibabaHigh net worthJPMorgan ChaseWorld Wealth Report
Link to something vlF99zMg