Morgan Stanley has announced a new “robo-advisor” service to help young investors get started with small portfolios.
As Computer Business Review reports, the robo-advisor is tailored specifically towards younger investors who have “less complex needs.” It comes with a 0.35% advisory fee that’s designed to reflect its aims of helping new investors manage their first portfolios.
Built entirely inhouse by Morgan Stanley, the fully automated system is available online and comes with several customization options.
Robo-advising is set to become much more common over the next few years, making it easier for new investors to get started. Increasing amounts of wealth will be overseen by digital agents, with Business Insider predicting the figure will reach $4.6 trillion by 2022.
By launching its own service with a specific target audience, Morgan Stanley also positions itself to remain relevant as robo-advising becomes more prolific.
In the near-term, technological and human advisers are likely to coalesce to deliver more timely information to investors. An investor might retain traditional advice options for when they need to make major financial decisions or engage with large portfolios. Robo-advisers will allow investors to get real-time details using a smartphone, enabling more rapid responses to changes in their portfolio.
The introduction of digital assistance services could make investment more efficient and allow participants to create higher returns. This will eventually lead investors back to companies like Morgan Stanley, seeking advice on how to manage increasingly complex portfolios. Morgan Stanley’s new robo-advisor is designed to step towards this scenario, where the use of digital tech brings about new opportunities for investors and financial providers.
The service requires a $5,000 starting investment, which Morgan Stanley believes will be accessible to young people interested in seriously investing. Users can follow the service’s advice to invest in specially-designed portfolios, including options built around sustainability and emerging technology. The company hopes the seven themed portfolios will have enough appeal to attract investors by matching their interests.
Morgan Stanley intends the service to diversify its client base by allowing it to reach young customers sooner. People who start to accumulate wealth through the robo-advisor will be able to transfer to the company’s main advisory services.
The program will allow investors to start small, learning how to make decisions by engaging with socially responsible portfolios. As their needs become more complex, Morgan Stanley will be prepared to sell its more lucrative advice services. The strategy lets the company access a new demographic by using digital technology to upsell young clients to more expensive services.
KPMG says blockchain ‘critical’ to industry, joins advocacy group
KPMG has joined the Wall Street Blockchain Alliance as a corporate member and has declared blockchain as “critical to the industry,”
Blockchain is gaining momentum across different industries as its benefits start to become clear. The concept of a distributed and transparent ledger gives businesses a way to improve efficiency, cut down waiting times and open new revenue streams.
KPMG is the latest major firm to publicly commit to furthering adoption by joining a working group.
The Wall Street Blockchain Alliance (WSBA) is a non-profit trade organisation that’s working to advocate the introduction of the blockchain in financial services markets worldwide.
KPMG said it’s joining the group so it can work with leading blockchain experts and help to promote use of the technology within the finance industry. It’s pursuing several long-term goals, including an improved customer experience and reduced operating costs.
“Blockchain is maturing toward the production phase and it is clear that it has the potential to dramatically impact financial services by improving outcomes critical to the industry such as cost of operations, capital consumption, customer experience and in some cases new business models and revenues,” said Eamonn Maguire, global leader of KPMG’s Digital Ledger services.
KPMG’s decision to join the WSBA will give the alliance more visibility as it develops standards for blockchain use within the financial markets. A common set of standards will allow for those within the industry to collaborate on a shared blockchain platform.
Existing corporate members of the alliance include Calypso Technology, RiskSpan, OTC Exchange Network, BlockEx and blockchain analytics platform Blockchain Intelligence Group.
The addition of KPMG will provide a direct bridge between the predominantly tech-centric existing members and the industry that the alliance intends to transform.
“We look forward to collaborating with them, as our global members and indeed the world, begin to implement blockchain innovations across financial markets and beyond,” said Ron Quaranta, Chairman of the WSBA.
Deutsche Bank open-sources code from its trading platform
Deutsche Bank has released more than 150,000 lines of code from its Autobahn electronic trading platform. The company said the decision to open-source parts of the technology is intended to create a “common industry standard” for automated trading systems.
The code contains components that network “thousands” of different banking applications from across the financial services industry. It enables communication between different computer systems at banks and their customers. Called Plexus Interop, the system is part of the wider Autobahn trading platform developed by Deutsche Bank.
The release is significant for several reasons. Deutsche Bank said it wants the code to be integrated into trading applications written by external vendors. It will offer a “shared foundation” for different trading platforms, allowing them to exchange data with each other. The result will be an interoperable, cloud-based trading network based on a common set of open-source components.
The initiative is a first for the traditionally closed financial services market. It’s a prominent example of the change being necessitated by digital transformation and new cloud platforms. Customers expect information to flow seamlessly between providers so they can harness the full potential of their data pools. The days of siloed data inside closed ecosystems are gone.
Seamless trading between platforms
If Deutsche Bank’s vision comes to fruition, trading data could seamlessly pass between different platforms. Trading platforms that include the code will talk to each other, allowing customers to get more insights from their data and make better trading decisions.
Deutsche Bank said that market participants currently have to use different services to monitor their trading activity, data and news sources. Plexus Interop offers a solution where a single platform could combine all three tasks.
The milestone release is also a step forward for Deutsche Bank’s own digital transformation. The company said it wants to be a “leader” in open-source tech within banking.
“We want to be a leader in open source technology in the banking sector,” said Peter Wharton-Hood, COO of Deutsche Bank’s Corporate & Investment Bank.
“By making this code publicly available, we aim to create a common industry standard that will deliver a faster and more convenient service to clients, strengthen controls and reduce costs.”
To many providers, the concept of releasing the code to proprietary platforms would have been unthinkable just a few years ago. However, the demand from customers for interoperable solutions has necessitated a shift towards open standards that anyone can integrate with and pull data from.
The first application to use the Plexus Interop code is Symphony, a collaboration platform that’s widely used within the financial services market. Users of the messaging service will be able to access trading data from within the app, evolving the way in which banks operate.
FORMER CITI CEO: 30% of banking jobs will be wiped out in 5 years
Vikram Pandit, former CEO of Citigroup, says 30% of banking jobs could disappear within the next five years.
In an interview on Bloomberg Television, the 60-year-old Indian-American said threats from artificial intelligence and robots will “change the back office.”
“I see a banking world going from large financial institutions to one that’s a little bit more decentralized,” he told Bloomberg’s Haslinda Amin.
Pandit’s prediction is roughly in line with his former employer’s estimates. A report by Citigroup in March of last year estimated the same number — 30% — of job losses, but over a decade as opposed to just five years. The firm is already staffing up a new center to unleash robotics throughout the the bank.
Pandit helmed Citigroup for just under five years, beginning in 2007. Having led the bank through the financial crisis, and resigned in 2012. He has since founded a private equity firm called Orogen Group, where he today serves as CEO.
Many other former and current finance executives have voiced similar concerns about jobs being made redundant thanks to artificial intelligence. Last month, Axel Lehmann, COO of Swiss bank UBS, said AI would “fundamentally change the banking business.”
“I don’t want to get blindsided. It’s less the technology, as such, providing a transformative element in the banking industry,” he said in an interview with Business Insider. “It’s really alternative business models that has the potential to shake up everything and eat into our cake.
This article was originally published on Business Insider. Copyright 2017.
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