CTBC Bank, Taiwan's biggest wealth manager by fee income, is self-developing a robo-advisory platform for launch next year, taking the view that third-party technology vendors do not offer sufficiently long-term commitment or allocation strategies.
“Many independent robo-advisory firms have come to talk with us in the past three years, but they seem to have a different starting point from us,” said Albert Lee, chief executive of global retail banking and head of international private banking.
The vendors' main aim seems to be to go public on the back of cooperating with a big bank, he told AsianInvestor. “I’m not sure if they would maintain the services after listing, while we are committed to long-term services to clients.”
Challenges for robo-advisers
This approach reflects the uphill struggle that independent robo-advisers face across Asia. Traditional banks are looking to fend off the threat of technological disruption, while robo-advisers also face challenges such as know-your-customer rules and the difficulty of developing a scale business.
Lee (pictured left) said that current robo-adviser technology can do a good job of capturing market information, analysing and adjusting client portfolios efficiently and executing transactions quickly to avoid missing opportunities.
But there are shortfalls, he noted. Robo-advisers mainly focus on short-term trading and cannot provide truly long-term discretionary allocations.
For example, for a client with retirement needs, wealth managers normally need to think about how to source income for them. This may involve a wide variety of products, such as bonds (whether in developed or emerging markets), annuities insurance or life insurance.
“I don’t think the current robo-advisers can provide such complicated solutions, but this is the direction we’re working towards,” Lee said.
Slow electronic take-up?
However, private bankers say the uptake of digital wealth management in Taiwan has been slow, as it has elsewhere in Asia.
Taiwanese HNWIs' adoption of robo-advisers and other electronic services remains limited, said Dennis Chen, UBS's country head and head of wealth management for Taiwan. That’s due to the complex investment demands of HNWIs and their preference for human interaction, he noted.
Lee agreed, saying that typically robo-advisers provide pre-set investment portfolios to match certain risk appetites and investor profiles.The current model works for affluent or mass-affluent clients, but not HNWIs, who usually require tailor-made solutions and high-touch contact with private bankers, especially in volatile markets, he added.
Huang Hao, president of Ant Fortune, a mobile fund platform owned by China’s e-commerce giant Alibaba, said no Chinese fund house or internet company offered a true robo-advisory platform – something Ant Fortune is working to develop.
However, wealth managers have been warned against complacency in the face of technological advances. Consultancy PwC published research in May suggesting that the wealth industry in Asia is "dangerously" behind the digital curve.
Almost half of the HNWIs in Asia are using electronic services to manage portfolios but only a quarter of wealth managers provide such tools, according to the paper.