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The wealth management industry is under pressure. Profitability depends on scale, and in the United Kingdom there are more than 27,000 firms vying to advise clients on the management of their savings, from independents with a handful of clients to the wealth management arms of global asset managers and private banks. Clients are increasingly demanding, forcing their wealth managers to invest in technology to provide digital interfaces and reporting. They are also more sensitive to cost, and likely to opt for less lucrative passive investment strategies offered by the likes of Vanguard than the expensive active alternative. New entrants such as Monzo and Revolut are tempting investors with free brokerage, while platforms are also offering simpler and cheaper alternatives. Yet there is widespread recognition of the value of well-informed advice, especially if it can be provided at a reasonable price. The answer to the conundrum obviously lies in technology. Which is where Wealth Wizards comes in. The firm, acquired recently by Royal London, enables wealth managers in the United Kingdom to offer financial advice to clients in a purely digital form, making it affordable and accessible to a much wider range of investors. Dominic Hobson, co-founder of Future of Finance, spoke to Simon Binney, Business Development Director at Wealth Wizards.

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Growing institutional interest in crypto-currencies, not least as a hedge against rising inflation, has spawned a range of custodial services to safeguard the private keys without which nobody can access the digital wallet that contains the assets. Hex Trust, the Hong Kong based provider of institutional grade digital asset custody services, was among the first in the field.

Since it opened for business in March 2018, Hex Trust has gathered a diverse clientele in the private banking, wealth management and asset management industries. Future of Finance co-founder Dominic Hobson spoke to Alessio Quaglini, CEO of Hex Trust, about how he sees the crypto-custody market developing as non-fungible tokens (NFTs) and security tokens are added to the list of eligible institutional investments.

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Cross-border payments are notoriously expensive. They are also slower, less reliable and less transparent than domestic payments, in which transfers are now (or soon will be) both instant and instantaneously visible. One reason for these inadequacies is that an oligopoly is at work. There are around 25,000 banks in the world, but almost every cross-border payment ends up being handled by just 15 of them, all of which have relationships with thousands of correspondent banks. Unsurprisingly, given that cross-border payments are also cross-currency, the 15 banks are more or less synonymous with the banks that make up the foreign exchange (FX) oligopoly. CLS, the FX settlement utility set up by the major central banks, is able to cover 87 per cent of transaction volumes across 19 major currencies with a user-base of just 70 member-banks. A mere 14 of the CLS member-banks offer CLS services to the corporates and asset managers that ultimately drive FX activity, as opposed to servicing other banks. Many banks have withdrawn from correspondent banking altogether – the number is down 20 per cent since 2010 – chiefly because of the compliance risks of customer due diligence: banks do not know their customers’ customers and fear being fined for breaches of anti-money laundering (AML), countering the financing of terrorism (CFT) and sanctions regulations. In other words, more than 99 per cent of banks are just processing foreign currency payments for their own domestic or regional customers and relying on the services of the members of the oligopoly to actually send money abroad. This is why it takes an average of 2.6 banks to move an estimated US$1.5 trillion a day across borders. Yet cross-border payments are vital for economic prosperity, international trade, global financial stability, continuing growth in international e-commerce and international travel and especially in poverty reduction. Remittances worth US$707 billion passed through the system in 2019, US$529 billion to people in low to middle income countries, at an average cost of 6.82 per cent in transaction charges. This is why the G20 has made improving cross-border payments a priority and asked the Financial Stability Board (FSB) to come up with solutions; why the United Nations has set a target of reducing remittance charges to 3 per cent by 2030; why the Committee on Payments and Market Infrastructures (CPMI) has published a list of 19 “building blocks” to enhance cross-border payments; and the Bank for International Settlements (BIS) has pondered whether central bank digital currencies (CBDCs) could provide the key that unlocks for companies and consumers the value currently being eaten by banks.

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Data is all about correlation rather than causation. But this is why it is so powerful. In the past, management decisions could be based on whatever the decision-maker deemed to matter. 

Now, the causal nature of decision-making is being challenged by a host of correlations. Of no market is this truer than the previously opinion-rich but near data-free zones of workforce management and office location, both of which the Pandemic has challenged at the elemental level. So the emergence of Vertis.ai, a market intelligence platform that aims to improve decision-making in the HR and commercial real estate industries by analysing billions of data points, could scarcely be more timely. Dominic Hobson, co-founder of Future of Finance, spoke to Sam Hocking, co-founder of Vertis.ai.

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