The future of digital wealth management

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U nlike in most consumer-oriented industries, core business processes in banking are far from fully digitized. Critical asset- and wealth management decisions such as asset allocation or investment selection are still implemented manually based on expert judgment. Digitization efforts of banks are focused on customer interfaces and the back-office. However, this will not be enough to thrive in a hyper efficient and interconnected real time digital world. Therefore, new digital wealth management frameworks are needed, covering strategic and tactical asset allocation, security selection, portfolio construction, and risk management. This is well beyond what today’s passive robo advisors have to offer – solely focusing on strategic asset allocation. A digital framework will allow banks to offer value adding solutions across client segments and channels, produced in a fully automated, cost efficient and scalable way.

„Unlike in most consumer-oriented industries, core business processes in banking are far from fully digitized."

 


To build digital frameworks, rule-based investment management is the option of choice

"Rule-based" is a rapidly growing investment category. Investment decisions are taken based on clear and evidence-based rules. This approach fulfils the key requirements. Automation: Rules are coded into algorithms. Robustness: Unlike complex quant models or AI approaches, rules are no black boxes and simple in their nature. Counter-intuitively, this makes them more robust to cope with the highly complex financial markets behaviour. Cost efficiency, transparency & liquidity: Portfolios are composed of ETF, index funds or single stocks and bonds.

Dufour Capital, an investment research driven start-up in Switzerland, founded in 2011, has specialized in rule-based investing and co-innovated a digital framework together with a leading industry player. The company advises banks and institutional investors and offers access to a wide range of rule-based investment solutions. Started with no assets but the powerful vision of “managing portfolios digitally”, the company today is one of the largest European B2B Robo Advisors with assets under advisory of over CHF 1.5 bn.