What is Expected in 2016 from Fintech Markets?

VCs have been advising startups to make sure they have enough funds to operate for the next 18 months due to an expected pullback of investing by venture funds and late stage investors. Is this also affecting the Fintech Fintech Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Read this Term market or is investor appetite continuing from 2015?

It has been reported that wealthy investors are showing interests toward digitally delivered investment advice, due to all the suspicions around the unnecessary surcharges. The robo-advisors market has been growing exponentially and can't be categorized under the same category, so two main categories appear. The first one is involved in distinguishing the business to consumers (B2C) from the business to business (B2B) which is intended for institutional clients. The second category involves the categorization by scope of the services provided and the product universe like financial products or partnership with fund companies.

This year it is expected that merger and Acquisition Acquisition Acquisition means acquiring or taking possession or the securing of property, services, or abilities. To put it simply, it is the act or process of acquiring or gaining. You can acquire a work of art, you can acquire an ability such as speaking another language, you can acquire a business or shares in a company and you can acquire an accountant's service. For example, you can acquire a new car. In a broad sense, Acquisition can mean the act of taking ownership or possession of something. There Acquisition means acquiring or taking possession or the securing of property, services, or abilities. To put it simply, it is the act or process of acquiring or gaining. You can acquire a work of art, you can acquire an ability such as speaking another language, you can acquire a business or shares in a company and you can acquire an accountant's service. For example, you can acquire a new car. In a broad sense, Acquisition can mean the act of taking ownership or possession of something. There Read this Term (M&A) activity will increase and leapfrogging from the incumbents will start. This will allow for the detailed monitoring of the business model of each technology platform. The expectations are that this will shift the market from fees to trust. There will be some issues with the battle in the U.S. regarding the Fiduciary Standards. This is due to the evolution of the industry and brokers and all financial service provider are affected. The reason is conflicts of interest in the practices, and the cost associated with using them and whether standalone Fintechs are the beneficiaries or not.

The Department of Labor has taken an angle toward the tech companies which offer standalone robo-advisors that help retail inventors access and affordable service. Expectations are that they will assist toward a better fiduciary standard for consumers, for example Wealthfront. Companies like Betterment have made statements in the past that they don't work with specific brokers and their main focus is their clients, which seems to calm jitters.

The SEC and FINRA are discussing the possibility of whether robo-advisors should be regulated and subjected to fiduciary standards. In a research by attorney Melanie Fein, commissioned by the Federated Investors, she states that there should be caution when approaching this kind of services for retirement accounts. Even though the companies that participated in the research are only 3 the conclusion is straight to the point- robo-advisors do not live up to the public expectations neither to the DOL fiduciary standards.

They are discretionary managers whose profiling technology is static and incapable of taking into account the broad financial picture and needs of the client, especially when in retirement. The service offered cannot be in the best interest of the client's needs because it is “myopic”. The shortcomings pointed out by Melanie are more acute for retirees whose time horizon is shorter and who need different treatment than other demographic groups. Retirees are more interested in income generation, tax-loss harvesting, and drawdown advice. Their profiling is subject to change and the process used by robo-advisors may not be adequate to take into account all other non-financial parameters that affect significantly, albeit indirectly, financial needs.

At the moment with all the uncertainties that 2016 carries, this year standalone business models will be watched closely and the only thing that the market will be looking for is trust. This will be carried out from agency and regulatory bodies to the institutions that are still uncertain whether they should adopt these new practices or not. It is not only Federated Investors that are doing research into this domain, but others like SEI investments are too.