FinTech, Financial Sector & Dramatic Consumer Shifts

The finance sector around the world has been contending with consumer trust issues since the 2008 financial crisis. Now we’re seeing the rise of FinTech and it’s disrupting the financial sector. From RoboAdvisors to sophisticated online stock trading tools. Canadians have, for the most part, been very conservative in their adoption of new technologies and financial services. But as our recent Big Data Consumer Omnibus research has shown, this is changing. How?

In Algorithms We Trust?
An interesting insight from our omnibus was how the over 40 demographic is beginning to trust RoboAdvisors which are, essentially, algorithms that automate financial planning and investment strategies. In Canada, the Royal Bank is the first of the majors to roll out a RoboAdvisor. There is also WealthBar of British Columbia. Others are starting to emerge. In just one quarter, trust by the over 40 group in RoboAdvisors increased 33% in Canada.

Shifts in Investment Approaches
Traditionally, Canadians have mostly relied on a financial planner or a planner from their bank to manage their investments. Several years ago, some consumers started self-directing their RRSP’s. This is increasing. Canadians are shifting away from financial planners and banks to using third-party tools. Less and less are relying on Certified Financial Planners. Interestingly, social media are playing a role here as well. If banks and wealth management firms think they’re safe with the 50+ crowd, that could be a costly assumption. The fastest growing segment of social media adoption is the 55+ bracket.

What Does This Mean?
We explore the insights and meaning in more detail in our Big Data Consumer Omnibus. As a summary, banks and wealth management firms along with insurance companies, may be surprised at how rapidly Canadians are now shifting to digital services and disruptors entering the space. Larger firms will need to be increasingly aware of FinTech startups in Canada and those entering the Canadian market. Now is the time for anti-disruption planning. Consumers are moving much faster than larger financial institutions. Our research backs this up.

A Special Section on the Canadian Financial Sector

In the initial edition of the Big Data Omnibus of Canadian consumers, we have a special section dedicated to the financial sector. You can purchase a copy here: Well Researched

Are you a banker or CFP? What are your thoughts?