Transformation of conventional Banking. Opportunities and risks of Fintech companies in Asset Management

Table of Contents

1 Introduction

1.1 Relevance of the topic

1.2 Research question

1.3 Structure and approach

2 Changes on the market

2.1 Overview

2.2 Digitalization

2.3 Changes in customer behavior

2.4 Internet

2.5 Mobile

3 Banking

3.1 Banking in Germany

3.2 Retail Banking in Germany

3.3 New trends of Retail Banking

4 Asset Management

4.1 Type of Investors

4.2 Service Type

4.3 Place of Service and Investment Objective

4.4 Market Participants

4.5 Processes

4.6 Intermediaries

5 Fintech

5.1 Definition

5.1.1 Impact of Fintech

5.1.2 Impact of Robo Advisors

5.2 Asset Management

5.2.1 Personal Financial Management

5.2.2 Robo Advisory

5.3 German market in comparison

5.4 Regulations for Robo advisors

5.5 Legal classification of Robo Advisory models in Germany

5.6 Analysis of the Business Model

5.6.1 Business Model Canvas

5.6.2 Key Partners

5.6.3 Key Activities

5.6.4 Key Resources

5.6.5 Value Proposition

5.6.6 Customer Relationships

5.6.7 Channels

5.6.8 Revenue Streams and Cost Structure

5.6.9 Customer segments

6 Investigation

6.1 Introduction

6.2 Aim of research

6.3 Structure

6.4 Results

6.4.1 Characteristics of the companies

6.4.2 Answers

6.4.3 Analysis

7 Conclusion

7.1 Development

7.2 Digitalization

7.3 Partnerships

7.4 Security concerns

7.5 Modification of the industry

7.6 Summary

8 Appendix

Research Objectives and Themes

This thesis examines the transformation of the traditional banking sector through the emergence of financial technology (Fintech) companies, with a specific focus on the asset management sub-segment known as "Robo Advisory." The research investigates whether these algorithm-based platforms are reliable, secure, and viable long-term alternatives to conventional banking and investment management, particularly during unstable market conditions.

• Digitalization and its impact on customer behavior in the financial sector.
• Business models of Robo Advisory compared to traditional banking practices.
• Regulatory frameworks and market conditions in Germany.
• Security and reliability of automated investment algorithms during market crises.
• Strategic partnerships between established banks and Fintech companies.

Excerpt from the Book

Summary of Chapters

1 Introduction: Introduces the shift in the financial services sector driven by digitalization and outlines the study's focus on the emergence of Robo Advisory.

2 Changes on the market: Examines broader market trends, including the impact of digitalization, evolving customer behavior, and the growth of internet and mobile technology usage.

3 Banking: Provides an overview of the German banking system, its structure, and current trends in retail banking.

4 Asset Management: Details the key components of asset management, including investor types, services, and the role of intermediaries in the investment process.

5 Fintech: Defines Fintech, explores its impact on the banking industry, and provides an in-depth analysis of Robo Advisory business models and regulations.

6 Investigation: Presents the results of a qualitative study based on interviews with industry specialists regarding the performance and reliability of Robo Advisors.

7 Conclusion: Summarizes the findings on the future of the industry, focusing on digitalization, partnerships, security concerns, and market modifications.

Keywords

Fintech, Robo Advisory, Asset Management, Banking, Digitalization, Investment, Algorithm, Market Share, Financial Crisis, Portfolio Management, Customer Behavior, Regulation, BaFin, Business Model Canvas, Transparency

Frequently Asked Questions

What is the core focus of this Master's thesis?

The thesis focuses on the transformation of conventional banking by Fintech companies, specifically examining how Robo Advisory platforms operate and compete with established banking institutions.

What are the primary themes discussed in the research?

Key themes include the impact of digitalization on customer preferences, the regulatory environment in Germany, the business models of Robo Advisory firms, and their performance during market downturns.

What is the main research question?

The main question is whether algorithm-based asset management methods can successfully compete with traditional market players or if they will face significant hurdles regarding security and long-term stability.

What scientific methods were employed for this study?

The research uses both a comprehensive literature-based investigation and a qualitative empirical approach consisting of interviews with five specialists from the Robo Advisory sector.

What topics are covered in the main section of the book?

The main section covers the German banking landscape, definitions of Robo Advisory, regulatory challenges (e.g., MiFID 2), detailed business model analyses, and a practical investigation of system reactions during market instability.

Which keywords best describe the essence of this work?

Essential keywords include Fintech, Robo Advisory, Asset Management, Digitalization, Financial Algorithms, Market Performance, and Investor Protection.

How did Robo Advisors perform during the February 2018 market slump?

The study notes that Robo Advisory portfolios generally experienced performance losses between 3.6% and 8.2% during this period, similar to the broader market.

Do Robo Advisors have emergency plans for financial crises?

The interviews revealed that most algorithm-based Robo Advisors do not have automated emergency "kill switches" for crises; instead, they rely on pre-defined thresholds and monitoring by human expert teams.

What is the primary advantage of Robo Advisory according to the author?

The primary advantages identified are cost efficiency, transparent 24/7 access to portfolios, and the ability to provide automated, evidence-based investment advice to non-wealthy individuals.