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How Goldman Sachs Hopes To Become Your Primary Digital Bank – Wealth Tech Digest #5

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✅ How Goldman Sachs Hopes To Become Your Primary Digital Bank

Our first article today from Bloomberg Business says that the Robo Advisory market will reach over $41 billion dollars globally by 2027. And the market is anticipated to reach this at a 31.8 percent CAGR from 2020 to 2027. These projections come from a recent Robo Advisory report from Allied Market Research. Driving this growth is the ongoing surge in the adoption of advanced technologies. There is a strong and continuing trend toward digitization in financial institutions, as well as favorable government initiatives. Robo advisors were adopted at increasing rates during the turbulent conditions surrounding the pandemic. And they are being used extensively for wealth asset management during these times of crisis.

According to the research, robo advisors help to prevent investors from making illogical or impulsive decisions during uncertain market conditions. North America had the highest market share in 2019 and is expected to retain its leadership position. This is due primarily to investments in mutual funds or ETFs made through robo advisor software. But the Asia-Pacific region is expected to witness massive gains during the forecast period as well. The Asia-Pacific region is anticipating the highest CAGR of 34.8 percent as we move toward 2027. It is worth noting that security and compliance issues are said to be restraining market growth. But robo advisors continue to offer mass exposure to individuals learning about portfolio management. And robo advisors will continue to educate investors about diversification and management through stocks, bonds, and CDs.

✅ Can Fintechs Drive Financial Literacy In The Next Generation?

Our next article today comes from the Wall Street Journal and covers a recent announcement from Goldman Sachs. They have released a new low-cost digital platform called Marcus Invest. The platform allocates and automatically rebalances an individual’s wealth across their portfolio. Models are developed by the firm’s investment strategy committee. Then those models are used to guide individual investments across stocks and bonds. This new Marcus Invest option will be integrated into Goldman’s existing Marcus consumer-banking app and website. The hope is that the new investment tech will help round out the suite of Goldman banking products. These already include savings accounts, unsecured personal loans, and budgeting software. Stephanie Cohen is the global co-head of Goldman’s consumer and wealth-management division. She says that their hope is to become the customer’s primary banking relationship by becoming the digital bank on their phone.

Historically, an investor would have needed $10 million dollars in assets to draw the attention of wealth managers at Goldman Sachs. But, in our ever-advancing technological world – all you need now is $1,000 dollars and a smartphone.

✅ Where Will The Baby Boomers’ $70 Trillion In Assets Go?

Our last digest today focuses on the financial technology currently being developed for kids and young adults. In an insightful article from Crunchbase news, author Christine Hall walks us through what is happening when it comes to kids and money management. Only 17 states in the U.S. have mandates surrounding financial literacy. And there are 85 million parents and teens in the U.S. who rarely, if ever, set foot inside a physical bank. All totalled, very little is being done in the U.S. to increase financial literacy among younger populations. This reality has led many investors to believe that this demographic is one of the last unbanked segments that exist. Many see amazing opportunities here to collaborate with schools and drive financial education. Tanya Van Court founded Goalsetter in 2016 to provide an education-first banking experience for young children. She wanted a fintech platform that could grow along with the kids. She says that parents who were surveyed didn’t want an app focused on spending.

Parents want their kids to learn how to save money and increase their financial literacy. And from a business perspective, the earlier a customer is acquired, the more sway you hold over that customer’s financial path. Van Court says (quote) “If we acquire a customer at 5 years old, we have an opportunity to keep them and be there for every one of their milestone moments” (unquote). Many agree with Van Court and her Goalsetter platform, which raised almost $4 million dollars in seed funding this January. While the data varies somewhat, many researchers believe that children even as young as 3 can grasp the basic idea of money. And by age 7, many of their financial habits may already be in place. But schools aren’t required to teach kids about money, and parents don’t seem to be rising to the occasion. This is why there is a growing group of fintech startups developing child-friendly tools and resources. And so far, they’re not having any trouble attracting funding from venture investors who agree.

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