Exploring the role of robo-advisors and autonomous wealth platforms in digital finance

Digital finance refers to financial activities whose efficient functioning relies on the ubiquity and power of digitalised processes. Services that enable an efficient flow of surplus funds into poorly functioning economies are the basis of capital markets; these, however, are often still encumbered by meagre offerings of asset managers in the mutual fund industry, whose competitive structure and conditions make it hard to deploy innovation, thereby undermining potential gains (Sironi, 2016; Jung et al., 2018; Belanche et al., 2019). Robo-advisor platforms promise to eliminate information frictions and excess fees that non-disruptive incumbents impose on investors. By frictionless digitalising processes, these services also promise to broaden the offering of products to clients. Autonomous wealth platforms further digitalise the traditional work of wealth managers by introducing oracles and financial infrastructures that are natively digital. These products promise to bring clients closer to powerful capabilities that were previously only accessible by high-net-worth individuals or institution-driven platforms. They will also bridge the gap between an increasingly volatile world of crypto assets and the subaltern and illiquid realm of cheap labour and lack of capital, as many developing economies abandon digital reticence in dealing and managing cryptocurrencies and blockchain technologies. Market forces are probably signalling that the future may bring us autonomous wealth-enabled business models naturally created by emerging or continuing networks, thus replacing the promise of a democratised, fully decentralised, distributed, trust-enabled, dematerialised economy.