One of the biggest competitors that incumbent banks, institutions and advisory firms face today is the Robo Advisor. Fintech startups and apps like Betterment and Wealthfront are giving consumers convenient, seamless access to financial planning using automation and artificial intelligence (AI).
However, one fintech startup is trying to do the exact opposite, putting robo advising technology in the hands of incumbents: Marstone. As a digital, white label robo advisory platform for wealth management, Marstone’s goal is to create branded user experiences that are on par with cutting edge fintech competitors. Towards that end, Marstone recently partnered with fintech leader Fiserv to offer banks that rely on Fiserv for their core processing technology a full suite of robo advisory services under the “Powered by Marstone” moniker.
But exactly how powerful will Marstone be when it comes to helping established institutions? Let’s take a closer look and find out.
The main challenge that Marstone attempts to address for incumbent financial institutions is the speed at which they need to innovate to keep pace with fintech robo-advisory apps and services. Through their existing relationship with Pershing and their partnership with Fiserv, Marstone can provide white label robo advisory services to more institutions across the country that are also Fiserv clients. This includes everything from big banks that are competing with services like Fidelity Go, all the way down to local banks and credit unions.
Marstone develops its AI tech through partnerships with some of the top technology companies, such as IBM Watson. Its platform offers automated holistic account analysis, tailored portfolios and a user experience that feels more like a lifestyle brand than a bank. The goal is to demystify financial decision making for the user, while at the same time solving one of the biggest challenges faced by the industry today: asset retention. There’s currently a massive generational wealth transfer going on, as baby boomers pass their assets onto their children.
Big banks and advisory firms that do not offer the younger generation seamless, cost-effective technology solutions that are competitive with apps like Betterment and Robin Hood risk seeing that money walk out the door as soon as it lands in the hands of millennials. By providing a branded solution developed by Marstone to these younger customers, incumbents give themselves a better chance of retaining those assets.
As robo advisory apps, solutions and platforms continue to enter the market, the struggle for incumbents just getting into the game is differentiation. So, one of the questions for some of Marstone’s future clients is, exactly how different will their robo advisory platform look and feel from everyone else’s? Vanguard and Schwab are already well ahead of the robo advisory game in terms of awareness, so do institutions that licensea white label Powered by Marstone suite of services stand a realistic chance of catching up? And will consumers that use the most popular fintech apps like Betterment and Wealthfront be willing to switch over to a branded robo advisor that they’ve never used before? These are a few of the major question marks (and potential hurdles) that Marstone and their incumbent partners will likely face in the years ahead.
OUR VERDICT: FRIEND
Innovating to keep pace with fintech startups is a huge challenge for big banks, traditional wealth advisories and even smaller credit unions. The cost of internal innovation and development is huge, especially when it comes to complex AI robo advisory solutions. Marstone is helping to alleviate much of that burden, allowing banks to offer competitive robo advisory services without the cost and headache of both development and ongoing maintenance. We see their partnership with Fiserv as a sign of friendship to incumbents, as Marstone will now be able to scale its operation and bring Powered by Marstone white label solutions to even more institutions. This should have a substantial positive impact on customer experience, and asset retention, for clients of Marstone.