The combination of finance and technology in what we now know as ‘fintech’ has brought many new new business models to the market, one of the fastest growing of which is robo-advisory. Robo-advisors are computer driven, enhanced investment engines that help individual investors make better decisions about their money, with varying levels of success. The robo-advisor space in China is new, but growing rapidly and comes at an interesting time, as retail investors are becoming more mature and sophisticated with their investments.
However, there is uncertainty about the future these platforms. Although they have the potential to help investors reach greater returns on investment, in a market where money market funds and simple money market funds pay high-single digit returns, where do robo-advisors fit in? The middle class is still under-served by the traditional wealth management industry and may have significant potential. China’s recent slow down, volatile stock market, and weakening currency have all been catalysts for robo-advisor demand as investors start looking for more consistent returns. Robo-investment also gives consumers the option of investing in overseas markets – within China’s foreign currency limitations. Given the economic slowdown, this seems to be a very attractive option for Chinese consumers.
In this report, we will first discuss the robo-advisory process. Then we will take a look at the global market for robo-advisors, and why the Chinese market is ready for this service, despite the limitations. We will also talk about Chinese consumers’ trading and investing preferences and discuss restrictions in the Chinese market and regulation on cross-border transactions as well as some of China's other unique market characteristices. Finally, we provide our predictions for the robo-advisory industry in china, and the growth opportunities for both domestic and foreign players.