Hong Kong is poised to see its first bank-based robo-advisor aimed at retail investors this year. Hong Kong’s CMB Wing Lung Bank, a local bank acquired by China Merchant Bank in 2008, is preparing to roll out a mutual fund-based robo-advisory service offered to retail investors.

 

The robo-advisor will construct a portfolio of between eight and 15 funds for users from around 800 Hong Kong-authorized funds the bank already carries to help investors achieve global exposure, and will include a quarterly rebalancing feature, says Kelvin Lei, co-founder and CEO of technology financial service provider AQUMON, which helped the bank to establish the robo platform.

 

Lei anticipates that there are more retail banks in Hong Kong that will roll out robo-advisory services this year or next. Although Hong Kong’s mutual fund distribution landscape has long been dominated by two or three large foreign banks operating in the territory hat sell investment products to clients as part of wider services, Lei believes some Chinese banks are ahead of their global peers in the development of robo-advisory services.

 

Global banks have experienced teams of fund researchers with a strong knowledge of asset allocation, but the Chinese banks have moved quickly to partner with fintech firms to acquirie this capability, he says.

 

Lei says established banks are quickly catching up in anticipation of a new competitive landscape when virtual banks will be required to win the Securities and Futures Commission’s approval before they build up digital infrastructure for wealth business.

 

Many robo-advisors in Hong Kong have generally focused on using ultilise exchange-traded finds as portfolio building blocks in a bid to provider cheaper services to attract retail investors. AQUMON runs its proprietary U.S. and Hong Kong ETF-based robo.

 

New robo platforms to provide portfolios of mutual funds could generate consistent asset flows for fund companies in the territory. AQUMON’s Lei says utilizing mutual funds as portfolio building blocks, robo-advisors are set to help traditional banks unlick their untapped clientele and bring in steady flows to funds on their shelves.  

 

 

This article is selected from Ignites Asia and please click here to read the original article.

 

 

 

 

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