SAN FRANCISCO — West Coast startups threaten Wall Street behemoths with the potential for disruption, but the new wealth management normal might include a healthy dose of firms from both coasts.
What’s at play is a side effect of the fintech innovation race; a cultural swap between the Valley and Wall Street which may be altering how both regions operate. For example, JPMorgan recently poached a former
“For me, it starts at a high level,” says Gurinder Ahluwalia, CEO of the San Francisco-based 280 CapMarkets. “How do you use tech to enable everything? That’s just how people wake up here.”
With changing user expectations and response rates, firms on both coasts are looking for the best ways to build and utilize new technology at the lowest costs, he says. "You used to be satisfied working on the bank’s schedule," Ahluwalia says. "Now, people want the ability to engage with us as they see fit and on their timing.”
However, tech innovation is not just a West Coast or East Coast phenomenon, says Jacqueline Ko Matthews, InvestmentPOD CEO. “It’s literally leveling the playing field for everybody and quickly pushing toward a digital economy across the board.”
Silicon Valley denizens are realizing that to be disruptive they have to collaborate, Matthews says at a panel at SourceMedia’s In|Vest West conference. Funding rounds and partnerships between startups and larger financial institutions have flourished. Notably, the wealth management tech provider
Likewise, partnerships can be the quickest and cheapest way for incumbents to bring new technologies to market. “The incumbents are sort of like the British monarchy that lasted for thousands of years,” Matthews says, “but have to keep reinventing themselves to stay relevant.”
Large institutions will have to adopt some of the characteristics that have made the West Coast startups successful, says Crystal Clifford, COO of HDVest. “Innovate, be more nimble, fail fast and move forward,” Clifford told Financial Planning after the panel. “Firms in the East who can bring new technologies to market faster and gain adoption quickly will differentiate themselves.”
While the mentalities of two coasts may never fully integrate, they may be come close, she says. The East will likely always have rules and regulations that restrict its ability to innovate, she says.
“There is a critical apex at which point the risk of staying the same is greater than the risk of rising to change,” Clifford says. “The legacy of the East must quickly embrace the momentum of the West.”
More about In|Vest West: As new digital tools transform wealth management, the industry’s largest players are rushing to adapt to ever-increasing customer expectations, while smaller firms strive to keep pace. Behind the scenes, many are investing more on technology and hiring to drive growth, but margins remain under pressure. In|Vest West is exploring all the dynamics at play — from front to back office — and the technologies that are shaping the future of the firm.
