Asian wealth management is at an interesting inflection point, and the next five years will reveal some path-breaking developments in the industry. At one end of the spectrum, financial technology—fintech—is spurring innovation that is disrupting traditional banking and wealth management, and on the other end, banks are seeking to reinvent themselves by focusing on technology to offer more to customers.

When DBS, which is partnered with Kasisto, recently announced their first digital-only retail banking platform in India, naysayers and old guards truly started taking note of the buzz surrounding fintech and admitted that this is not a passing fad.

Recognizing the trend, Ravi Menon, Managing Director of the Monetary Authority of Singapore, is bullish on creating a strong ecosystem for fintech development in Singapore by way of the new FinTech & Innovation Group.

On the wealth side, a start-up called Robinhood now offers a free trading platform; whereas another, called R3, is building a ‘blockchain’ union among traditional banks. Blockchain, which is the technology on which the cryptocurrency bitcoin is based, could potentially be deployed to legitimize fintech-enabled transactions without the need to comply with the typical know-your-customer norms used in traditional banking.

Banks are fortifying their positions by either investing in technology infrastructure or launching  fintech outfits.

Large traditional banks have begun to fortify their positions by either investing heavily in their technology infrastructure or, better still, launching their own fintech outfits to foster innovation from within—Citi FinTech being a recent case in point. However, when we look past the novelty, we find that while every fintech entrepreneur may claim to have found the ‘the next big idea,’ only a select few have been able to successfully monetize that idea and turn it into a sustainable business model. Yet it is already disrupting private banking in Asia.

The Slow Yet Steady Rise of the Robo-advisor

Most players in Asia still advise funds way below the critical mass needed to be sustainable. The going rate for advisory fees currently hovers between 0.15 percent and 0.35 percent of the investment, which implies gross revenue of only S$150,000 ($111,940)-S$350,000 ($261,194) for S$100 million ($75 million) in assets under management (AUM). So for a robo-advisory business to sustain, it would need significantly more than S$100 million in AUM given the fixed cost structure of operating a robo-advisor business.

Another trend we see is the relatively small size of investments, typically under $200,000. This may be due to the fact that when someone is attempting to augment their retirement income, they implicitly accept a relatively lower rate of return. Inherent to robo-advisors is the concept of portfolio investing. With high returns from single asset classes becoming increasingly elusive with the current economic headwinds, investors are keen to spread their investments in portfolios. And robo-advisors offer advice based on sophisticated algorithms mapping portfolios rather than investments in, say, equities alone.

To offset the need for “human touch,” especially for high-net-worth individual investors, a number of players in this space have begun migrating to a “bionic” or hybrid tech-augmented advisory model, where, in addition to the algorithm, there is a human advisor to guide the investor along the way.

The rise of robo-advisors points to an underserved need—the ability to see investment performance in real time rather than in static snapshots over a period of time—giving robo-advisors a leg up over traditional private banks and advisors. Investors like being able to track performance relative to standard benchmark indices for each of the asset classes within their portfolio.

A start-up called Future Advisor now provides such sophisticated analytics for free. This leads us to believe that banks will be compelled to up their game and offer more than periodic paper-based reports.

The fintech industry itself has begun to look like a promising high-return investment haven.

Betting on Fintech

Beyond robo and analytics, the growth in fintech has been marked by the rise of multiple peer-to-peer lending start-ups, which endeavor to disintermediate lending to individuals and small enterprises. In 2015, three Singapore-based P2P start-ups—MoolahSense, Capital Match, and Funding Societies—raised more than S$10 million for small and medium enterprises.

Another sweeping trend we see in Asia with the rise of fintech is the investment directed at fintech itself. In particular, ultra-high-net-worth individual investors, and more discerning family offices in Singapore and throughout Asia, are looking at more avenues to seek higher returns. With the increased volatility in equities and slowing returns in alternatives, the fintech industry itself has begun to look like a promising high-return investment haven and there has been a surge of investments into the sector.

As the fintech industry begins to bring together these start-ups and digital solutions in blockchain, analytics, lending and cybersecurity, we will find some degree of consolidation with either traditional banks acquiring promising fintech start-ups or multiple fintech companies merging or acquiring each other to broaden their value proposition.

Fintech continues to spur innovation along the entire wealth and banking value chain and will ultimately benefit individual investors above all. Traditional banking will evolve and become better as it becomes more digital. And banks will always be relevant as custodians of wealth, governed by strong legal frameworks, processes and regulation. Their challenge will be to match fintech companies in the speed of delivery, customer experience, and ability to provide financial information in real time.

The rise of fintech is as much a social phenomenon as it is technological. There is a need to ensure that enough checks and balances are in place, coupled with a longer-term view of what constitutes success in fintech as it relates to wealth management. Fintech is a strong means to an end, not an end unto itself. And the end is all about how an individual investor is empowered with more choice and better information in real time.

A version of this piece first appeared in The Business Times.