The next wave of disruption in the asset management industry following the explosion of index funds will be a lot like the disruption in the financial advisory space: It will be digital, according to Moody’s Investors Service.
It’s already happened on a large scale in China where Yu’e Bao, a spinoff from Alibaba, is operating the word’s largest money market fund, with over $200 billion in assets from 370 million accounts.
And there are indications that something similar could happen here because tech companies are already involved in financial services. Amazon, for example, has lent more than $3 billion to over 20,000 merchants that use its e-commerce platform, and Amazon Pay, Apple Pay, Android Pay (by Google) and Facebook Messenger are are used regularly by retail customers to buy goods and services electronically.
“Ultimately, we envision a future where technology companies increasingly enter financial services, and within asset management, offer an electronic store of value vehicle, be it money market, index or digital asset funds,” write Moody’s analysts in a new report.