Crowdfunding in the UK: The Democratization of Finance, Opportunities, and Challenges in the Wealth Management Industry

by Ashley Globerman, February 9, 2016
Industry Trends
EMEA

Abstract

Abstract
The crowdfunding industry in the UK continues to disrupt the traditional wealth management industry.

This report explores the alternative finance industry in the UK, specifically crowdfunding, from a wealth management perspective. The study seeks to identify the users of these platforms, and the opportunities and level of disruption these portals pose to traditional wealth managers and technology providers. 

“The crowdfunding market is only a sliver of the vast £600 billion UK wealth management industry,” says Ashley Globerman, an analyst with Celent’s Wealth Management practice and author of the report. “However, since the financial crisis and especially over the past couple of years, there has been a rise in technology-backed, socially engaging, and self-directed models of investing, all of which have a compounded effect on the conservative wealth management industry.”

This report touches on various forms of crowdfunding, but focuses more on equity crowdfunding because it is the model with the highest growth rate in the UK. Celent defines crowdfunding and its role in the UK, sizes the market, assesses the consumers of crowdfunding, ascertains major market players, and discusses opportunities and challenges to traditional wealth managers and technology providers. 

Some of the key findings from this report include:

  • Technological advancements, skepticism, risk aversion, low interest rates, and an overhaul of the UK pension system are driving millennials and others (such as tech-savvy Gen Xers, Baby Boomers, “silver entrepreneurs,” and pensioners) to wade into the crowdfunding scene. 
  • Wealth managers can benefit from the emergence of crowdfunding platforms in several ways, although they must trounce inherent hesitations towards the Fintech industry.
  • The more digitally enabled, self-directed channels will adapt easier to crowdfunding than wealth managers whose core business is high touch / full service advisory. However, there are opportunities for all types of firms and technology providers to benefit from the disruptive potential of crowdfunding.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Market Overview

2

 

Key Research Questions

2

 

Market Sizing

3

 

Regulations

5

Consumers of Crowdfunding

6

 

Benefits

8

 

Challenges

9

Major Market Players

11

 

Types of Firms

11

 

Crowdfunding Platforms

11

Opportunities and Challenges for Wealth Managers and Technology Providers

14

 

Online Brokers

14

 

Banks

15

 

High Touch and Advisory-Led Wealth Managers

15

 

Technology Providers

16

Conclusion

17

Leveraging Celent’s Expertise

18

 

Support for Financial Institutions

18

 

Support for Vendors

18

Related Celent Research

19

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