The rise of blockchain technology: disruption of the financial ecosystem

Blockchain technology offers a transparent, efficient and secure way of recording transactions. For wealth and asset management, blockchain’s core advantages lie in its ability to provide real-time, tamper-proof data, automate processes through smart contracts and eliminate the need for intermediaries such as custodians, brokers and clearing houses.

One of the most significant impacts blockchain will have on the industry will be through the tokenisation of assets. Traditional asset classes such as real estate, private equity and even rare art can now be tokenised and traded digitally on blockchain platforms. This democratises access to investment opportunities, bypassing traditional financial institutions that have long held control over such assets. Wealth managers and asset managers who rely on these intermediaries to access high-value investments may find their roles increasingly obsolete as blockchain-enabled platforms offer direct access to these markets. There are even industry observers that expect all kind of bankable assets to be tokenised one day due to various technological advantages.

This is because, among other things, blockchain's potential to streamline operations by reducing settlement times, increasing transparency and improving compliance mechanisms could significantly lower operational costs. Automated solutions powered by blockchain can replace tasks traditionally handled by wealth managers, such as portfolio rebalancing, transaction verification and client reporting. As these processes become more efficient and secure through decentralised protocols, the need for human oversight diminishes, leading to a possible reduction in demand for wealth and asset managers.

Artificial intelligence: enhancing decision-making and automation

While blockchain allows for the efficient management and exchange of digital assets, AI brings another dimension to wealth and asset management: the automation and enhancement of decision-making. AI-driven algorithms, particularly those using machine learning (ML), are capable of analysing vast amounts of data, identifying patterns and making predictions with remarkable accuracy. For asset managers, AI has already begun to replace traditional research methods by automating the analysis of financial markets, news sentiment and even alternative data sources such as social media trends and satellite imagery.

AI-powered robo-advisors, for instance, provide personalised investment recommendations based on an individual’s financial goals, risk tolerance and investment horizon. These robo-advisors are not only cost-effective, but are also capable of providing round-the-clock service to clients, far surpassing the capabilities of human wealth managers in terms of accessibility and scalability. With algorithms constantly learning and adapting, AI can continuously refine its recommendations and adjust portfolios in real time, often with greater precision than a human manager could achieve.

Moreover, AI enhances risk management by offering predictive analytics and scenario modelling that anticipate market fluctuations, thereby allowing asset managers to mitigate risk more effectively. For traditional wealth managers, whose value proposition has historically been rooted in a combination of market expertise and individualised investment solutions, AI-powered solutions challenge the necessity of human intervention in investment decision-making. These tools can provide more granular, data-driven insights at a scale and speed that human advisors cannot replicate. However, the value of human expertise will change over time rather than be replaced – if business and investment models are adapted accordingly.

The changing role of human expertise

While blockchain and AI may render some aspects of wealth and asset management redundant, the complete replacement of human expertise is unlikely in the near future. However, the role of wealth managers and asset managers will certainly evolve. Advisors who can effectively harness these technologies and integrate them into their practices will remain valuable. Human expertise will still be needed for nuanced decision-making in complex financial situations or sensitive decision processes, particularly where emotions, personal circumstances and cultural factors come into play. 

Additionally, the relationship-driven nature of wealth management cannot be replicated by machines. High-net-worth individuals and institutional investors often seek tailored advice that considers both financial objectives and emotional considerations. While AI can help optimise portfolios, the human element of trust, understanding and long-term relationship-building will remain important.

Advisors who embrace blockchain and AI as tools to enhance their capabilities will find opportunities to become more efficient, expand their service offerings and create more value for clients.

Important legal information

_{This publication is intended for information and marketing purposes only, and does not constitute investment advice or a specific individual investment recommendation. It is not a sales prospectus and does not constitute a request or an offer or a recommendation to buy or sell investment instruments or investment services, or to engage in any other transaction. Maerki Baumann & Co. AG does not provide legal or tax advice. Investors are therefore advised to obtain independent legal or tax advice concerning the suitability of such investments, since their tax treatment depends on the personal circumstances of the investor in question and is subject to change at any time. Maerki Baumann & Co. AG holds a Swiss banking license issued by the Financial Market Supervisory Authority (FINMA). Please note that Maerki Baumann & Co. AG does not provide legal or tax advice. The above information should not be considered as such. It is only an initial assessment without any claim to completeness or correctness. For a final and legally binding assessment, please contact a tax expert.}
 

Editorial deadline: 26 March 2025

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