How Fintech Is Integrating Hyper-Personalization Into the Financial Sector

Betterment’s Sarah Kirshbaum Levy and Cognizant’s Kevin Pleiter sat down with Worth at the Health + Wealth of America Conference to discuss the effects of fintech’s continued integration into the financial services industry.

Published on December 17, 2021

Photo courtesy of Alex Kotliarskyi via Unsplash

From checking your online statements to trading stocks, digital finance has quickly become something that we cannot live without. At the Health + Wealth of America conference on Thursday, industry experts Sarah Kirshbaum Levy, CEO of Betterment, and Kevin Pleiter, managing director of capital markets at Cognizant, sat down with Worth to discuss the ways in which fintech will continue to permeate and improve the financial sector at every level. The fintech revolution has opened the doors to a broad array of financial possibilities that have democratized aspects of wealth management that have previously been difficult to access. Kirshbaum Levy is hopeful that technology advancements will lend themselves to long-term thinking about retirement benefits, democratizing the process and allowing everyone to plan for the future with ease and understanding. Pleiter sees the rapid advancements in financial technology as an opportunity to provide not only education but valuable, high quality wealth advice to a broad audience at a fraction of the cost. Pleiter also notes that the capacity for hyper-personalization of wealth management is made possible by advancements in the fintech space, effectively breaking the mold of traditional wealth management techniques that consisted of portfolio silos with each client being delivered the same model portfolio as thousands of other clients. Through the advancement of technology, personalized financial strategies can be tailored to each individual’s needs and circumstances. One of the practical ways personalized portfolio management has improved due to technology is through machine learning and AI. Kirshbaum Levy points out that machine learning has dramatically streamlined the process of portfolio management by tailoring and rebalancing your financial portfolio, which can also be overlaid with rules about risk tolerance and tax preferences.

Over the course of the past two years, most everyone’s personal and financial needs have shifted in a way that legacy banks could not navigate without the aid of fintech startups. As moderator of this session and Clarim Media’s chief content officer James Ledbetter points out, startups in the fintech industry market themselves as revolutionaries that are here to replace big banks; however, the reality of a forced adjustment to online banking and wealth management is that without the innovation of these startups, legacy banks would not have been able to deliver the same level of service to their client bases over the course of the pandemic. Thus, partnerships between fintech and legacy banks were a crucial step toward the survival of these two competitors.

While fintech brings a lot of benefits to the financial sector as a whole, Ledbetter points out that there are also downsides—such as the gamification of investing and trading. Kirshbaum Levy and Ledbetter discussed that, as a fiduciary, Betterment is obligated by law to advise their clients to act in their own best interests, whereas financial services and platforms that promote ease of transaction may be taking advantage of their users. “Nothing is ever really free,” she says, noting that when you are dealing with platforms that encourage ease of transaction over a long-term holding strategy, the user becomes the product.

The effects of fintech on the financial sector as a whole are pervasive and largely beneficial. Through the advancement of technology, AI and machine learning, the fintech revolution has the power to help create hyper-personalized portfolios, democratize aspects of financial planning that might otherwise remain obscure and allow legacy banks to work in tandem with new tech to provide high-value service at a fraction of the cost. However, with great power comes great responsibility and that power has been placed in the hands of the consumer. The gamification of investing and trading opens the door to a host of dangerous possibilities that may place the unknowing user at risk.