3FOOD

Third Industrial Revolution Consulting Group
target is an underserved segment of the mass affluent and emerging affluent group of
individuals with liquid financial assets of €100,000 to €1,000,000. This segment is typically
overlooked by private banking. Once their business model proves successful, some players will
start moving upmarket and offer highly customized services to the High Net Worth Individuals
(HNWI), at lower fees and potentially higher margins. At this stage, HNWI may adopt the new
service and happily accept its lower fees.
However, new players will need to gain the trust of investors and to deal with complex
regulatory hurdles. This constitutes an opportunity for traditional banks and asset managers
that, with a strong link to their customer base, are in a unique position to offer their services
such as hybrid robo-advice, which combine personal and automated advice.
The hybrid robo-advice sector is expected to grow to manage 10% of the world’s investable
assets by 2025, according to a Swiss research firm. MyPrivateBanking estimates that the socalled
hybrid robo-advisers will manage $16.3 trillion (€14.7 trillion) within the next 15 years, a
process that could also reduce the cost of advice. 13
The robo-advice industry is experiencing strong growth across Europe, wealth managers
creating their own platforms or partnering up and acquiring specialised start-ups. Luxembourg
can leverage its local expertise, ICT infrastructure and regulations to attract robo-adviser startups
and the robo-adviser units of traditional wealth managers. One positive step forward is to
create a center of expertise for AI and data analytics applied to asset management. For
example, specific courses might be set up at the University of Luxembourg as a first step to
attract and develop local talents. Niche markets might be established which focus on TIR-like
projects to attract venture capital and develop an ecosystem of startups that are focused on
TIR-specific applications of AI in the development of automated advice and process automation,
perhaps with a specific cluster from Luxinnovation. Other more extended strategies should also
be encouraged.
4.2 A Secure “Data Vault” as a Precondition to Smart Contracts
The Working Group is proposing to “Build a national secure data vault to drive efficiency and to
become the leader in the design and implementation of smart contracts.” Luxembourg should
strive to set up a central, national platform where citizens and companies may upload any of
their personal data (name, address, property data, electronic medical data etc.); a sort of “ethen
move upmarket, delivering the performance that incumbents’ mainstream customers require, while
preserving the advantages that drove their early success. When mainstream customers start adopting the
entrants’ offerings in volume, disruption has occurred. https://hbr.org/2015/12/what-is-disruptive-innovation
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