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- With 2020 quickly approaching, Business Insider has been polling experts to learn what finance, investing, payments, and real estate will look like in 2030.
- The past 10 years have seen cost pressures and technological change sweeping across the financial-services industry, and we saw that come to a head in several key ways in 2019.
- Tech and big data will inevitably continue to drive some key shifts. And the types of skills and jobs needed are generally expected to look very different in 10 years as more basic functions continue to be automated away.
- Here are 26 predictions about what’s in store for the next decade.
- Click here for more BI Prime stories.
With 2020 quickly approaching, Business Insider has been polling experts to learn what finance, investing, and real estate will look like in 2030.
The past 10 years have seen cost pressures and technological change sweeping across financial services, and we saw that come to a head in several key ways in 2019.
This year may be remembered as the year that the broker wars reached a fever pitch and discount brokers slashed stock-trading commissions to zero (setting up an even more compelling case for industry consolidation in the process.) We also wrote about how the rise of portfolio trading for credit — the latest in a string of innovations to come to the credit market in recent years — was pushing that space toward electronification and away from high-touch practices that dominated for so long.
All the while, historically low interest rates over the past decade-plus have sent investors on a frantic search for yield, resulting in huge piles of yet-to-be-spent private-equity dollars.
We’ve also written about how new tech could leave some industries scrambling to address ethical issues and get out in front of regulatory changes. In the insurance-tech world, for example, some are voicing worries that the use of tech to write increasingly customized insurance policies could leave the riskiest customers without coverage.
Given the whirlwind year we had in 2019, we were interested to learn from experts what the future could hold. If there’s one takeaway, it’s that technology and big data will inevitably continue to drive some key shifts. And the type of skills and jobs needed in and around finance are generally expected to look very different in 10 years.
New tech will likely change the way we move around in the world, which could translate to changes in real-estate markets. Virtual and augmented reality could give us new ways to picture investments and risk. Human jobs giving financial advice will change as more basic functions are automated away.
And algorithmic trading and the rise of passive investments will likely continue to reshape public markets — changing what it means to be a stock picker.
Here are the 26 must-know predictions for the next decade.
Alex Nicoll, Casey Sullivan, Bradley Saacks, Meghan Morris, and Shannen Balogh contributed reporting.
1) Voice-enabled tech will be commonplace in wealth management
Wealth execs who we surveyed overwhelmingly see artificial intelligence and machine learning as heavily aiding advisers by 2030. Artificial intelligence has already showed up at TD Ameritrade, which its rival Charles Schwab is set to acquire in a $26 billion deal expected to close during the second half of next year.
Business Insider reported earlier this year that the firm was building out a Netflix-like recommendation system powered by AI, in which clients are served news and information based on their trade data and holdings.
Danielle Fava, the director of innovation at TD Ameritrade Institutional, is now thinking about other use cases. By 2030, the industry should expect AI to aid advisers in providing their clients with “extreme personalization” in how and when they communicate and making investment decisions, Fava said.
She also sees voice-enabled search functions, paired with machine-learning technology, becoming commonplace at advisory firms.
“A decade from now, one of the hottest trends in technology should be commonplace among advisory firms: voice-enabled search combined with machine learning,” she said.
“Adoption of smart speakers such as Amazon Alexa and Google Home is expected to be faster than for any other consumer device, including the smartphone, as consumers grow more comfortable making trades and checking their account information without clicks and taps.”
Read more wealth-manager predictions.
2) The Amazon effect will reshape mortgage lending
Experts expect the mortgage-lending industry, which is still bogged down in Byzantine paper-heavy steps, to rapidly evolve in the coming years as the Amazon effect — meaning the buy-it-now expectation among consumers — finally hits mortgage providers.
“While owning a home has long been the cornerstone of the American dream, it’s head-scratching that in today’s on-demand Amazon and Venmo digital world, the mortgage industry — with $15 trillion in assets — has remained painfully analog and plagued with inefficiencies,” said Vishal Garg, the cofounder and CEO of the mortgage-tech startup Better.com, a rapidly growing digital-lending startup that has attracted more than $200 million in funding from backers.
Garg said he expected the “Amazon effect” to hit the mortgage industry, eventually allowing customers to deal with different parts of the process in one place — realtor, financing, title insurance, homeowners insurance, and appraisals.
Read more about how upstart lenders and incumbents like Bank of America are thinking about mortgage tech.
3) Private-equity firms will staff more tech specialists
New technology affecting many industries in which private-equity portfolio companies operate is expected to shape the private-equity workforce as firms continue to morph into giant asset managers, launching and expanding new products for investors, experts said.
By 2030, private-equity firms will likely have whole teams of specialists who dedicate themselves to implementing and maintaining new technologies at a wide variety of portfolio companies across sectors, recruiters told Business Insider.
“The sectors themselves may also be categorized differently” within the private-equity firm, Noah Schwarz, a recruiter at Korn Ferry, said. “For example, old-line industrial manufacturing will likely be called industrial technology.”
Read more about the five key themes that will shape private equity in the coming decade.
4) Wall Street will play catch-up with tech when it comes to office design
Todd Burns, JLL’s head of project and development services, said he was seeing ratios increase to as many as four employees per desk in some financial institutions’ divisions, up from one desk for every one employee.
And those desks look different: Burns said finance was increasingly adopting the sit-stand desks common at tech companies. He expects financial firms to keep tracking tech firms in terms of workplace design — albeit will a several-year lag.
“My belief is the financial institutions are generally 5 to 7 years behind everybody else,” he said. In a decade, “offices will look more like tech firms but have the security of the bank.”
Read more about the office of the future.
5) Different ways to finance homeownership could attract bank copycats
The housing-affordability crisis will continue through the beginning of the decade and potentially longer, according to most of the experts we spoke with. Within real estate, a few startups are trying to offer different kinds of ownership options.
One large category of startups focused on affordability straddles the borders of proptech and fintech by using technology to update financial products like rent to own, fractional ownership of homes, and home-equity loans.
Brad Greiwe, the cofounder of the proptech-focused venture-capital firm Fifth Wall, said these models may be able to attract consumers, but once they do, the larger banks will copy them and put these proptech companies out of business.
“It is being driven from the proptech technology side, and unless the banks are going to adopt them, it’s not going to be that impactful,” Greiwe said.
Read more about what experts think it will take to solve the affordability crisis.
6) Financial firms will keep moving offices out of big cities
Both to keep costs low and to tap new labor pools, financial institutions have already signaled plans to expand into cheaper markets well outside New York and San Francisco: PIMCO is hiring for a 200-person office in Austin, Texas; BlackRock is building a 1,000-person office in Atlanta; AllianceBernstein is moving much of its New York office to Nashville, Tennessee.
Similarly, JLL’s Burns said he talked to a client this month with space in Washington, DC, that’s thinking about a move.
“They’re a financial institution saying, ‘We could do that in Milwaukee just as easily.’ I think you’ll see more of this move from city centers,” he said. Hot markets for JLL’s financial clients include Charlotte, North Carolina, and Houston.
Julie Whelan, CBRE’s head of occupier research for the Americas, said CBRE has seen a lot of interest from finance in what real estate calls secondary markets — like Phoenix, Nashville, and Tampa, Florida — and she expects that interest to accelerate.
“There will be some tertiary markets that start to pop up. We looked at markets we’d consider next-generation where you’d need to be a pioneer from a financial services perspective, like Utah — not Salt Lake City, but going out to Provo; Boise, Idaho; Raleigh-Durham; Indianapolis,” Whelan said.
“Those are markets we’ll start to hear more about from a financial-services perspective that are more overshadowed by the secondary markets now.”
Read more about how Bank of America is chasing smaller deals and already expanding its investment bank to far-flung American locations that it had previously ignored, adding San Diego, Nashville, and Salt Lake City.
7) Investment research, asset allocation, and portfolio rebalancing will be fully automated, thanks to AI and ML
Wealth execs we talked to largely see the industry being dominated by fewer large players than today, wealth managers (who still exist) regularly harnessing artificial intelligence, and advisers taking on a more conciergelike role.
“With the proliferation of artificial intelligence and cloud computing, many investment-management processes currently implemented by advisers will likely be fully automated using algorithms and machine learning to offer implementation with limited adviser intervention, e.g., investment research, asset allocation, portfolio rebalancing,” Ben McGloin, the head of advice, planning, and fiduciary services at BNY Mellon Wealth Management, said.
“These adviser tools will not only ensure improved and more consistent outcomes for clients but will also allow advisers to manage more clients and spend more time with them.”
Read the full text of our wealth-manager survey here.
8) The Internet of Things will play more of a role in payments — and smart cars are up first
The card-network giant Visa has been investing in Internet of Things payments for the past couple of years, Bisi Boyle, the vice president of Internet of Things at Visa, told Business Insider. Smart devices making their own payments is likely to start with smart cars, with other applications in appliances and other devices to come after that.
Boyle heads up efforts around connected payments and is leading Visa’s charge to make sure the card network’s rails are connected on the Internet of Things. And for 2020, she’s focused on rolling out invisible payments in cars.
“We saw the opportunity because of this explosion of connected devices that make up the Internet of Things that people use every day now,” Boyle said.
The four use cases Visa is exploring with cars are fuel, parking, food, and tolls. Cars, Boyle said, will likely be the first place consumers will see Internet of Things payments — and she predicted that capability could arrive as soon as next year.
“The idea is you’re just living your life, and all these payment experiences happen,” Boyle said.
Visa is betting that fuel and parking use cases will surface in the 12 to 18 month range, Boyle said. And the card company has already partnered with car companies like Honda to start rolling out the tech.
Paying for parking and gas are just the beginning, though. Boyle sees drive-thru and curbside food pickup as the next step for the tech within three years.
Read more about how Citi Ventures is betting on cars that pay their own bills and why its cohead of investing envisions a future where your devices make payments without you.
9) Closing on a house will take days, not weeks
The average time it takes to close on home is still upward of 45 days — a month and a half.
But that figure has been falling as the influence of startups proliferates. A 2018 study by the Federal Reserve Bank of New York found fintech mortgage challengers processed applications 20% quicker than traditional lenders without engaging in riskier underwriting.
Home closings for digital customers at places like Better and Bank of America happen in about 20 days — half the industry average. Redfin offers a 25-day closing guarantee, and the average will continue to drive lower as more parts of the process are streamlined.
“We’ll see the time from application to closing shrink considerably as we’re able to automate more of the preapproval, underwriting, appraisal, and the close,” Jason Bateman, head of Redfin Mortgage, said. “We’re within striking distance of being able to consistently close a sale within 12 days of an accepted offer.”
By 2030, closing on a home in under a week will become the norm, Better.com’s Garg said.
“The continued advancement in technological innovation around the mortgage process will soon allow us to see five-day closings in the coming years,” Garg said.
Read more about what Bank of America is already doing on the tech front for mortgages.
10) Financial advisers will need to prove the value of the human touch
Financial planning was a topic that cropped up again and again with wealth execs.
“Successful advisers will need to demonstrate that they can add value beyond the computing capability of algorithms,” BNY Mellon Wealth Management’s McGloin said.
“In order to navigate the short- and long-term wealth-management challenges that certainly lay ahead, advisers will need to ensure that their clients have a comprehensive wealth plan that goes beyond just managing their investments.”
He said that financial advisers would need to use advisory tools to work closely with their clients to make sure that the advice they provide and the practical strategies they recommend are in tune with their clients’ preferences. They also need to help realistically provide for the future that clients want for themselves and their families.
“This is not a formula likely solved by algorithms; it’s a personalized plan for growing and sustaining real-life wealth,” McGloin said.
Read more wealth manager predictions here.
11) The lines between private equity and hedge funds will blur
Private equity, once an obscure part of the alternatives space, will have more assets than the better-known hedge-fund industry by 2023, according to Preqin. Institutional investors, meanwhile, are shifting more of their portfolios to the private markets, according to EY, in part because of underperformance of active managers on the public markets.
“The demand for less-liquid securities will grow over time as more and more view it as an area that investment firms have an edge and where high returns can be generated relative to liquid markets,” Don Steinbrugge, the founder of the consultancy AgeCroft Partners, said.
“The lines are blurring between hedge funds and private equity, and I expect the industries over time to converge.”
Already, top stock-picking hedge funds — managers who made their names and their billions with concentrated bets on well-known public companies — are seeing the light.
Viking is growing its private-markets team after putting more than a half a billion dollars to work in the private companies during the first half of this year, while Tiger Global and Coatue have become some of the biggest early-stage investors. Point72 and Two Sigma have built out venture-capital arms, and Lone Pine is opening up another one of its funds to private investments.
Read more about big investors’ plans to drop hedge funds in favor of private equity.
12) The brokerage and wealth industry will continue to consolidate
Charles Schwab in November announced plans to buy rival TD Ameritrade.
Leading up to that, analysts considered what discount brokers’ rapid-fire decisions to eliminate online-stock-trading commissions would mean for the brokerage industry’s future — and how those firms fit into the broader wealth-management space.
Those trends pointed to the conclusion that size is the only way to win. And on top of the brokerage space, they’ve brought digital advice and human-driven wealth management into the spotlight as another business line facing similar cost pressures that could boost the need for tie-ups.
Schwab is also set to buy wealth and brokerage operations from USAA. And earlier in the year, Goldman Sachs agreed to pay $750 million cash to buy United Capital, a registered investment adviser with 220 wealth managers and $25 billion in assets. More broadly, there has been a surge of consolidation in the registered-investment-adviser space over the past two years.
“I believe the current wave of industry consolidation is a consequence of several possible factors,” Jim Hays, the president and head of Wells Fargo Advisors, said. “It may be a matter of scale — being able to compete and offer a vast array of client services is becoming table stakes as client needs and complexity grow.”
“Those consolidating may not have a value proposition that is powerful enough for attracting either financial advisers or clients. Additionally, the regulatory environment is likely driving the need to consolidate,” he said.
“Essentially, if a firm doesn’t have critical mass, it can be very challenging to be successful. Clients expect an integrated, unified experience across all their finances. Smaller firms may not have the scale and security to deliver as client needs change.”
13) Lenders will need to brace for changing tastes among homeowners
The baby boomers were the largest generation. But then along came the millennials, a generation of more than 70 million now in their 20s and 30s who have persistently zagged where boomers zigged, often delaying cultural milestones — including homeownership.
“As with most everything else millennials do, they will likely buy homes when they are somewhat older than those in earlier generations,” Tim Mayopoulos, who joined the mortgage-tech startup Blend as president this year after six years as CEO of Fannie Mae, said. “If that is true, future demand for housing will continue to be very strong. The question is whether millennials will be able to successfully act on their expressed desire to own homes given affordability challenges.”
If the younger generation remains financially unstable, that could have several knock-on effects in housing, Mayopoulos said: continued high demand for rentals, an increased preference for smaller homes versus the McMansions boomers favored, and new innovations.
“There will be a need for less-expensive methods of constructing homes, and there will be new innovations in lending to facilitate down payments to reduce upfront transaction costs and to keep monthly payments as low as possible,” Mayopoulos said.
14) Immersive experiences could reshape investing and financial education
As analyzing complex datasets increases in importance across finance, the practicality, and benefit, of using some form of enhanced reality to digest information and visualize multidimensional outcomes seems not only likely but also undeniable, according to some experts.
“I think this is a great emerging area — for people who want to work with their finances in a much more visual way, people who want to interact with their advisers, people who want to visit educational resources,” Vijay Sankaran, TD Ameritrade’s chief technology officer, said.
“Immersive experiences are going to provide much more opportunities and, by 2030, be completely game changing.”
Read more about how firms are testing out use cases for VR and AR.
15) Private-equity firms and asset managers will lean more on big data to juice returns
The use of data, which is already being developed by firms such as Blackstone, KKR, and Neuberger Berman, will be an important differentiator in an environment where firms face bigger challenges to achieve the same kind of returns private equity has traditionally seen, experts said.
“In coming years, we expect more [private equity firms] will try to find an edge in data, where several are already starting to lay the groundwork for using advanced analytics and digital tools to improve their investment performance and their operating efficiency,” Bryce Klempner, a consultant at McKinsey & Co. who advises private-equity clients, wrote.
16) Offices will see a reversal of the open-floor-plan push
Goldman Sachs CEO David Solomon told employees earlier this month that the firm’s senior leaders would soon leave their stuffy private offices and sit in an open floor plan. Finance has joined most other industries in moving toward open offices, much to the chagrin of employees who chafe at the loss of privacy and space they say they’ve earned.
But experts said some financial groups, like private-equity firms, may retain their private offices even as the larger industry has moved toward open seating. And now, finance is seeing the pendulum swing back toward some modicum of privacy.
“There’s going to be some giveback of private office space, whether it’s to senior employees or employees who deal with a heightened level of security. We’re going to be looking at what the true business demand is, as opposed to the trend of ‘we need to get more dense simply because it’s good business,'” Tyler Kethcart, JLL’s head of business development for experience management, said.
Read more about the office of the future.
17) Financial advisers will be more like travel agents
The rise of robo-advisers, the automated wealth-management tools that take human touch out of the equation, has been one of the wealth industry’s defining features over the past decade.
In a recent survey, financial advisers called robos the most overhyped wealth-related tech. And traditional financial advisers said that there would always be a place for human advice, particularly when it comes to the complex needs of the ultrawealthy.
But firms are pouring resources into making the basics of managing money more automated — Charles Schwab said recently it would roll out a new automated tax and retirement feature for both its basic robo-adviser and its hybrid robo product that offers human advice in the form of a certified financial planner.
Those factors could drastically change the demographic that demands human-only financial advice.
“The evolution of financial advisers will look a lot like that of travel agents. They will be forced to go up market serving older wealthier clients who value in-person interaction,” Andy Rachleff, the chief executive of the robo-adviser Wealthfront, said.
“The young professionals of today will continue to employ more and more automation and mobile-based services to help them manage their money over the next 10 years and beyond.”
Betterment, which was founded in 2008 and launched in 2010, has amassed more than $20 billion in client assets as one of the largest standalone robo-advisers in the industry. Wealthfront launched in 2011 and this year reached some $21.5 billion in total client assets (it counts $13.6 billion in invested assets.)
Of course, those figures represent just a small sliver of global wealth-management assets, and the big wirehouses that employ tens of thousands of financial advisers around the country measure their wealth assets in trillions, not billions.
18) Fierce competition for assets will weigh on private-equity returns
The capital being allocated to the private markets is expected to keep ballooning, and private-equity firms will engage in more and larger buyouts, making them a more vital player in the global economy, experts said.
But that means fierce competition for assets, which drive prices higher and private-equity returns’ potential lower.
Andrea Kramer, the head of fund investments at Hamilton Lane, called private equity’s pricing challenges “extreme” and said she expected competition to only increase in the coming years.
“We expect to see a continued reduction in absolute returns across the industry,” she said.
Returns, she said, will be realized by cost cuts and revenue enhancements, some of which will be driven by data analytics and software to access real-time information.
She said private equity would invest in data scientists, technology, human-resource training and recruitment specialists, sector experts, and integration specialists.
19) Real-estate brokerage will look more like wealth management
Just as the assembly line and robotic manufacturing has not totally ended the market for craft manufacturing, the traditional model of brokerage will likely continue to exist in 2030.
And just like craft manufacturing, it will be for the most expensive part of the market, where complexity makes a technological solution more challenging.
Clelia Warburg Peters, the president of Warburg Realty and a cofounder of the pioneering proptech venture-capital firm MetaProp, said traditional real-estate brokerage would become a “private-wealth-management-style service.”
The “Rethinking Real Estate” author Dror Poleg sees the transformation as similar to what’s happened with “travel agents and stock brokers,” where the only ones who aren’t replaced by technology will be the ones who work in specialty markets.
20) Indexing will continue to conquer public markets
Passive investing, which topped half of all mutual-fund assets for the first time in 2019, will continue to rise, and finding an edge in the public markets will become nearly impossible thanks to advances in computing power and data processing.
Dev Kantesaria, the CEO and founder of the stock-picking hedge fund Valley Forge Capital Management, told us he believed the story of the next 10 years would be the effect of “relentless market share gain by passive strategies.”
The bloated hedge-fund industry — which has thousands of funds chasing similar trades — is expected to shrink, and Kantesaria expects those assets from closed hedge funds to flow into passive products.
“Once you’re indexing, you don’t get those investors back very easily,” he said. Kantesaria serves on the board of a hospital that recently put a good chunk of its endowment into a Vanguard index fund, and he said: “We aren’t going back.”
21) Even more team building for financial advisers
When the CFA Institute surveyed some 3,800 members and candidates across the investment industry earlier this year about the future of their roles, 54% of wealth managers, financial advisers, and planners said they expected their roles to “substantially” change over the next five to 10 years.
Some say adviser work is expected to happen more and more in teams made up of specialists that can parachute in for specific client issues.
“Rather than become extinct, I think we’re moving into a golden era for advisers. They’ll be central to a broader relationship that extends beyond investing to include serving the comprehensive needs of their clients,” Andy Sieg, the president of Merrill Lynch Wealth Management, said.
“Research shows that clients increasingly want financial services delivered in one place for the convenience and quality of advice it allows for. The adviser of the future needs to be able to offer highly personal service, enhanced by a digital experience, and advice that takes into account more of their clients’ financial lives.
“What’s more, today approximately 80% of our advisers are on teams. By 2030, essentially all of our advisers will likely be part of a team. “
Read more about how Merrill Lynch is training young advisers.
22) Augmented reality will transform trading and sales desks
For Mazy Dar, the CEO and founder of the startup OpenFin, the case for VR-type technology infiltrating Wall Street makes sense, even if it might take some time.
Dar, whose company pitches itself as the operating system of finance, said he could imagine a world where a trader could look over to the sales desk and immediately see the quotes they are getting from customers in real time displayed via some type of augmented reality.
And while pulling off something like that is still a long ways away, Dar said, the potential is there.
“There are certain things you just can’t automate, and certainly not within the next 10 years,” Dar said. “At the end of the day, when it comes to enabling humans and when it comes to visualization — what are the next tools and other capabilities that you can give people to better do their job? I see augmented reality as a natural extension of this.”
23) There will be a bigger LP focus on ESG factors
Kara Helander, the chief inclusion and diversity officer at The Carlyle Group, said she expected firms to expand their investing in impact and ESG, and improve the overall diversity makeup of their professionals, as investors’ want to do good while achieving high returns and work with private-equity firms that reflect those values.
“One of the things we see is our stakeholders — more and more our LPs and our portfolio companies — care about how well we are managing for total impact,” she said.
24) Banks will start visualizing risks across the firm in 3 dimensions
Sources estimated it would take about a decade for some type of VR tech to become a mainstay at financial firms. A big hurdle in that timeline will be the improvement of the actual hardware, as the current form isn’t suitable for widespread adoption.
But that’s not to say firms are sitting on their hands in the meantime. Bank of America is working with the Unreal Engine, a popular gaming engine used by the likes of “Fortnite” and “Gears of War,” to learn how it can improve its data visualization capabilities.
The experiments will be focused on trading capabilities but viewed as being applicable across the bank, according to a Bank of America spokesperson. The goal is to have a prototype rolled out in 2020.
Speaking at WatersTechnology conference in December, David Reilly, Bank of America’s global banking and markets chief information officer, said the future of the trading floor wouldn’t simply be two-dimensional and elaborated on the firm’s efforts.
“So now we can present the information to you in a way where quickly you can say; that’s pretty much what I would have expected, or no it isn’t, I need to go check that out,” he added.
“Moreover, that information can be presented to compliance in real time, to risk, to audit, and — maybe one day — to the regulators so that everybody sees the same information. And we think that’s going to extend to all of our businesses.”
25) Private-equity funds will keep setting records
Blackstone broke records this year when it raised the biggest-ever private-equity fund, which came in at $26 billion. And records could continue to be rewritten.
“We’ve seen funds north of $20 billion; we could see $30 billion or $40 billion funds over the next decade,” Brenda Rainey, a consultant at Bain & Co., said.
As the private-equity industry matures, Rainey and others said, firms will also adopt more sophisticated software that take care of private-equity back-office tasks such as accounting and finance, as well as front-office tasks, such as due diligence and deciding when is best to exit a company.
26) Tech like autonomous vehicles could have a huge effect on real-estate markets
“We could either be very close to, or even moving into, a regime where autonomous vehicles are becoming the norm, or we will be really far away from that, and we will think it funny we ever thought it was possible,” Warburg Realty’s Warburg Peters, said.
“That will be a major factor in the experience about housing affordability and the way we live and perceptions of the value of places. If we move into a world where essentially there are fleets of autonomous vehicles from wherever you are to wherever you want to go, people will start to make very different choices.”
Wall Street 2030