W&F Q1 2021

www.wealthandfinance-news.com Wealth & Finance International - Q1 2021 5 4 Wealth & Finance International - Q1 2021 Boomers and retirees embracing Bitcoin and cryptocurrencies Baby boomers and Gen X are piling into Bitcoin and other cryptocurrencies, affirms the CEO of one of the world’s largest independent financial advisory and fintech organisations. The observation from Nigel Green, the chief executive and founder of deVere Group comes from a global poll of clients aged over 55 found that 70% of those surveyed are already invested in digital currencies or are planning to do so this year. Last weekend, Bitcoin hit $57,000, which gave it a market capitalisation of more than $1 trillion. In addition, Ethereum, the second-largest cryptocurrency, surged past $2,000 for the first time, giving it at the time a market cap of $226 billion. This week, the prices have dipped and the Bitcoin market is currently worth around $900 billion. Mr Green says: “Despite this week’s drops, the Bitcoin price has still soared by almost 360% over the last 12 months, partly fuelled by endorsements made by Tesla billionaire Elon Musk, amongst others, and growing interest from institutional investors. “This hugely impressive run has captured the attention of people around the world – and not just so-called ‘digital native’ younger generations, as is typically, and somewhat patronisingly, portrayed. Nearly two-thirds of financial services firms struggle to integrate data and analytics Nearly two-thirds (63%) of data scientists in financial services firms say their organisation is not currently able to combine data and analytics in a single environment. This was among the key findings of new research in the UK, US, and Asia, for Alveo, leading solutions provider of managed data services for data mastering and analytics. The survey also found that nearly four out of ten respondents (38%) saw ‘the need to integrate structured and unstructured data’ as one of the main challenges their organisation faces in ‘bringing analytics to data and using the combination to drive effective decision-making’. For financial services firms, closing the gap between data mastering and analytics capabilities is key in deriving insights from an increasingly broad range of data sources. In a financial context, structured data adheres to a pre-defined data model and includes everything from financial instrument terms and conditions to pricing feeds, while unstructured or semi-structured data does not conform to a pre-set data model and might incorporate earnings call transcripts and social media activity. It can also help gauge scores against ESG indicators. Another key challenge highlighted by the research was the issue of ever-expanding data volumes. 39% of data scientists surveyed claim ‘it is difficult for us to manage large data files and scale our infrastructure to the volumes we face’ as the main challenge in bringing analytics to the data. Mark Hepsworth, CEO, Asset Control, said: “Financial services firms struggle with growing data volumes that are often siloed in data stores and legacy systems, making access difficult. This causes a bottleneck when firms look to get a broader range of data to data scientists and decision makers, creating a range of challenges as a result including lack of integration of meaningful data and analytics.” In line with this, the research shows that many financial services firms across the UK, US and Asia still struggle with significant issues in integrating different types of data and being able to scale infrastructure to cope with ever increasing data volumes. Firms’ efforts in bringing analytics and data together are also hampered by inadequate data lineage and poor data quality. Nearly a third of firms (32%) don’t have full transparency of data lineage across their organisation and the wider operational ecosystem, while just under a quarter (22%) list ‘lack of contextual information such as data lineage that helps us trust the data’ among their main data management challenges. This can lead to a lack of trust and redundant data sourcing and verification. In the search for data quality, lack of a data catalogue leading to time-consuming data searches or double sourcing’ is the top issue, referenced by 28%, followed by the fact that ‘a proactive focus on data quality is hampered by need for ad hoc incident resolution’, identified by 23%. According to Hepsworth: “There are tools now available that can help firms identify data quality issues and proactively address them. More specifically, –increasingly there are solutions that enable businesses to explain the value and origin of data, trace data back to its external sources and ensure data lineage.” “And thanks to the latest advances in cloud, data processing and analytics, it is now possible to combine analytical and data management capabilities and use the results to maximise market data ROI and enable data scientists and other business users.” “Boomers and Gen X, it seems, are just as excited about digital currencies, with seven out of 10 already invested in crypto, or will do so in the near future, according to the poll. “They too recognise that digital, borderless money is the way forward.” He continues: “Whilst the recent massive social media hype and clickbait headlines are more of a catalyst for millennials and Gen Z to consider investing in the likes of Bitcoin, there are other drivers for older generations. “The over-55 respondents to the survey frequently cited a key factor for their interest in crypto is the historic levels of money-printing as central banks around the world attempt to prop-up their economies following the fallout from the pandemic. “They’re aware that if you are flooding the market with extra money, then in fact you are devaluing traditional currencies – and this, and the threat of inflation, are legitimate concerns, prompting them to seek out alternatives. “In addition, Bitcoin’s reputation as ‘digital gold’ was also often highlighted.” The world’s largest cryptocurrency by market cap is often referred to as ‘digital gold’ because like the precious metal it is a medium of exchange, a unit of account, non-sovereign, decentralised, scarce, and a store of value. Mr Green adds: “Bitcoin will continue to dominate the crypto ecosystem, but even within this class, it is recommended to maintain a diversified portfolio to mitigate risks and to seize opportunities.” Last week deVere Group added Cardano (ADA) to deVere Crypto to join other major digital currencies including Bitcoin, Ethereum, Dash, Bitcoin Cash, XRP and Dogecoin. The move followed Cardano doubling its market capitalisation to $28 billion in around two weeks amid soaring interest, driven by the likes of rock star Gene Simmons from Kiss who has voiced his support for Cardano on Twitter after tweeting that he has purchased $300,000 of the cryptocurrency. The deVere CEO concludes: “Baby boomers and Gen X, who own most of the world’s wealth, are embracing the cryptocurrency revolution. This will serve to further bolster prices in the market in the longer-term.”