The Promises and Pitfalls of WealthTech: Evidence from Online Marketplace Lending

73 Pages Posted: 8 May 2020 Last revised: 9 Mar 2023

See all articles by Xiaoyang Li

Xiaoyang Li

Hong Kong Polytechnic University

Haitian Lu

Hong Kong Polytechnic University

Iftekhar Hasan

Fordham University ; Bank of Finland; University of Sydney

Date Written: September 25, 2020


WealthTech (WT) holds the promise to “democratize financial service” by serving the underserved market segments with affordable, quality, and transparent wealth management services. This paper assesses the competence and integrity of WT using a unique, order-level data set on WT vis-à-vis human bidders from a Chinese online marketplace lending platform. We find WT outperforms human investors by a significant margin due to WT’s informational and speed advantage to cherry-pick high quality and mispriced investment opportunities. We also find a misalignment of interest when the platform’s private benefit in loan origination conflicts with WT users’ returns. In a dynamic view, we show the return of both WT users and non-WT users declines as the WT dominates the market. We also discuss the corresponding regulatory strategies.

Keywords: WealthTech, Algorithmic trading, Online Marketplace Lending, Conflict of interest, Regulation, Robo-advisor

JEL Classification: G14, G21, G23, G28, K2

Suggested Citation

Li, Xiaoyang and Lu, Haitian and Hasan, Iftekhar, The Promises and Pitfalls of WealthTech: Evidence from Online Marketplace Lending (September 25, 2020). Available at SSRN: or

Xiaoyang Li (Contact Author)

Hong Kong Polytechnic University ( email )

11 Yuk Choi Rd
Hung Hom
Hong Kong

Haitian Lu

Hong Kong Polytechnic University ( email )

School of Accounting and Finance
Hung Hom
Hong Kong

Iftekhar Hasan

Fordham University ( email )

NEW YORK, NY 10023
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101

University of Sydney ( email )

P.O. Box H58
Sydney, NSW 2006

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