Robo-advisors, micro-investment services, portfolio management tools—many consider wealthtech a real game-changer. It has already transformed our financial industry and will continue to do so. How? JPIN has compiled some valuable insights to help you understand the world of weathtech.
What is WealthTech?
WealthTech, or wealth management technology, refers to the convergence of technology such as AI, big data, SaaS, and financial assets, such as savings, investments, and patrimony, to create a digital ecosystem of finances.
WealthTech changes how individuals and companies manage their finances. It incorporates a set of technologies to automate and increase the efficiency of the processes associated with wealth management and investments.
The wealthtech sector in India has over 300 startups focusing on robo-advisory, personal finance management, online brokerages, and investment platforms, among other use-cases.
The fintech market in India is growing at an unprecedented rate, making India one of the fastest-growing fintech markets, ahead of the US. Moreover, the internet proliferation in India, fuelled by the pandemic, has soared by 8.2% since last year alone, leading to increased digital adoption.
In accordance with a report by Research and Markets the global wealthtech market is expected to grow from US$ 54.62 million in 2021 to US$ 137.44 million by 2028; it is estimated to grow at a CAGR of 14.1% from 2021 to 2028.
According to a recent report by Redseer, the Indian wealthtech market is expected to more than triple in value from around US $20 billion in 2020 to about US $63 billion by 2025.
Services & Solutions
WealthTech sits under the umbrella of FinTech, but is itself a broad term which covers a wide range of technologies that focus on wealth management, with these being:
Robo advisors are digital tools that often use machine learning-based methods to perform operations for the user or the client. They can automatically invest across different types of instruments depending on how the user has configured the software.
Robo-retirement platforms are an extension of Robo-advisor platforms. Here, the platforms employ algorithms to manage a client’s retirement plan. The Robo-retirement platform helps the client create a retirement portfolio.
An increasingly popular trend in WealthTech is micro-investing. It allows investing through microcredits or small investments. With this, people who are not into investing can get started with micro-investing.
These platforms and services allow retail investors and businesses to gain easy access to stock market information and investment opportunities, as well as some of those that would otherwise only be available to certified investors.
One popular format in digital brokerage is social investing, which lets you see the investments of people in your trading network that you follow, just as you follow people on Facebook.
Investment Tools & Portfolio Management
Investment tools and portfolio management are a B2B segment of WealthTech. The typical aspects of investment tools include comparison tools, research analyses and access to networks of advice.
The Impact on Wealth Management and the Financial Advice Industry
Wealthtech has grown exponentially in recent years, and thus wealth management in particular and the financial industry, in general, have been consistently transformed. Platforms and solutions that use technologies like Big Data and Artificial Intelligence provide a real and often more cost-effective alternative to the services of traditional wealth management firms.
This is why many large companies that recognized the trend have created their proprietary tools or have collaborated with fintech businesses to have them developed.
But first, data security must become the number one priority for wealthtech providers in order to prevent breaches.
Predictive analytics technology is critical to wealthtech company survival because it helps to gain insights into client behaviour and their needs so they can improve services and products.
What’s more, cloud computing will remain a major trend in wealth technology because it provides for sustainable growth. The dawn of blockchain technology has created new asset classes and will continue to do so. And lastly, quantum computing will help wealth managers deal with information overload and improve investment decisions in the long term.
Wealthtech has transformed how advisors and consumers approach wealth management. It has brought new challenges, but also new opportunities to the market. JPIN backed TSLC (The Social Loan Company) – an AI-driven fintech company that intends to empower communities through efficient financial products and services, is the perfect example of how a startup comes up with fresh ideas to apply technology while focusing on data security, predictive analytics, and more.
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