Wealthtech Beyond 2022: What Industry Trends Should You Follow?

Some things never change, but some things are Fintech and nothing can hold them. While the wealth management segment has a long and heavy plume of tradition and a reputation of being slow to change, it has no choice but to wrap that plume around itself and jump in that Wealthtech thing rushing by.

Lo and behold—the changes are right around the corner. 

Where we are in Wealthtech now

Before we speed up, let’s take a look around.

• Right behind you is Wealthtech expansion in the EU: While North America is the heaviest player in Wealthtech, the number of European businesses and institutions contributing to the industry segment development increases.
• A funding flourish is next to it: According to CB Insights, Wealthtech scooped $5.6B of funding in Q1’21, which exceeds the segment’s total year-end funding of $5.2B in 2020.
• You can see The Great Wealth Transfer along the road:  It will take 20-30 years before the unprecedentedly affluent Baby Boomers will pass on their riches ($30 trillion, to be exact) to tech enthusiasts Gen X and Millennials. 
• Can you see the phygital? Now wealth managers are caught into balancing between online and offline, as their clients prefer a familiar human touch to robo-advising yet are looking for more flexibility in the services.

Exploring the many ways of embedded finance

According to Oracle’s estimates, the value of the embedded finance market is expected to exceed $7 trillion in the next 10 years, making it worth double the combined value of the world’s top 30 banks today. The opportunity for Wealthtech to leverage embedded finance not only means new ways to invest but also a new service support model in financial planning for Insurtech, says Head of Strategy and Member of the Executive Board at additiv Christine Schmid.

Further into ESG investment

Growing is the number of clients and wealth managers attracted by sustainable and impact investing. As Wealthtechs will continue to concentrate much effort in this field, we’ll see embedded finance linked here too. 

“Through embedded wealth, super-apps could leverage the vast amounts of data they already have on their users and target different investment products to support their customers’ ESG aspirations.” – Christine Schmid, Head of Strategy and Member of the Executive Board at additiv.

More personalization to see

Speaking of data, younger generations prefer customized experience and are ready to share their data to get it. And, according to Ernst & Young, the category of service providers they are ready to trust their data with the most is wealth managers. 

To get tailored services without spending extra effort, the new wave of investors need solutions which put the collected data to use and generate value. Big Data analytics, AI, and ML algorithms are already at their service.

However, full automation exclusively is not what clients want. A hybrid model is, and it takes personalization one step further. In this model, a client can choose whether to use the self-service approach and be an advisor to themselves or delegate the task.

Flawless UX all along the way

Users of Wealthtech solutions expect performing operations as simply and quickly as possible – and your UX better give it both to experienced ones and newbies. As the hybrid model of interaction and self-service see more popularity, the role of UX will only grow.

Wealthfront mobile app design is one example of how intuitive UX design makes building a socially responsible investment portfolio plain and simple.

Source: Wealthfront

Wealthtech ecosystem to transform

Coordinated technology ecosystems allow traditional wealth management firms and startups better navigate today’s industry trends, from shifting customer preferences to new regulatory hurdles. This is an already familiar symbiosis of startups, corporates, governments, and investors, but it’s undergoing changes.

With the industry booming, more players join the market and more partnerships make headlines. The growing personalization in Wealthtech leads to discovering new niches, making the industry ecosystem branch off into a fractal-like dynamic structure. Let’s zoom in on the trends within.

Even more networks

Community thinking inspires Wealthtechs to create ecosystems for their clients too, and CAIS is one example. This New York-based company has built a platform for investment and wealth communities, where alternative asset managers and independent financial advisors can leverage education and the access to complex investment solutions. 

M&As on rails

The mergers and acquisitions (M&As) frenzy saw a slowdown as the Russo-Ukrainian war escalated this February. However, the need for time-efficient and error-free post-acquisition processes to secure fast ROI is still there. 

What we might see soon is an increased use of digital workers, or Intelligent Process automation, to solve the problem. 30%-40% of business processes can be digitized and automated and thus save “thousands of hours.”

By the way, to learn how the vendor can make a post-acquisition stage smooth for you, read this one.

The final stop

Actually, the journey can continue, if you wish so. From establishing DevOps and CI/CD processes to developing a SaaS platform, we can go through any Wealthtech engineering aspect you’re interested in. Schedule a call with our experts and tell us about your project.