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.