Predictive trends in the wealth management space for 2022

The accelerated pace of digitalisation in the past few years has caused a massive disruption across industries. The wealth tech industry stands as no exception, to this new era of rapid innovation.

Technology innovations are breaking down traditional brand name structures and new entrants are flourishing. Financial advisors who have embraced technology will have a distinct competitive advantage.

The increasing adoption of digital solutions across industries is fueling the growth of the wealth tech solution market as well.

The onset of ‘new-normal’ has orchestrated a new age ecosystem of consumer needs and demands. However, the wealth tech has always been extremely dynamic with its hyper-personalised dimensions.

The end consumers are always looking for a richer, more interactive, and digitally customised solutions for their unique demands because the ‘one size fits all’ motto does not resonate with the industry.

The Indian wealth management market has grown exponentially over the years and is overall expected to grow 14.1 percent CAGR from 2021 to 2028, especially in the Asian region. Moreover, financial assets grew at a 14 percent CAGR from 135 lakh crore to 257 lakh crore from FY’14 to FY’19.

There is a wide network of distributors which is continuously increasing in the market. Over the last year, we have witnessed that consumers do not mind paying higher by choosing regular plans over direct plans, as they see value addition of receiving personalised service from these distributors.

With AMFI data stating that share of direct plan in the total AUM as of October 2021 fell by 2 percent from October 2020, it is conclusive that customers are giving more importance to availability, convenience, and customer service, and they are willing to let go small percentage of commission that they need to lose in terms of returns.

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Over the last few years, the industry has been looking for a solution, for business owners to provide a real-time digital investment facility which was paperless and efficient.

The aim was to shift their focus on making better business decisions rather than perturbing about surplus funds sitting idle in the current accounts and depreciation with inflation.

Also, this was not the case with just SMEs or MSMEs, even minors and NRIs were still struggling to find a digital solution for their investment needs.

However, as the wealth management firms fueled their transformation journeys in the wake of the pandemic, we witnessed that few platforms were able to solve these problems for individuals hence they saw great traction along with deep penetration in the market.

Even though the industry adopted change very rapidly, the problem remained the same for non-individuals like MSMEs or startups. There was no complete digital investing solution available for MSMEs or startups for efficient working capital and treasury management.

So unfortunately, they relied on traditional products like fixed deposits and others. These traditional products with lock-periods, premature penalties with unappealing returns and the current low-interest environment, presented highly futile and non-profitable choices

If we look back at the most vital demand in 2021 that connected all trends in the space, we perceived that the need for greater digitalization, morphed with efficient service delivery and transparency for all investors, as not just individuals, framed the entire year.

Even though the uncertainties of the pandemic are still looming across the globe, we expect few trends in the wealth management sector to shape the coming years. To begin with, the industry will see a rise in paperless automated onboarding with digital tools leading to increased accuracy and speed of processing.

Further, an era of hyper personalisation will set the center stage for the market. With advanced technologies and data analytics, the services, offerings, recommendation, will be uniquely tailored to fulfill specific needs of the customers.

Lastly, industry will increasingly follow the hybrid guidance capabilities. A prerequisite to meet the evolving customer needs is a unified environment thriving on collaboration of human intelligence with artificial intelligence. This will empower the investor to make well-informed decisions along with a personal touch of human assistance.

The future of the wealth tech industry looks star-studded and shining, and we see technology becoming a major game-changer in this industry.

The industry needs to continue this momentum of growth and acknowledge that, today, more than ever, there is a need for wealth management firms to re-invent their capabilities and deliver next-gen services to the consumers.