Did you know that Gen Z started investing at the ripe age of 19? Faster than all the previous generations, 6 years before millennials, and a shocking 16 years before the Gen X. To be fair, Gen Z had all the tools at their disposal guiding them towards financial literacy. More and more younger people are understanding the importance of investing and saving. Most are in search of financial freedom, so they can work on their terms, follow their passions, and travel the world, while some want early retirement to avoid having to work at all. To each their own, but Gen Z has rightly understood the importance of compound interest as a way of realizing their dreams.
Younger generations are tech-savvy and prefer using investing and trading apps to make their investments, for a faster and more streamlined experience. This has given rise to wealth-tech apps in the market.
What is Wealth-Tech?
Wealth tech is a subset of fintech that uses high-end technologies like artificial intelligence, machine learning, big data, and advanced analytics to provide more efficient and effective solutions and tools for wealth managers and consumers.
Upstox, Groww, Zerodha, and Robo-advisors are some of the examples of Wealth Tech apps. These apps make investing easy, by helping users avoid intermediaries like brokers, and reducing friction like hefty paperwork making the barrier entry minimal. These apps are favorite among younger generations Gen Z and Millennials.
The Growing Trend of Trading Apps
India is set to be the 4th largest wealth market in the world. According to Allied Market Research, WealthTech Enterprise solutions are projected to reach $18.6 billion by 2031 at a CAGR of 14.8% up from $4.8 billion in 2021. The pace of adoption is expected to accelerate as established institutions and startups continue to invest heavily in digital transformation. The Indian Wealthtech market is poised to grow to over $60 billion by FY25. Data from intelligence platform Tracxn shows that investors have collectively put around $228 million into Indian wealth tech startups over the past two years.
The data shows that the population of high-net-worth individuals is increasing in India. Currently, there are 10 lac people with a net worth of more than 10 crore. By 2035 this number will go on to increase and reach around 1 crore, which will require a few lakh portfolio managers to serve this base, which can be tough. According to the managing director of Neo Group, an asset management and financial services platform, “Only tech can solve this problem, unlike the traditional wealth management services offered by banks, wealth tech firms use data analytics and the latest technologies to give personalized investing strategies at a fraction of the cost.
Benefits of FinTech in Wealth Management
Increased Accessibility
Wealth tech expands access to financial services by lowering the barriers to entry and making it user-friendly and easy to operate thus making it easier for people to access and invest.
Personalization
Sophisticated algorithms allow wealth tech apps to provide tailored investment recommendations and portfolio allocations aligned with each investor's financial goals, risk tolerance, and liquidity needs.
Cost Savings
Fintech wealth management solutions automate large parts of operations like portfolio management, trading execution, and advisory services. This significantly reduces the need for expensive human advisors and infrastructure.
Enhanced User Experience
Wealth tech platforms feature an intuitive user interface that engages users and helps them seamlessly navigate different functions.
Improved Transparency
Wealth platforms incorporating open API architecture, personalized notifications, interactive dashboards, and automated reporting give investors complete transparency on holdings, investment performance, fees, strategies, etc.
As more technologies develop, it will further disrupt the wealth tech industry. Think augmented reality for immersive financial planning experiences and quantum computing for unparalleled data processing capabilities. These advancements, though will take time, will likely start a new wave of hyper-personalized and ultra-efficient wealth management services.