India’s wealth management sector has experienced unprecedented development in recent times, with an increasing number of investment professionals willing to scale returns. As a burgeoning young economy, India has experienced a growth in the number of wealthy individuals seeking newer investment options and bespoke services. As a result, the wealth business has undergone a technologically driven metamorphosis known as “wealth tech” adding momentum to private wealth management. As the industry is now assisting new investors, broadening the canvas for investment management, and broadening both demographic and geographic reach, wealth technology leaders are driving investment management prospects.
Wealth tech: An opportunity to Increase investment and yield better returns
Wealth technology has created new commercial prospects in India’s wealth management industry encouraging high-earning millennials with an innate understanding of money management and technology to drive a new wave of investment. Furthermore, the digital India initiative’s expanded and robust internet infrastructure, as well as the arrival of 5G, have resulted in increased headroom for investment management, facilitating service implementation. To add to this, young Indian investors, today want accurate guidance on risk-adjusted long-term asset allocation and convenient, effective, and seamless digital experiences. As a result, the wealth technology business has been pushed to combine cutting-edge developments such as artificial intelligence (AI), machine learning (ML), and sophisticated big data applications into investment management, resulting in exponential growth in the wealth tech industry powered by digital investment management platforms.
In this situation, the rising use and acceptance of digital payments, QR Codes, UPI, and Mobile Wallets have digitally prepared India for integrated financial services in the form of wealth tech to be supplied online encouraging external wealth managers to increase the bucket of investment both in terms of volume and value. And eventually, this will grab the market across the country, from metros to Tier 1/3, and will be extended to communities to produce new investors. The RBI has taken up favorable government initiatives, such as the Digital Rupee (Central Bank Digital Currency- CBDC) and its active implementation with leading banks, to solidify the financial infrastructure further. This combined with digital integration by wealth tech will yield growth in investment management by compounding investments from more prominent investors, which wealth tech facilities will add up.
According to the CII, India’s GDP will be worth USD 35-40 trillion by 2047, and affluent IT players will be the drivers of this massive expansion, which will pave the way for a brighter future. This will result in more investors and more extensive investment portfolios demanding the need for an organised digital investment product marketplace to serve the latent needs of new-age investors. Thus, the development of this new wealth has generated the significant potential for the Wealth Management sector in Tier 2 and Tier 3 cities in India, which was previously concentrated mainly on Tier 1 cities.
The Wealth Management business has experienced a tremendous surge of innovation and experimentation in the last decade to reduce the cost-to-serve down and make it sustainable to service this market. Increased access to disruptive technology and the widespread availability of low-cost internet in India have aided the cause. This also calls for a centralised financial advisory mechanism to educate budding investors and encourage existing investors to widen their investment portfolios. The rapidly evolving regulatory landscape has been adding challenges in the execution of providing investment avenues, hence a digitally enabled wealth management ecosystem is the call of the hour. Wealth tech brings together wealth and technology to provide digital solutions to improve personal and professional wealth management and investing. This automatically broadens the investment canvas by bringing in more potential investors and increasing investment management.
Wealth Tech Empowering the Integrated Financial Services System
Wealth technology is helping to bridge the gap from both sides by accelerating investments and providing access to specialist advice services to bolster the relaxed captive investors and increase the number of investors, thereby organically enhancing investment management. Wealth tech infrastructure equips a fleet of Independent Financial Advisors (IFAs), Wealth Managers, unorganised brokers, and Fund Managers with a SaaS-based platform to analyse, amend, and reset their client portfolios and handle a bouquet of financial services as a product marketplace. Consequently, intermediate players will be able to better service customers, increasing the volume and value of mushrooming investment management.
The author is founder at Centricity WealthTech
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