By Vittal Ramakrishna
Economic, demographic, and technological changes are converging, and this has significant effects on Indian investors and their investing practices. As trust in the digital platform has grown, today’s investors are more informed and eager to invest through wealthtech platforms. A study by Research and Markets predicts that the Indian wealthtech market will increase by three times, reaching $63 billion, and that the number of investors is also expected to reach 12 million by FY25. The adoption of digital platforms by investors from tier-2 and tier-3 cities, as well as the growth of tech-savvy investors with rising disposable incomes, are all contributing to this growth.
Furthermore, wealth advisors are now adopting smarter technology to better serve their clients and meet their changing expectations. As a result, the Indian equity markets, MF folios, and Demat accounts have all seen steady growth. Let us delve into how wealth technology is changing the investing landscape.
Wealthtech in India: reimagining the investments
Wealthtech entirely focuses on generating wealth for investors through the use of technology to manage data sets, conduct analysis, and guarantee a positive investor experience. Wealthtech businesses in India either operate under a B2B business model, where they create solutions for banks, investment firms, and wealth management businesses, or under a B2C business model, where they offer services directly to end users. Marketplaces, investment tools, financial advisors, robo-advisors, trading platforms, and data analytics companies are all part of its ecosystem.
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Due in large part to the enormous opportunity in the wealthtech sector, numerous business models have emerged, each aimed at a different customer cohort. While traditional brokerage models (full-service stockbrokers) target both HNI and retail customers, digital brokerage models (discount stockbrokers) primarily target retail customers.
COVID-19 has been a blessing in disguise for digital platforms, with an increase in “new investors,” such as digitally savvy Millennials and Gen-Z. As a result, there has been a surge in average investments and usage on these platforms. At the same time, there is continued investor interest in the Indian investment arena, with investments increasing rapidly. Here are a few steps wealth-tech companies are taking for investors to support their long-term wealth-building efforts.
Supporting financial literacy: By forming sound investing habits over time, investors can improve their financial health with the help of platforms provided by wealth tech companies. Wealthtech businesses are uniquely positioned to address this problem because they combine cutting-edge technologies with knowledge gained from previous high-finance paradigms. These businesses are having success assisting young, first-time investors choose their preferred platforms and investment vehicles by clearing up the clutter and answering some of the numerous questions that trouble investors.
Tools for portfolio management: Wealthtech is offering cutting-edge tools to assist investors in achieving their financial goals and diversifying their investment portfolios based on their risk and return profiles. They offer a selection of fixed-income investments that act as a source of regular income and capital preservation as well as a hedge against inflation and equity market volatility. Wealthtech companies shield investors from being swayed away by market fluctuations by providing sound financial advisory services in these times of volatility and aggressive upselling of dubious assets.
Roboadvisory: These are online wealth management services that provide automated investment advice using cutting-edge portfolio management algorithms. Investors looking for a cost-effective option with a self-directed experience supported by reliable digitally generated advice are considering robo-advisors. Automated, algorithm-based systems are used by robo-advisors to offer portfolio management guidance. These services were developed using a customer-centric approach, which puts the needs and wants of the consumer at the centre of all technological advancements.
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All things considered
Wealthtech is seamlessly integrating into the daily lives of investors as it develops as a component of comprehensive financial services offering. The companies are ushering in a new era of global finance by focusing on preserving and increasing wealth. Companies now provide clients with an easy-to-use, frictionless client experience that delivers high value, from onboarding, asset allocation, and portfolio monitoring to personalised insights and investment ideas.
Due to wealthtech, the wealth management market is becoming more digitised and open to a wider range of consumers. It is progressing toward offering more individualised, client-centred services and enhancing the products and services that wealth managers and advisors offer.
(The author is CEO, Founder at POD, a Bengaluru-based fundraising platform)
(Disclaimer: Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited)