WealthTech’s digital transformation: The 4 biggest trends shaping the sector

WealthTech's digital transformation: The 4 biggest trends shaping the sector

WealthTech signifies much more than merely integrating technology into financial planning. At its core, it embodies a pivotal shift that is radically changing the dynamics of wealth management.

Morningstar Wealth, which helps firms build intuitive digital experiences, has released a new e-book exploring the top trends in WealthTech and how aggregated financial data fuels innovation.

With the backing of cutting-edge technology, WealthTech has successfully managed to bridge existing gaps, personalise services, enhance efficiencies, and provide comprehensive insights. This tech-centric approach has substantially elevated the experience for investors, advisors, and back-office operations.

WealthTech adoption has accelerated over the past few years, helped by several factors. One of the primary catalysts of this surge in WealthTech adoption is the emerging generation of investors.

Over the forthcoming two decades, US Gen Xers and Millennials are poised to inherit a staggering $84rtn from their preceding generations. This colossal wealth transfer has, for many, already started. As these investors gain command over their new-found wealth, there is a distinct inclination towards digital instruments.

An illuminating study by the global consulting firm EY highlighted that in 2019, a mere 6% of consumers recognised FinTech as their leading financial associate. However, by 2021, this statistic had witnessed an astronomical rise to 31%. Even more impressively, nearly half of the Millennial participants (49%) professed their utmost trust in a FinTech brand.

The unforeseen advent of COVID has also dramatically reshaped the financial landscape. Financial institutions, including wealth management firms and advisors, found themselves in an urgent scramble to adapt. Consequently, this led to a global upsurge in financial inclusivity, which in turn triggered a notable increment in digital payments, new clientele, and burgeoning markets.

The final notable factor is the move to app-based services. Parallel to the transformation in other sectors, consumers are now predominantly dependent on app-based services, be it for leisure, retail, or commuting. This evolution has created an expectation for analogous advancements within financial services. This change is evident from the numbers: from 1.2 billion finance-based app downloads in 2019, the figures skyrocketed to 2.7 billion in 2022. By 2027, this number is anticipated to touch an astounding 3.9 billion globally.

WealthTech platforms enable wealth managers improve accuracy, enhance insights, reduce costs, lighten workloads, improve client communication, scale growth and more. It is no surprise the sector continues to grow.

To find out what the biggest trends in WealthTech are, read the e-book here.

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