Technology advancement will disrupt digital wealth management industry

Technology advancement will disrupt digital wealth management industry

By Gagan Singla

A fool can earn money; but it takes a wise man to save and dispose of it to his own advantage.’ This quote of Brigham Young’s is a popular one among wealth managers. Wealth management is all about investing one’s assets in an intelligent manner to get the best returns. Wealth managers are the ones who provide necessary advice in return for a fee. Over the years, wealth management has turned into an industry. Digitization has helped. Today, investors buy and sell stock or invest in mutual funds at a click of a mouse or even the press of a mobile button.

The Rise of Retail Investors and Technological Accessibility

A remarkable turning point in the Indian economy was accessibility to the internet. Internet charges in the country continue to remain among the cheapest in the world at around $0.17/GB. No wonder, nearly 700 million Indians are today connected to the internet.

This turned into a very important factor during the pandemic years when businesses closed down and jobs were lost. What was important is that people continued to have access to the internet and turned towards other sources of income. That was when the number of retail investors in stocks displayed a remarkable growth. In 2020 alone, their numbers soared by 1.4 crore. People looked towards creating long-term wealth without heavy investment. Technology has made the markets accessible. This trend continued. By January 2023, India had 11 crore demat accounts though the percentage is still low as compared to the US or UK. The disruption brought about by technology is likely to help.

The Power of Automation and Artificial Intelligence

Providing platforms to give retail investors easy access to the stock market was the easier part. Helping such investors make informed choices was required. This is where Automation and AI turned into powerful tools that have improved efficiency, accuracy, and scalability. Automation makes administrative activities more efficient, giving wealth managers more time to concentrate on making strategic decisions and developing enduring client connections. Robo-advisors, powered by cutting-edge technology, have emerged as disruptive forces to offer algorithm-driven portfolio management, catering to a wide range of investors with varying risk appetites. By leveraging sophisticated algorithms, Robo-advisors provide cost-effective, transparent, and personalized investment solutions. They are particularly appealing to tech-savvy millennials who seek simplicity. An ideal model will be a combination of Robo-advisors and traditional wealth managers. This will combine the best of human expertise and technological efficiency.

Enhancing the Investor Experience expand

Investor experience will be the deciding point when it comes to a better wealth management firm. With the latest mobile Apps and upgraded websites, users may now manage their portfolios, watch real-time market data and make transactions at their leisure. The combination of data analytics and predictive modelling enables investors to make well-informed decisions. It is the personalized solutions that matter. The App that provides the best solutions is naturally the most attractive.

Challenges and Future Innovations

Enabling government policies such as the Digital India initiative have helped in the exponential growth in demand for digital investment platforms. The question is whether the industry has been able to keep up? It is estimated that the investment tech industry will have a market size of nearly $14.3 billion by 2025. If this is to happen, industry will have to keep up the pace to safeguard investor interests. Data protection and privacy, along with identity theft, remain significant concerns that must be addressed through collaborative efforts. Mobile apps will need to become smarter and easier to use, utilizing cloud-based AI and integrating diverse data sources to simplify decision-making for clients. Fast-tracking financial document approvals and introducing regular innovations will empower clients to make informed investment choices. At the same time, human expertise must also be shared, particularly with investors who are new to markets.

(Gagan Singla, Managing Director at BlinkX. Views expressed are the author’s own. Please consult your financial advisor before investing.)