Technology has changed global finance in multiple ways. It is now feasible to deal with practically any organisation in the world in a matter of seconds. Wealthtech organisations are ideally positioned to tackle a wide variety of difficulties because they blend experience garnered from prior high-finance patterns with cutting-edge technology of today.
These firms may partner with millennials to help them develop long-term wealth by removing decision fatigue, diversifying portfolios, nudging for emergency reserves, enabling price sensitivity, empowering risk-taking, and so on.
The evolution
Wealthtech has changed the way consumers and advisers approach wealth management.
In an exclusive conversation with CNBC-TV18.com, Pushpendra Singh, Founding Partner at Centricity Wealthtech, said, "The company has been exposed to both fresh prospects and new problems. This involves the creation of new technology applications for wealthtech businesses, with an emphasis on data protection, predictive analytics, and other areas. It entails financial advisors offering value that transcends algorithms' capabilities. The wealthtech ecosystem enhances financial process efficiency by delegating traditionally expert only responsibilities. It has changed the investment environment as well as people's ideas about modern money."
Using quantitative investing to aid in investment decisions
New investors require a system that not only tells them where to invest but also automates investing and manages their portfolios without requiring them to constantly monitor stock movements.
According to Singh, such investors are becoming more interested in quantitative investing, which bases investment decisions on numerical analysis.
"It is based on extensive statistical analysis and frequently necessitates the creation of complex models and algorithms to evaluate markets, asset valuations, volatility, and other investing factors. Traders typically select a quantitative analysis algorithm with predefined rules for purchasing and selling signals," Singh told CNBC-TV18.com.
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The difficulties
The wealth management industry in India is confronted with various obstacles, ranging from increased competition to regulatory reforms. As more players enter the market, competition for customers increases, putting additional strain on fees and services.
"Wealthtech success in India has primarily been limited to addressing the accessibility issue. Some obvious factors work against India, such as the depth of the investor class or the country's comparatively low disposable income in comparison to the United States. Concurrently, structural, and behavioural issues affect the Indian landscape," Singh explained.
The inability to adapt to complex regulatory frameworks, a lack of alignment with client interests, and rising costs are examples of value gaps in wealth management, and HNIs/UHNWIs in India are the most underserved digitally for their money management needs. There are numerous challenges, such as a lack of digitisation in customer experience and processes such as onboarding, analysis, and execution. The existing challenges were exacerbated by a rapidly changing regulatory framework, he added.
The way out
In India, there is an urgent need to empower independent financial distributors so that investors can achieve better results. Lack of digital awareness among clients and respective independent financial advisors makes deeper penetration — where there is potential — even more difficult.
