How fintech industry is making wealth management accessible

The second-largest number of fintechs have come from India in the last three years. India's adoption rate is 87 per cent while the global average is 64 per cent. This phenomenal market growth is specifically seen in the segments of lending and personal finance.

There is a rising trend of ‘new-age investors’ who are mainly young millennials keen on pursuing asset allocation with the help of the fintech industry as traditional retail investor avenues such as fixed deposits can no longer keep up with inflation.

The intersection of technology and finance can significantly impact people's lives, especially in a country like ours, where the number of internet users will only increase in the future.

Over the past two decades, we have witnessed the shift from analogue to digital banking with upcoming tech platforms. Many credible fintech platforms aim at enabling access to everyone and convenience. The success of companies like Zerodha, Groww and others is an example of this as retail investors have opened the highest number of demat accounts in the last decade.

The upcoming fintechs seem to be addressing issues in the financial industry, whether it is mis-selling or high brokerage charges, and bringing the costs down while preventing the spread of mis-information. They have worked on gaps that people struggled with for years.

Finance seemed too complicated, at least back when there was little or no transparency, and most investors used to buy things because a broker suggested it. Now, with the disruptive fintech leaders, the complexity of finance is being reduced by educational initiatives. This, in turn, helps the end users create wealth for themselves in an efficient manner.

‘Wealth Management’ was earlier a term mostly associated with high-networth individuals because there was a preconceived notion in the industry that retail investors cannot understand advanced assets, so it is futile trying to convince them to invest in new asset classes. But this is changing with more awareness from all quarters and Indian fintech companies bringing about financial inclusivity. Technology has made distribution more accessible and costs are lower.

In the past decade, we have witnessed a shift in people’s thoughts regarding money-making decisions. Earlier, when anyone heard about investments, what came to mind was the stock market or mutual funds. But with the rise of innovative fintech, investors are moving towards different types of investment opportunities, whether it is a fixed income product or a basket of stocks. 

A lot of fintech platforms have adopted Artificial Intelligence technology for advising instead of adopting a relationship manager model. Since AI is data- and insight-driven and is free from subconscious bias, the customer gets advice based on facts.

And that's precisely what the wealth management landscape in India needs: transparency and upfront information. 

The new and upcoming fintech companies aim to enable people with choices that were earlier accessible only to institutions or HNIs, along with educating investors about products. In the end, it's about empowering users to make decisions by providing them with all the information they require, whether it's about the risk or the business model, to make their final decision.

The author is the Co-founder, Wint Wealth. 

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.