Shankari Krishnan has been investing small sums of money regularly with an online WealhTech platform. This has the advantage of no commission or middleman, so Shankari makes her own decisions. In addition, there is no requirement or pressure to invest large sums of money. Instead, Shankari uses a robot-advisor, who considers all her specifications and uses algorithms to customise an investment portfolio that is best suited to her. In this way, Shankari has been able to grow her investment slowly with easy-to-use technological aids. ‘Once you learn how to configure the software and feed in your information accurately, this software is a boon in allocating your funds effectively,’ says Shankari. ‘I feel like I’m in control of my finances, and can pull out or shift gears at any time without relying on a third party.’
Shankari has essentially been using WealthTech to manage her finances. WealthTech, a subdivision of the burgeoning FinTech sector, uses advanced technological tools like AI to manage your wealth. This means you don’t have to hire a wealth management firm or shell out big bucks, in order to be taken seriously. The rise of WealthTech is especially vital in helping women manage their finances effectively. Women are conservative investors, and like to start small. WealthTech is an efficient way for them to begin and manage their portfolios. With integrated technologies on one platform such as the use of digital brokers, social trading, algorithmic trading, and micro-investing, WealthTech provides ease and transparency for people looking to generate revenue on their own terms. WealthTech and FinTech are often confused. FinTech is a much larger sector encompassing all financial services and products. On the other hand, WealthTech is a sub-sector, which focusses solely on wealth management.
Says personal banker and advisor Sakina Furniturewalla, ‘With WealthTech, there are several benefits for both individuals and institutions. For individuals, the entire process is automated with AI tools and lower cost, eliminating the need for human advisors and infrastructure. Even middle and low-income people can start investing. Then, as you get used to the software and see what results each configuration brings, your understanding of the subject and decision-making ability also improve. You’re able to navigate different functions on your own and understand how to customise investments based on your unique requirements. Your understanding of big data and machine learning also improves. With increased transparency, instant notifications, and personalised dashboards, you have access to your portfolio and performance instantly. WealthTech is not just for B2C users or individuals. It can also be used by wealth management firms, where financial advisors can use the technical support provided by these platforms to enhance efficiency. Here, wealth managers and consultants can combine their extensive knowledge with WealthTech findings to help their clients arrive at optimal solutions.’
Globally, the Wealthtech Solutions Market size was valued at $6.23 billion in 2024 and is expected to reach $44.86 billion by 2037, expanding at around 16.4 per cent CAGR during the forecast period. In India, the solutions market is projected to witness a CAGR of 20.98 per cent during the forecast period, growing from $154.38 million in 2024 to $708.43 million in 2032. Some WealthTech apps in the country include Upstox, Groww, Zerodha, and Robo-advisors, which are gaining popularity and momentum among millennials and Gen Z. While the statistics and benefits look positive, one also has to keep certain risk factors in mind while using WealthTech to make investments. Sakina shares some of them with us:
1. The absence of a human advisor means unforeseen market developments, political situations, or any other external factors may sometimes not be considered while making a decision. The apps rely highly on AI algorithms, which don’t account for irregular occurrences. This means you’ll have to be extra vigilant and keep abreast of trends.
2. There is also the concern of data privacy and cybersecurity. Users have to be watchful of the security procedures and privacy policies of these apps before sharing valuable data.
3. Read through the fine print to understand the fees and economies of using these apps and their robot-advisors.
4. Remember, WealthTech should be considered only an advisor or a tool. Keep reviewing your portfolio to ensure it stays appropriate to your needs. Educate yourself and make informed decisions, since you will have no one else to blame if things go south!
‘The ideal thing to do if you’re jumping onto the WealthTech bandwagon is to start with small sums,’ says Sakina. ‘This way, you can afford to be experimental at first and see which approach works for you. Another alternative is to employ a financial advisor to show you the ropes and advice you in conjunction with WealthTech. Whatever your decision, you must keep your needs, situation, and risk appetite in mind before you plunge in!’