Ecosystem development, sustainable investment strategies, and hyper-personalization were identified as some of the major wealth management trends that will be prioritized by Wealthtech companies this year. This, according to a report from Capgemini, a French consulting firm.
In a research report, titled Top Trends in Wealth Management 2021, the Capgemini team points out key trends in wealth management during the coming year. Some of these Wealthtech-focused trends were mentioned in the previous year’s paper, however, they still appear to be relevant for 2021, meanwhile, other trends such as sustainable investing and hyper-personalization have really picked up in a post-COVID environment.
As confirmed in many other reports, the Coronavirus pandemic has accelerated the digital transformation that’s supported by the Fintech and Wealthtech sectors with companies now spending substantial amounts on their technology development and related IT upgrades.
According to a research study published in 2020 by Celent (the technology advisory division of Oliver Wyman), wealth managers were expected to spend approximately $21.4 billion on technology by the end of last year. These numbers are now on track to increase further at a compound annual growth rate (CAGR) of 5% year-over-year (YoY) for the next 2-3 years, when it’s projected to reach $24 billion (by 2023).
Customer-facing wealth management professionals will require the appropriate technology and software tools to effectively manage client investment portfolios while offering comprehensive digital services, the report noted.
An important trend for this year that became popular, even before COVID, is sustainable investing. During the past few years, sustainable investing has really become more widely-adopted, however, the Coronavirus crisis has further increased interest in these products and solutions, which investors now believe are quite sound and relatively less risky investments during these challenging times.
With the COVID-19 outbreak having a major negative impact on key markets and businesses, sustainability-related funds managed to acquire a record amount of investments during Q1 2020 with an inflow of around $45.7 billion into sustainable funds, Morningstar confirmed. The growing demand for sustainable investing may lead wealth management companies to develop new capabilities, the report noted.