WealthTech Solutions: Types, Trends and Development Process

The popularity of and the reliance on wealthtech solutions is increasing at an impressive pace owing to a rich number of reasons. This piece intends to familiarize its readers with the concept of wealthtech and the most important contributors to its popularity. The benefits of wealthtech solutions for organizations regardless of their size will also be covered in detail. So, read on! 

WealthTech: What is it? 

WealthTech is a portmanteau of wealth and technology. Wealthtech intends to innovate, rejuvenate, and modernize the wealth management sector. Big data, artificial intelligence, machine learning, and Natural Language Processing (NLP) are the key technologies associated with Wealthtech. 

As per Allied Market Research, the wealthtech solutions market was valued at USD 4.8 billion in 2021 and by 2031, it would touch the USD 18.6 billion mark by growing at an impressive CAGR of 14.8%. 

Wealthtech Solutions: Types 

The primary and the most popular types of wealthtech solutions are listed below: 

Robo-Advisors: Robo-advisors are automated platforms that offer financial planning services with minimum human intervention. The services offered by robo-advisors are driven by algorithms. Based on the client’s risk tolerance, financial goals, and investment horizons, robo-advisors also offer portfolio management solutions. Betterment, Wealthfront, and Charles Schwab’s Intelligent Portfolios are the most popular robo-advisors in the market today. By leveraging sophisticated algorithms, these platforms democratize access to investment services, making them available to a broader audience. 

Digital Brokerage Platforms: Individual investors who can’t afford to spend a whopping amount of money for availing conventional brokerage services are the biggest beneficiaries of the digital brokerage platforms. Such platforms offer online trading and investing services at an extremely affordable cost. Robinhood, E*TRADE, and TD Ameritrade are the most popular digital brokerage platforms in the market today. 

Client Relationship Management (CRM) Systems: CRM systems cater to the specific needs of financial advisors by offering features like client segmentation, automated communication, and performance tracking. Salesforce Financial Services Cloud and Wealthbox are the most popular CRM systems in the market today. 

AdvisorTech: AdvisorTech, a subset of WealthTech, specifically focuses on tools and platforms that support financial advisors in delivering superlative services to their clients. These solutions encompass CRM systems, portfolio management software, financial planning tools, client communication platforms, and more. By integrating these technologies, financial advisors can offer personalized advice, optimize investment strategies, and foster stronger client relationships. AdvisorTech solutions play a vital role in transforming how financial advisors operate. 

Retirement planning: Retirement planning within the WealthTech space involves using advanced tools to help individuals create comprehensive retirement strategies. These strategies include setting retirement goals, estimating future expenses, calculating required savings, choosing appropriate investment vehicles, and continuously monitoring and adjusting the plan to ensure it stays on track. 

Advanced calculators and simulators allow users to estimate their retirement needs, project future income, and evaluate different scenarios. These tools help users make informed decisions about their savings and investment strategies. WealthTech platforms often include educational resources and personalized advice, empowering users to make informed decisions about their retirement planning. This includes information on tax-advantaged accounts, withdrawal strategies, and healthcare planning. 

WealthTech Solutions: Market Trends 

The major market trends in the wealthtech sector are listed below: 

An unprecedented adoption of AI and Machine Learning: The reliance on AI and Machine Learning for performing most of the business operations has never been as much as it is now. Wealthtech leverages AI and ML to provide sophisticated solutions for investment management, financial planning, and advisory services. Machine Learning algorithms analyze massive datasets to identify patterns and predict future market trends. This helps in making informed investment decisions and risk assessments. Predictive analytics enhances the accuracy of financial forecasts, enabling wealth managers to optimize investment strategies and improve client outcomes. 

AI-driven personalization engines assess individual client data to offer customized financial advice and product recommendations. Personalization increases client satisfaction and engagement by providing relevant and personalized financial solutions. AI and ML algorithms monitor transactions in real-time to detect unusual patterns that may indicate fraudulent activity. Enhanced security measures protect client assets and maintain trust in financial institutions. 

AI automates routine tasks such as data entry, compliance checks, and reporting. Natural Language Processing (NLP) is used for chatbots and virtual assistants. Automation reduces operational costs, minimizes errors, and allows wealth managers to focus on more strategic tasks. Automated solutions allow firms to serve a larger client base without a proportional increase in costs, making services scalable. 

Impressive growth of Digital-Only Platforms: Digital-only platforms, often referred to as neobanks and challenger banks, operate exclusively online without any physical presence. In the wealthtech sector, these platforms offer a range of services including investment management, financial planning, and personalized advisory services. The rise of digital-only platforms is a direct response to the evolving consumer expectations for convenience, accessibility, and customized financial services. 

Focus on Environmental, Social, and Governance (ESG) Investing: ESG investing has emerged as an important trend in the wealthtech sector. Greater public awareness of climate change, social justice, and corporate governance issues is driving the demand for sustainable investment options. Governments and regulatory bodies across the globe are encouraging or mandating greater corporate transparency and responsibility, spurring the adoption of the ESG principle. Investors, particularly millennials and Gen Z, are increasingly seeking investments that align with their values, prioritizing sustainability, and ethical considerations. 

WealthTech Software Development Process : A step-by-step guide to save time and effort 

WealthTech solutions have never been as effective, efficient, and productive as they now are and this is the reason why these days, they have no dearth of takers. Financial services organizations of all sizes are fascinated with the capabilities of WealthTech. lets go through all the steps that need to be followed for the flawless development of WealthTech software in detail.

The development of a WealthTech software involves the following steps: 

Requirements Gathering: This is the first phase of the WealthTech software development process. During this phase, in-depth discussions with the key stakeholders are conducted to gather the detailed requirements, pain points, and goals. The industry trends, competitor offerings, and regulatory requirements are researched and thoroughly analyzed to ensure that the software meets all the current and future demands. Detailed use cases and user stories are created to capture the functional and non-functional requirements. Technical feasibility, budget constraints, and timeline are also assessed at this stage to ensure the viability of the project. 

Design and Prototyping: Design and prototyping lay the foundation for the software’s user experience and functionality. Intuitive and visually appealing interface designs that facilitate user interaction are developed. The user experience is designed in such a manner that it ensures that the software is easy to navigate. The focus stays on enhancing the user satisfaction. 

Low-fidelity and high-fidelity prototypes are created to visualize the software’s layout and flow. The user interface and user experience are refined by making the desired changes suggested by the stakeholders and potential users through their feedback. 

Application Development: This phase involves the actual coding and creation of the software. The front-end development involves building the client-side components of the software by focusing on responsive and interactive elements. The back-end development involves the development of server-side logic, databases, and APIs to support the front-end functionality and ensure data integrity. The integration of third-party services involves incorporating external APIs and services for features like data feeds and payment gateways. Agile development practices are utilized to deliver incremental updates and adapt to the continuously changing requirements. 

Back-end Integration: Seamless integration with existing systems and infrastructure is essential for the development of a powerful WealthTech software. This phase involves transferring data from the legacy systems to the new platform while ensuring accuracy and completeness. Robust APIs are created for the communication between different software components and third-party services. It is ensured that the new software is capable of interacting with the existing tools and platforms used by the client. The back-end architecture is also designed at this stage to handle future growth and increased user load. 

Compliance and Security: It is extremely important to ensure that the software adheres to the regulatory standards and protects the sensitive data. Advanced encryption techniques are used to secure data at rest and in transit. Role-based access controls are implemented to restrict data access based on user roles. Regular security assessments and penetration testing are conducted to identify and mitigate the vulnerabilities. 

Testing: Thorough and frequent testing is essential to ensure that the software is reliable, secure, and performs as it should. The issues and bugs identified during this phase must be addressed to ensure that the software is perfect. 

Launch and Ongoing Support: The final step involves deploying the software and providing continuous support to ensure its success. The roll-out process is strategized to minimize the disruptions. A phased launch is considered as per the need. Comprehensive training sessions and detailed documentation are provided to help the users adapt to the new system. The software is regularly updated with the new features, security patches, and performance enhancements based on user feedback and the evolving requirements.

The Best WealthTech Solutions Provider 

Hexaview Technologies is a digital transformation organization engaged in offering wealthtech solutions to clients across the globe for over a decade now. 

A Highly Successful WealthTech Project: Highlights 

Hexaview recently helped a US-based fintech firm through wealthtech solutions. The client specialized in a variety of digital financial services, including mobile payments, peer-to-peer lending, and personal finance management tools. Despite its innovative approach and solid market position, the client faced several challenges that impeded its growth and operational efficiency. The client’s conventional processes were labor-intensive and lacked the agility required to meet the evolving needs of its expanding customer base. 

The reliance on manual processes resulted in high operational costs and prolonged transaction times. The client’s services lacked the depth of personalization needed to cater to individual customer needs effectively, leading to suboptimal customer experiences. The existing infrastructure struggled to accommodate the firm’s rapid growth, resulting in frequent bottlenecks and service delays. The client also grappled with the challenge of managing vast amounts of data and leveraging data to gain actionable insights became difficult.

Hexaview implemented a state-of-the-art robo-advisory platform to offer automated, personalized financial planning and investment advice, reducing the need for human intervention and allowing for cost-effective scaling of advisory services. Sophisticated AI and machine learning algorithms were deployed to analyze customer data, predict financial trends, and provide customized investment recommendations. This enhanced the client’s ability to offer personalized services and improve customer engagement. 

Hexaview also integrated blockchain technology to enhance the security, transparency, and efficiency of transaction processes. Blockchain’s immutable ledger system ensured trust and reliability in financial transactions. Migration to a cloud-based infrastructure was done to enhance operational flexibility, scalability, and reduce IT maintenance costs. The cloud environment facilitated seamless scaling and improved the client’s ability to manage increased transaction volumes. 

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Frequently asked questions 

What is WealthTech? 

WealthTech is the combination of wealth and technology. It involves the use of the most advanced technologies to modernize the wealth management sector and make it easily accessible to as many people as possible. 

What are WealthTech solutions? 

Wealthtech solutions are technology-driven tools and platforms that assist with various aspects of wealth management, including investment management, financial planning, risk management, and client engagement. 

Are WealthTech platforms safe? 

Yes, WealthTech platforms are equipped with advanced security features like encryption and Multi-Factor Authentication (MFA). Fraud is prevented by using AI and ML algorithms. Regular audits are conducted to ensure the safety of WealthTech platforms. 

What is the difference between WealthTech and FinTech? 

WealthTech is a subset of FinTech and focuses particularly on technological solutions designed to improve wealth management, investment, and financial planning services. FinTech has a wider scope and includes digital payments, lending, blockchain, cryptocurrencies, etc. 

What are the main types of WealthTech solutions? 

Key types of wealthtech solutions include robo-advisors, automated trading platforms, personal finance management apps, portfolio management software, client relationship management (CRM) systems, and financial planning tools. 

How do robo-advisors work? 

Robo-advisors use algorithms to provide automated financial advice and manage investment portfolios. They typically assess a client's financial goals, risk tolerance, and investment preferences through an online questionnaire and then create a diversified investment portfolio based on this information.