Investors have shown growing interest in fintech companies focused on wealth management. According to recent data from market intelligence firm CB Insights, wealth management technology funding hit an all-time high of US$5.6 billion in the first quarter of 2021, exceeding the US$5.2 billion total for the whole of last year.
A total of 86 wealth technology deals took place in Q1 2021, the highest-ever level of deal activity in a single quarter. In terms of specific wealth management technology segments, robo-advisers and retail investing software grew significantly, with funding growing by 29% and 162% respectively. Southeast Asia, in particular, saw a noticeable pickup in funding, from US$61 million in 2020 to US$167 million in the first three months of 2021.
The increase in funding towards the wealth management segment comes at a time when demand for digital financial services is on the rise, bolstered by challenges posed by the ongoing Covid-19 pandemic, particularly in Asia-Pacific.
A survey recently conducted by data firm Refinitiv finds that investors are among the least loyal and most frustrated by their digital platform experiences. Around 22% of investors based in Asia-Pacific are willing to switch platforms within a year because of their poor digital experiences.
"The Asian market has unique challenges and investor expectations in respect to their digital experiences. With the growing number of retail investors and accelerated competition amongst established and new wealth players, providing the latest technology to lower cost, increase connectivity and improve the investor experience, will be key to long-term success,” observes Steven Carroll, global head of sales strategy and execution, wealth, at Refinitiv.
As a result of the increasing embrace of technological offerings, and the focus on providing the best digital customer experience, several established financial institutions have forged partnerships with fintech partners or enhanced their digital offerings in the hopes of increasing customer stickiness and visibility.
Banks such as Goldman Sachs and Royal Bank of Canada have launched their robo-advisory services while financial firms Mitsubishi UFJ Morgan Stanley Securities and Samsung Asset Management have partnered with fintech firms Quantifeed and Privé Technologies for their respective projects.
In the case of Samsung Asset Management, the firm teamed up with Privé Technologies to help increase the visibility of its investment products, with the fintech platform acting as a connector between the firm and private banks/independent financial advisers.
“Privé provided us a marketplace in which we can easily put our products on,” explains Jang Junho, head of digital marketing at Samsung Asset Management. “With Privé’s partnership, we can access investors from different markets including Hong Kong, so this is a good opportunity for us.”