Wealth management in a growing India: How technology is upending traditional systems and decades-old practices
By Venkatramana Gosavi, Senior Vice President and Global Head of Sales, Infosys Finacle
The Indian growth story is not unfamiliar to many. Often compared to China and its fast-growing economy, India’s rise as a global economic powerhouse has been a rare sliver-lining in an otherwise gloomy economic outlook.
But the nation’s changing demographic presents significant challenges to its incumbent banks and wealth management firms. These firms have historically relied on siloed and traditional systems with value propositions that may not greatly resonate with a key customer segment like the millennials who want seamless, personalised, and digitally rich experiences.
A 2020 survey found that over 35 percent of millennials earning more than ₹1 lakh per month expected their income to rise by more than 75 per cent.
Mirroring life: How technology trends have disrupted the space
We live in the age of generative AI, instant gratification, and fast digital interactions. Unsurprisingly, customers’ natural experiences turn to expectations in all forms of their lives, including banking and wealth management.
Rising to meet these customer expectations are fintech players who are disrupting the traditional financial advisor model. Several regtech are also cropping up to help wealth managers meet the increasing demands of compliance with automation.
According to research firm Clutch, 88 per cent of millennials invest their money. Many also get financial advice from influencers and others on YouTube, LinkedIn, and Instagram. They seek guidance on platforms like Reddit, upending the role of traditional wealth advisors.
A study by neo-bank Freo found that millennials were at the forefront of financial digital adoption.
What lies ahead: Innovation in wealth management and the foundational elements of the future
While conventionally, wealth management was characterised by inherited wealth and wealth management advisors, the modern world of wealth management is broadly dispersed, fast, and digital-first.
Despite all the shifting sands and the challenges that agile fintech disruptors pose, there is a lucrative opportunity: the Indian wealth management market is expected to reach $464.5 billion by 2027.
Innovations in technology offer incumbents a way to attract key customer segments in a changing demography and deepen their engagement with personalised experiences provided efficiently. So, the foundational elements of the future of wealth management in India and around the world lie in these three areas:
-Advisory tools, but digital
Digital wealth management platforms offer several tools and analytical insights to process massive quantities of structured and unstructured data. This processing can help advisors better understand their clients’ requirements and suggest suitable investment options.
Wealth and investment management firms can use the insights to personalise customer journeys and experiences, optimise portfolio management, improve conversion rates, and enhance efficiency through automation. Further, wealth managers can also use robotic advisory solutions to analyse portfolios, modify asset allocations, and provide personalised recommendations.
-AI: For there is no future without it
Chatbots streamline customer onboarding from collecting and verifying the necessary documents to guiding new clients on transacting investment products. Intelligent virtual assistants take conversational investments forward by providing investment advice on various digital channels and can engage with customers to propagate financial best practices.
Generative AI is expected to revolutionise investment research and analysis. Bloomberg launched BloombergGPT, a large language model (LLM) trained explicitly on financial data to support various natural language processing (NLP) tasks, such as performing sentiment analysis and answering questions. Investment analysts can use generative AI to quickly pull out financial reports and news stories. In contrast, advisors can use the technology to summarise notes and generate customised reports for clients more efficiently. Given the pace at which generative AI continues to evolve, it is likely that in the future, AI will be able to create a wealth portfolio in response to a request made in natural language.
-Going cloud-native: Implementing this layered tech architecture to put together best-of-breed solutions
Wealth firms should design their technology estate with a solid business engine for back-office operations as the foundation, layered with digital solutions and experiences; with a layered approach, the firms are not bound to a single vendor and their tightly coupled applications. The architecture should be composable, decoupled, have self-contained components, be receptive to APIs, accommodate event-driven changes, as well as include data lakes and embedded analytics. Other desirable traits include scalable, configurable, extendable, and continuously deployable architecture — which is only possible if it is cloud native.
Augmenting human interactions
There are generational shifts and disruptive tech trends in wealth management. But the future is digital-first. AI — powered by cloud-native tech — can augment human interactions so firms can elevate advisor-client engagement, empower customers to make better investment decisions, and grow their wealth.
