AI, blockchain technology to push the wealth management software market to new heights eventually
As the wealth management business increasingly becomes a technology business, the wealthtech market is poised for substantial growth and expansion behind the momentum of cutting-edge tech.
But we'll have to wait a few more years to see it hit its peak.
A report from Grand View Research predicts that the global wealth management software market will reach $12.07 billion by 2030, growing at a compound annual rate of 13.9% over the next eight years.
The California-based research firm's 159-page analysis expects the market growth to be driven by an "increasing demand for wealth management software from financial advisors to effectively understand the needs of their clients and streamline the financial management of their clients accordingly."
Researchers say the widening scope of wealth management software to cover everything from accounting and investment management to estate planning and retirement planning bodes well for the future. At the same time, rapid advances combined with greater adoption of the latest technologies for wealth management are expected to intensify the competition between traditional and non-traditional firms.
"The growing number of small and medium enterprises across the globe, and subsequently, the growing preference of these enterprises for modern solutions based on the latest technologies, such as blockchain and AI, are expected to create new growth opportunities for the (small and medium enterprises) segment," said a statement from Grand View Research. "Financial advisors are widely adopting financial advice and management solutions to increase productivity, improve workflow efficiency and strengthen client relationships by helping clients in attaining their financial and investment goals."
According to the study, the trading and exchange firms end-use segment is expected to witness the fastest growth over the forecast period as individuals are aggressively opting for forex and equity trading to augment their financial gains.
The growing adoption of wealth management solutions by trading and exchange firms to optimize efficiency and reduce operating expenses is also considered a positive for the segment.
When discussing the rise in wealth managers turning to AI-backed applications to offer personalized solutions to their clients, researchers say businesses are particularly adopting predictive analytics tools based on AI and machine learning to analyze the large volumes of data related to investments and forecast future trends.
"The increasing number of high net work individuals across the globe is expected to play a niche role in driving product adoption over the forecast period. HNWIs require various services, including investment management services, tax advice, billing services and portfolio management services, among others," according to the Grand View study.
Researchers also say reducing the manual processes remains a priority, and surprisingly, the outbreak of the COVID-19 pandemic is seen as a boon for new growth opportunities.
"Several businesses and individuals are approaching wealth management service providers to seek investment advice and plan their investments appropriately in the wake of the outbreak of the pandemic," said a statement from Grand View Research. "As such, market players are responding to the changing requirements of their clients and diversifying their solutions and services to manage the accounting, estate planning, investment planning and retirement planning of their clients."
The robo-advisory segment is expected to witness the fastest compound annual rate over the forecast period due to the growing adoption of the robo-advisory platform to automate portfolio creation based on the income, risk parameters and other facets of a client's investment mandate, according to the study.
Several businesses across the globe are also focusing on deploying cloud-based solutions to ensure easy access to data and deliver personalized services to their clients.
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