How Wealthtech is Changing the Financial Sector

In the 1990s, banking software developers Avalonq and Temenos first introduced technology for wealth management. Since then, WealthTech as a unique industry — a blending of wealth management and technology — has grown considerably. According to Drake Star Partners’ 2019 WealthTech report, the wealth management sector alone is expected to reach $101 trillion in 2020, up from $85 trillion in 2016, in large part due to the impact of technological advancements. 

A subset of FinTech, WealthTech concerns investment and the digital platforms that can enhance the process. Given the nature of the industry, which involves the exchange and exposure of sensitive data, the need for secure platforms is essential — which is why businesses involved must employ rigorous quality assurance (QA) procedures. Many are turning to QA outsourcing for this purpose.

How Wealthtech is changing the financial sector

WealthTech continues to grow considerably. Through new technologies such as artificial intelligence, wealth management providers are able to offer innovative platforms for delivering services or improve existing ones. As of now, these technologies cannot completely replace humans, although, in the future, that could change. 

With new opportunities, of course, come new challenges and responsibilities. Businesses that hope to leverage these technologies must ensure they are sound and secure through the help of software QA outsourcing or employing an in-house software QA tester. Bugs, after all, will not only disrupt the user experience but could also expose user data and potentially endanger consumer information.

Innovations in WealthTech

There are a number of advancements in the WealthTech sector that are changing the market. Some of the most influential include:

Robo-advisors

Machine learning has made the rise of Robo-advisors possible. This artificial intelligence-powered digital tools take into account factors such as the goals of the user and his or her demographics, including income, marital status, and so on, in order to offer personalized investment advice. Because they are exposed to so much data, companies using them must employ QA services that perform rigorous testing.

Robo-advisors are making financial and investment services feasible for people who aren’t able to afford personal financial advisors. While they’re unlikely to replace their human counterparts, who generally handle higher-income-bracket accounts, they are becoming increasingly mainstream, particularly for younger generations who rely on technology for many of their everyday services and challenges.

Challenger banks

Challenger banks are typically digital banks without actual brick-and-mortar headquarters. While they may have locations that provide minimal services, the majority of client banking is performed online. They also tend to be highly specialized, offering a few services, and are more common in the UK than in the US.

Digital brokers

Digital brokers make the investment process more accessible, offering comprehensive information for users, providing tools, and allowing people to see stock market opportunities previously unavailable to them. In some cases, consumers can also manage all of their investments through a single platform.

The need for in-house QA services or software QA outsourcing is vital as these digital brokers become more common, given that they have access to personal data and must provide error-free advice to consumers.

Micro-investment

Micro-investing is another way for wealth management to become accessible to new populations, with its lower contribution minimums. Because people are not required to invest large amounts of their income, it’s encouraging less wealthy, often younger people, including first-timers, to invest. 

Transfer of wealth

As Baby Boomers begin to retire, this massive generation is transferring assets to children and grandchildren. The demand for technology to facilitate these transactions will be enormous. 

As the WealthTech industry cashes in on this opportunity, the need for QA software testing services will continue to grow as well, with more and more wealth management businesses exploring possibilities and creating new models for investors, many of whom are new to the game.

The future of WealthTech

These innovations alone offer plenty of opportunities to wealth management businesses already. In the future, we can look forward to even more advancements, increasing the need for software development and QA outsourcing in the sector. Some possibilities on the horizon are:

  • A focus on data security to improve consumer trust
  • Predictive analytics to identify patterns in consumer behavior and improve products
  • An emphasis on cloud computing to store and leverage data
  • Increasingly automated services, including “self-service”
  • Ultimately — and this is a huge “maybe” — replacing human financial advisors

Ultimately, WealthTech is full of possibilities — and companies will need to implement them carefully and with responsibility in order to reap their rewards.

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