Wealth Management Platform Market

Market Overview

The global wealth management platform market size was valued at USD 6.05 billion in 2023. It is expected to reach USD 19.33 billion in 2032, growing at a CAGR of 13.78% over the forecast period (2024-32). As individuals seek more customized financial solutions tailored to their specific needs and goals, wealth management platforms that offer sophisticated analytics and personalized advisory services are in high demand. These platforms enable wealth managers to deliver targeted recommendations and advice, enhancing client satisfaction and retention.

The wealth management platform is made explicitly for financial services planning and monitoring, including estate planning, tax, and legal advice, personal retail banking, and investment management. Financial institutions are concentrating on creating workflows to make their clients’ lives easier due to growing digitization in various industries and a constant emphasis on system automation. With the aid of bank channels and other digital platforms, financial service providers are progressively using open application program interface (API) frameworks to provide their financial services alongside third-party products.

The APIs allow the service providers to access one other's products and services. However, traditional financial advisors adapt internal platforms to accommodate clients' expanding needs in response to investors' differing choices. Wealth management platforms include several advantages, including enhanced and streamlined business operations, better system efficiency for business processes, compliance with legal requirements, standardization of services, an omnichannel approach, and superior user experience.

Market Dynamics

Global Wealth Management Platform Market Drivers

Need for Improved Experience in Financial Firms

The main goal of financial firms is to enhance the client experience by providing integrated solutions through unified platforms. To offer a next-generation banking and financial experience, banks have replaced conventional, internal core banking systems. Increased client trust in banks results in more robust engagement and investment willingness, owing to wealth management platforms. As long as administrative and operational costs are kept to a minimum, the platform should be able to accommodate the rising demand for advisory services while improving effectiveness and efficiency across the advisory network.

Several banks have introduced wealth management solutions. For instance, private sector lender IndusInd Bank launched Pioneer Banking in January 2020. This wealth management platform is primarily targeted at high-net-worth individuals. Based on the bank's research skills, the new service combines wealth management options with various personal and business banking products. Such instances drive market growth.

Increased Digitization and High Adoption of Automation

In line with corporate policies, the market is seeing the adoption of digitalization and process automation, both promising to be profitable. Many businesses seek to hasten digitization, increase operational effectiveness, and strengthen client relationships. As a result, several end-use sectors will likely speed up the adoption of financial consulting and management solutions. Tools for wealth management can help businesses keep track of transactions and manage their assets more effectively.

Blockchain and artificial intelligence (AI) technological advancements are anticipated to fuel market expansion throughout the forecast period. The artificial intelligence system monitors the customer's spending and makes relevant recommendations. The Blockchain and AI track client spending and record trends, generating estimates using that data. Based on these projections, the system offers user support and suggestions to help them better manage their expenditure. Additionally, improved security and protection for client data enable businesses to maintain consumer interactions, which is among the key factors expected to drive the global market expansion.

Global Wealth Management Platform Market Restraint

Lack of Awareness of Wealth Management Platforms and Higher Dependency on Traditional Methods

Property costs constitute a significant barrier for potential competitors when opening branch locations. A physical presence is essential since the wealth management concept is built on a high-touch client connection. However, with the sharp increase in real estate prices during the past decade, establishing a brick-and-mortar model has become cost-prohibitive for new entrants. Designing innovative products in a growing restrictive regulatory environment and maintaining the product structure and pricing transparency are crucial challenges. Furthermore, levels of digital adoption across the wealth management industry are chronically low. This is indicative of a sector largely focused on human capital. This has assured individual clients with high discretion and yet the presence of little or no internal potential to change existing business models. Such factors hamper market growth.

Global Wealth Management Platform Market Opportunities

Increasing Adoption of Robo-Advisors in Wealth Management

The financial industry consistently implements cutting-edge technology to deliver financial services that are more affordable and effective. During the global financial crisis of 2007–2008, when stringent regulations on traditional banks and advances in the IT sector boosted the incentives for expanding nonbank and technology-based financial firms, these cutting-edge and innovative technologies attracted attention. Mobile payments, automated teller machines (ATMs), and trade finance using Blockchain, for instance, are a few technology advancements in the finance industry. Robo-advisers and automated financial advisors made to compete with human advisors are among the technological disruptions in wealth management services.

Robo-advisors recommend various investing strategies for objectives like retirement planning, saving for significant expenses, and maintaining a steady income to manage the costs. Robo-advisory management wealth services have several benefits over conventional services that rely on human advisory, including easy accessibility, affordability, and the ability to give their clients the choice of getting financial advice and managing investments whenever they want and from any location as long as they have an Internet connection. Robo-advisory enables market participants in the wealth management platform to offer their services at reasonable costs, allowing them to grow in the wealth management platform industry.

Regional Analysis

Preeminence of North America Over Others

North America accounts for the largest market share and is estimated to grow at a CAGR of 13.8% during the forecast period. The greatest economy in the world, the United States, has been a prominent market for wealth management systems in North America. The region's studied market is expanding due to several developments, including the emergence of Blockchain, machine learning, natural language processing, digital process automation to reduce exceptions, and a push towards digitization.

Furthermore, customers in the region are converting from risk-based portfolio construction to multidimensional outcome-based planning (such as investments, banking, health, protection, taxes, and estate). In addition, client expectations are rising rapidly for things like virtual engagement, seamless app experience, omnichannel support, and instant payments at a pace set by industries outside of financial services. These changing trends are expected to drive the studied market.

Europe is estimated to grow at a CAGR of 13.5% during forecast period. Digital technology has disrupted a broad spectrum of industries over the last decade in Europe, leading to new business models and the ousting of incumbents. Technology-driven business models are attracting new clients and assets in wealth management. In addition, the region is home to some prominent wealth management platform providers, such as Temenos, Finantix, Avaloq, and others, which provide new opportunities in the region with new investments. Many small and medium-sized fintech companies rapidly expand their services through cooperation with aggregators.

For example, Yolt, an online payment platform in the UK, became the first platform to complete data docking with the nine leading UK banks that comprise the CMA929, bringing about a unified view of customer asset information across these institutions. Furthermore, the General Data Protection Regulation (GDPR) across the EU explicitly requires enterprises to take data protection measures and introduce comprehensive record-keeping systems for data storage and handling. The revised markets in financial instruments directive (MiFID H), introduced in the same year as the GDPR, further strengthens protection for clients by improving standards of product transparency, KYC, and execution and is also expected to enhance the growth of the studied market in the region.

Asia-Pacific acquires the third-largest share in the market. The rapid adoption of the internet, smartphones and a shift toward consumerism in Asian countries have helped fuel digital wealth management software growth. Consequently, the digital platform plays a crucial role in the relationship between an institution, a relationship manager, and their clients. Additionally, many global investment banks invest in Asian equity players to improve their market position and competitiveness.

To drive timely market insights and analytics for its relationship managers and investment advisers in Singapore and Hong Kong, Nomura, Asia's leading international investment bank, signed a strategic agreement with Refinitiv Workspace for Wealth Advisors in July 2021. Refinitiv's wealth management division meets the growing needs of clients of wealth advisory firms. As a result, the businesses could pool their knowledge and skills to develop a scalable tech-led wealth management model that can meet a wide range of client requirements. From early-stage investors with relatively simple conditions to the more complex demands of mature investors, such substantial investments propel the market's growth in the region.

Segmental Analysis

By deployment type, the global wealth management platform market is segmented into On-premises and Cloud. The Cloud segment accounts for the largest market share and is estimated to grow at a CAGR of 14.5% during the forecast period. Cloud deployment is experiencing the highest growth rate during the forecasted period due to the increasing adoption of cloud-based solutions and software across industries. According to Spiceworks 2021, over the last two years, money allocated to hardware budgets has slowly flowed into other areas. Hosted/cloud services accounted for 24% of IT spending in 2021, and managed services accounted for 16% of spending. The majority of the adoption is witnessed among the Small and Medium Enterprises (SMEs) due to the cost-efficiency feature of the cost deployment. The cloud deployment option facilitates easy operability among varied locations without concern about installing software and maintaining supportive hardware. Such factors drive the segment growth.

On-premises solutions offer a greater extent of customization as compared to cloud-based platforms. Deploying an on-premises wealth management platform provides the IT team complete control over the software's settings, user interface, and design. This requires an experienced IT team that can make these modifications and promptly deal with any issues. Such factors contribute to market growth.

By end-user, the global wealth management platform market is segmented into Banks, Trading Firms, Brokerage Firms, Investment Management Firms, and Others. The Banks segment accounts for the largest market share and is estimated to grow at a CAGR of 13.8% during the forecast period. Banking clients' trust in wealth management platforms rises because they perceive their investments as safe, encouraging more active participation and improving their desire to make additional investments. The platform is anticipated to meet the rising demand for advisory services and reduce administrative work and operating expenses, increasing effectiveness and efficiency across the advisory network and fueling market expansion.

Investment Management firms are the second-largest segment. On the purchase side, global regulation has become considerably more prevalent, posing operational and compliance issues for investment managers. Firms are compelled to update their procedures and replace outdated technology due to new reporting, clearing, and margin requirements regulations. Investment management companies are using wealth management solutions due to all these causes.

Recent Developments

• July 2024 - Leading provider of intelligent data, wealth solutions, and integrated technology, Envestnet, Inc. (NYSE: ENV) ("the Company" or "Envestnet"), announced that it finalized an acquisition agreement with Bain Capital, valued at USD 4.5 billion (USD 63.15 per share).
• July 2024 - Earned Wealth secured USD 200 million in funding for its consultancy services, which specialize in providing financial guidance to physicians regarding both their professional and personal matters. The organization offers a unified platform that enables doctors to get advice from wealth management specialists on several subjects, such as financial planning, tax planning, wealth management, and investment.