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1、1Money in motionMoney in motionNavigating Indias evolving financial landscape with wealthtechAugust 20242Money in motionContents04Foreword06Executive Summarya.The financialization revolutionb.Revolutionizing markets:welcoming the new”affluent”customer14Indias financialization thrusta.Global wealth m

2、anagement industry:an overviewb.Indian wealth management industry:the journey has only just begun c.Wealthtech in India:charting a new frontier08Global wealth management:setting the context3Money in motion22Wealth management in the digital agea.Next-gen wealth:redefining the role of relationship man

3、agersb.Standing out in the age of personalization:hyper-personalized investment strategiesc.Robo-advisory:an evolution of wealth management proposition for the mass affluent segmenta.Understanding the changing regulatory landscape in Indiab.The future impact of regulatory developments 28Competitive

4、landscape:the great convergence 36Shaping tomorrowThe future of wealth management in India32Evolving regulatory landscape4Money in motionThe wealth management industry is undergoing a foundational shift.Fundamental changes in client relationships,assets in motion,heightened competition,rise of the b

5、ig tech,regulatory changes and increasing pressure to improve financial performance while strengthening client trust and value are transforming the industry.These are not optional challenges they are non-negotiable factors that will determine success for wealth management firms over the next five ye

6、ars.The defining question for the industry has become:”How to rethink and reshape business and operating modelto drive growth,profitability and sustainable competitive advantage by effectively addressing these challenges.”Global wealth growth,despite multiple crises spanning economic,political and s

7、ocial events,has proven to be stubbornly robust,demonstrating its ability to adapt and thrive even in the face of systemic challenges.Global wealth currently stands at approximately$450 trillion,with over$150 trillion in new wealth projected to be created in the next six years.While market trends ar

8、e influencing wealth management business operating models,the core essence of the industrys value proposition remains unchanged:helping clients create,protect and responsibly grow their wealth.While North America,Asia-Pacific and Western Europe continue to account for around 80%of global net wealth,

9、Asia-Pacific is facing growth headwinds,primarily due to concerns over Chinas growth prospects.Amid this uncertainty,India has emerged as a bright spot,with now home to more than 260 billionaires and 1,300 millionaires generating$588 billion in new financial wealth in 2023 its largest increase in hi

10、story.India is among the worlds fastest-growing economies and financialization is the key driver propelling this growth.Household financial assets are expected to reach US$6 trillion by 2028.Our chapter on Indias financialization thrust outlines that the growth in financial wealth,financial literacy

11、,rising affluence and need for yield has resulted in a shift of preferences from traditional fixed deposits to managed investment solutions.The size of the managed investments industry is set to grow to US$3.9 trillion by FY2027(74%of GDP)from US$1.7 trillion in FY2022(57%of GDP).The investment asse

12、t class will grow faster,driven by“value migration”and a“long runway,”making Indias wealth industry a structural and scalable opportunity.Indias customer segments have undergone a drastic change.While the traditional wealth management customer base of UHNI and HNI households commands an asset pool e

13、xceeding US$1 trillion,a new wave of affluent investors,including millennials and Gen Zs,has emerged as a force to be reckoned with.The chapter titled Revolutionizing markets:welcoming the new“affluent”customer covers in-depth the enormous potential of this segment and outlines the key challenges we

14、alth management firms will face in serving these diverse customers with their complex needs and varying channel preferences.Changing client profiles and behaviors are driving the shift in business models,products and digital priorities Vast wealth transfer to the next generation of millennials and G

15、enZ is expected by 2045 Potential customer includes mass affluents,young investors and women Client preferences shifting towards greater personalization and convenience Foreword5Money in motionWealth is transitioning to the next generation,who are exhibiting markedly different behaviors from their p

16、redecessors.With an attrition rate four times higher,these new customers expect on-demand products and services from their wealth managers.If these expectations are not met,they do not shy away from quickly switching to other providers.The emergence of Big Tech is driving the biggest disruption.Digi

17、tal-first wealthtech firms have bridged the gap with traditional players by broadening their product offerings,pushing incumbents to defend their market positions by enhancing their capabilities.By leveraging technology,wealthtechs now offer hyper-personalized advice and real-time portfolio manageme

18、nt,addressing the increasingly complex needs of diverse clients at scale.In response,incumbents have accelerated their digital transformation to compete more effectively with these tech-driven challengers.While it is still early to determine the long-term success of robo-advisory services,features l

19、ike automated investments and algorithm-based adjustments and rebalancing have shown promise.However,it remains to be seen if these innovations can fully replace the need for human touch.Our experience with early GenAI use cases across the value chain suggests it will significantly reshape many jobs

20、,enabling relationship managers and their teams to focus more on core advisory tasks while routine processes are managed by technology.It is imperative that all digital transformation plans now embed GenAIalong with a strategy to harness its benefits and address its potential challenges.This will un

21、lock efficiencies and a customer engagement model that the world has only just begun to experience.Amidst the transformative changes reshaping the wealth management industry in India,the future holds immense promise.This report aims to shed light on critical trends and strategic imperatives that wil

22、l guide wealth managers toward sustained outperformance.By focusing on these pivotal areas,we strive to support industry professionals in navigating the evolving landscape and achieving long-term success.We hope you find our report insightful and empowering as you navigate the complexities and oppor

23、tunities within Indias wealth management sector.Saurabh Joshi Partner,Financial Services ConsultingEY IndiaNilesh Naker Partner,Technology ConsultingEY India6Money in motionExecutive SummaryThe wealth management sector in India is at the helm of transformation,underscored by the rapid financializati

24、on of the economy and the profound impact of digitalization.The sector is currently experiencing trends,such as hyper-personalization of financial advice,a shifting investor base towards the affluent segment and residents of tier 2 and tier 3 cities,and technological advancements giving rise to weal

25、thtech firms.The wealth management sector in India is well poised to register a healthy CAGR of 12%to 15%1 over the next five years.According to the Knight Frank Wealth Report 2022,the Indian UHNI population and HNI population are expected to clock a CAGR of 7%and 12%,respectively,over 2021-262.The

26、mass affluent segment is expected to grow at 15%3 over the medium term,with technology and platform services being key differentiators in this fiercely competitive landscape.Indias financial sector is experiencing a marked shift as savings increasingly move from physical assets to financial instrume

27、nts.This financialization is driven by a combination of enhanced financial literacy,favorable demographics and supportive government policies,creating a fertile environment for wealth management services to flourish.Digitalization has been a catalyst for change,enabling firms to reach a broader audi

28、ence and offer more sophisticated services.The adoption of digital platforms,mobile applications and online tools has made wealth management more accessible and convenient for a diverse range of investors.The wealth management industry is witnessing a trend towards hyper-personalization,where servic

29、es are tailored to an individuals financial goals,risk appetites and life stages.This bespoke approach is facilitated by advancements in data analytics and artificial intelligence.The investor base in India is also transforming as wealth management services penetrate the affluent segment and gain tr

30、action in smaller cities.This expansion is democratizing investment opportunities and prompting wealth managers to develop products that cater to a wider spectrum of financial needs and aspirations.Technology has been a game-changer,with the emergence of wealthtech firms leveraging cutting-edge tool

31、s to enhance service delivery,leading to more efficient operations,reduced costs and improved customer experiences.The wealthtech sector in India is highly competitive,with a dynamic mix of new entrants and established players,promising continued expansion as it meets the growing demand for digital

32、financial advice and investment services.These entities are leveraging cutting-edge technologies like AI,machine learning and blockchain to offer innovative and user-friendly investment services,particularly to a younger,tech-savvy demographic.With competition heating up,these platforms are enhancin

33、g user experiences,streamlining portfolio management and reducing costs.Traditional banks are not far behind,as they digitalize their offerings and collaborate with or acquire fintech firms to stay relevant.The regulatory framework for wealthtechs in India is evolving to address the unique challenge

34、s posed by technology-driven services.Regulators are focusing on ensuring consumer protection,data privacy and cybersecurity while promoting a conducive environment for innovation.The outlook for wealth management and wealthtech in India is optimistic,with expectations of continued growth and innova

35、tion.With a large and youthful population showing a rising propensity to invest,coupled with regulatory reforms aimed at enhancing transparency and investor protection,the sector is poised for significant growth.Technological advancements are enabling greater access to wealth management services acr

36、oss diverse demographics and the introduction of innovative financial products is catering to a broader range of investor needs,offering a wealth of opportunities for both domestic and international investors as well as firms.1,2,3“Outlook on Wealth Management sector:Angel One,360 One could give 10-

37、20%return in 1 year”-Economic Times,2 October 20237Money in motion8Money in motionGlobal wealth management:setting the context1 19Money in motionWealth growth has shown extraordinary resilience to extreme events.Although not immune to market volatility,global wealth portfolios have rebounded from re

38、cent shocks,including the Great Recession and the COVID-19 pandemic.Strong equity markets have been pivotal in driving these gains,with real assets playing a significant role as well.Physical assets,such as real estate and gold,remain favored by much of the worlds wealthy,with investor interest cont

39、inuing to intensify.The overall wealth pool currently stands at approximately US$450 trillion and is expected to grow by an additional US$180 trillion over the next seven years.The regional outlook for wealth remains positive,with Asia-Pacific continuing to lead in wealth growth.Projected to grow at

40、 a rate of approximately 9%over the next five years,the region is expected to hold nearly 25%of the worlds wealth by 2030.A notable shift is witnessed in cross-border asset flows,with some domiciles experiencing faster growth than others.Switzerland,the traditional powerhouse of cross-border wealth

41、management,now faces competition from booking centers such as Hong Kong and Singapore,driven largely by the repatriation of assets back to Asia-Pacific.In recent years,the UAE has also gained recognition as a booking center,offering a highly attractive environment for both banks and investors.This r

42、epositioning has been partly fueled by the accelerated creation of wealth outside Europe,as well as a significant outflow of Russian assets from Europe to the Middle East.Global wealth management market:an overview1.1Growing wealth-A global trendFigure 1Source:UBS Global Wealth report 2023 and EY in

43、ternal research From2023454US$T630US$T59(M)MillionairesWealth100(M)To203010Money in motionKey macro themes reshaping the industrySource:2024 EY Global Wealth Management Industry Report:Rethinking the how,EY Internal Research Key macro trendsFinancial pressureStructural changes in the industryChangin

44、g demographics and client needsRedefining the future of advice Profitability pressures are reinforced by rigid cost structures,increasing operational complexity,growing compliance burden,and fierce competition for talent WM provider landscape is fragmenting as incumbents face increasing competition

45、from online brokers,WealthTech firms,and asset managers Structural changes in wealth management are forcing incumbents to defend their market positions,enhance capabilities,and differentiate more strongly Changing client profiles and behaviours are driving the shift in business models,products,and d

46、igital priorities Vast wealth transfer to the next generation of millennials&GenZ is expected by 2045 Potential customer incl.mass affluents,young investors&women Client preferences shifting towards greater personalization&convenience Advisor-led engagement channels will soon account for less than 5

47、0%of all client interactions The future of advice is to seamlessly blend human contact with automated interactions,providing smooth,high-value,omnichannel advice in real timeFigure 2112342Financial pressure:Since 2022,rising inflation,interest rates,and market volatility have weakened the economic o

48、utlook.Wealth managers are grappling with slow asset growth and tighter margins due to:Increased competition:New entrants and a broader range of products are driving portfolio management commoditization.Price sensitivity:Clients are more fee-conscious and regulatory pressures are intensifying accoun

49、tability,further squeezing margins.Asset allocation shifts:Open architecture and passive investing are lowering fees,while discretionary mandates and structured products provide limited relief.M&A consolidation:Post-pandemic M&A has concentrated market share,fuelling competition across regions.Profi

50、tability pressures are being reinforced by rigid cost structures,increasing operational complexity,growing compliance burdens and fiercer competition for talent.Industry shifts:Wealth managements stable margins and low capital costs are drawing new competitors,fragmenting the market:Wealthtech firms

51、 and discount brokers:gaining influence with younger,tech-driven wealth holders Asset managers:expanding into wealth management with unique value offerings Global institutions:banks,insurers and custody services are aggressively targeting affluent and HNW clientsIncreasing competition from maturing

52、players will accelerate structural change in wealth management,forcing incumbents to defend their market positions,enhance their capabilities,differentiate themselves more strongly and rethink the synergies offered by parent groups integrated business models.Figure 211Money in motion34Changing demog

53、raphics and client needs:Each generation feels that it is living through unprecedented times.But today,wealth managers and their clients are indeed navigating exceptional change.Key themes include:Evolving client preferences:clients demand hyper-personalization,convenience,sustainability and lower r

54、isk across all segments Regulation:stricter rules on consumer protection,privacy,data and sustainability reshape the industry Tech disruption:Generative AI,blockchain,quantum computing and cyber threats like ransomware are transforming operations Investment innovation:private markets,digital currenc

55、ies and tokenized assets expand client choices Employment dynamics:shifts in purpose,work-life balance,career paths and remote work impact both clients and staffThese factors indicate that wealth advice,investment management and client experiences will evolve more rapidly in the next five years than

56、 they have in the past two decades presenting both challenges and opportunities for incumbent wealth managers.Redefining the future of advice:High-quality financial planning and advice are central to a wealth managers value proposition.The challenge lies in scaling these services while delivering pe

57、rsonalized advice to HNW clients at a sustainable cost.Technology is crucial in enhancing both relevance and profitability,but success depends on aligning multiple elements to significantly boost the value of advice.India is projected to become a US$5 trillion economy by 2027-28,positioning itself a

58、s the third-largest global economy.The countrys vibrant entrepreneurial ecosystem is reflected in the rapid growth of ultra-high-net-worth(UHNW)individuals,with nearly three new members joining this exclusive group daily as startups gain market traction.This trend underscores the substantial growth

59、and evolution occurring within Indias wealth management sector,propelled by demographic shifts,intergenerational wealth transfer and the rising influence of millennial high-net-worth individuals(HNWIs).Indias savings rate remains well above the global average,currently around 29.1%of disposable inco

60、me.Traditionally,a significant portion of these savings was allocated to physical assets like gold and real estate,which constitute approximately 65%of household assets.However,over the past 5-7 years,rising disposable incomes and the advancement of financial markets have driven a noticeable shift t

61、oward financial assets,including bank deposits,equities and mutual funds.The share of financial assets in total investments increased from 40%in 2018 to 57%in 2022.Within the financial assets,managed investments arena is on the cusp of hyper growth.The managed investment space is anticipated to expe

62、rience substantial growth,with the market expected to double in size over the next five years.The number of unique mutual fund investors now exceeds 40 million,with the total number of mutual fund folios surpassing 170 million.Additionally,the number of demat accounts in India has also exceeded 170

63、million.And we have only just begun.The addressable asset pool for UHNI and HNI householdsthe primary target segment in traditional wealth management in Indiais valued at over US$1 trillion,with forecasts indicating it will nearly double within five years,exceeding US$2 trillion.UHNI and HNI segment

64、s are seeking differentiated products that give them an option to generate better positive alpha on their investments which is driving the shift to more sophisticated managed investment solutions like AIFs.US$130 billion have been raised in commitment across all three categories of AIFs and this is

65、expected to more than double over the next five years.Indian wealth management industry:the journey has only just begun 1.212Money in motionThe growing dominance of financial markets and instruments in shaping the economy is overshadowing traditional sectors,steering wealth towards investments in se

66、curities over physical assets.The wealthy in smaller cities are also adopting professional management of wealth,increasing participation of smaller cities in the wealth management sector.India is experiencing the rise of middle-class investors,millennials and GenZs with the rise in their wealth due

67、to higher returns from capital markets,inheritance of generational wealth,entrepreneurial success.Investors in India are demanding more personalized wealth advisory services,investment strategies and financial planning,real-time investment analytics along with hybrid model of advisory services.The n

68、ew investor segment of millennials and GenZs demand tech savvy wealth advisory services,with all their investment requirements at their fingertips in real-time,facilitated by the guidance of a financial expert.Source:EY Insights analysisKey trends shaping the Indian wealth management landscape Shift

69、 in financializationKey trendsDescriptionFocus on Tier 2,Tier 3 citiesEmerging client segmentsHolistic personalizationDemand for digital solutionsFigure 4The convergence of demographic changes,economic trends,technological advancements and regulatory initiatives is driving the expansion of the afflu

70、ent segment.Wealth managers of all sizes are racing to serve mass affluents in a bid to stay competitive and profitable over the longer term.As wealth is shifting hands to the next generation,which presents financial advisors with an opportunity to tap affluent younger generation.To address the evol

71、ving needs of the affluent segment,wealth managers are focusing on hyper-personalized service models,leveraging advanced technology,and driving operational transformation.This includes enhancing investor education and broadening their service offerings.Wealth management in India is a multi-decadal o

72、pportunity driven by rising incomes,expanding financial markets,and the shift from physical to financial assets.Growing wealth creation,intergenerational transfers,and the demand for sophisticated investment solutions ensure long-term growth in this evolving sector.Source:Nuvama WealthRelative Indus

73、try SizeFigure 3Asset ClassAssets Under Management(AUM)CAGR Last 10YAUM/Premium to GDPIndiaUS/GlobalMutual Funds21%16%116%AIF68%1%13%Insurance14%3%11%4“Indian wealth-tech segment to be$60 billion opportunity by FY25:RedSeer report”-Financial Express,16 December 20205“Indian Wealthtech Compendium 202

74、2”-Equalifi13Money in motionSource:EY insights analysisSource:“The Fintech revolution in India:bridging the digital divide”-Analysys MasonDrivers of growth of wealthtechs in IndiaIncreasing disposable incomeRapid growth of middle-class segmentYoung demographic keen on digital solutionsGrowing awaren

75、ess of financial assetsExponential rise of internet and smartphone penetrationUnder-penetration of financial assetsThe Indian fintech ecosystemFigure 5Figure 6The wealthtech market in India is a burgeoning segment within the countrys broader fintech ecosystem,reflecting a unique blend of technologic

76、al innovation and financial services being customized to the diverse needs of the Indian population.According to a report by RedSeer Consulting,the Indian wealthtech market is poised to grow to over US$63 billion by FY25 from US$20 billion in FY204.In 2022,India had 4 million wealthtech investors ex

77、pected to grow to 12 million by 20255Wealthtech in India:charting a new frontier1.3Popular wealthtech solutions in India include robo-advisory for automated financial guidance,digital brokerage platforms providing direct market access and portfolio management tools that centralize investment trackin

78、g.Additionally,B2B software services offer tailored technology solutions to enhance operations of wealth management firms,making advanced financial strategies accessible,and improving the sectors efficiency and inclusivity.India has risen as a formidable fintech powerhouse globally,with the wealthte

79、ch sector playing a pivotal role in transforming and digitalizing the nation.PaymentsGatewaysLendingtechWealthtechInsurtechOtherCore bankingTradingB2C dig.lendersPOS financingBNPLPayment wallets/UPICross borderPoSB2CP2PMarketplaceB2B focusedAlternate assestsUnderwritersBrokersClaims mgmt.Neo banksSa

80、aSOthersInvesting14Money in motionIndias financialization thrust2 215Money in motionCultural factors,economic conditions,and the lack of a comprehensive social security system,which encourages people to save for their future needs,influence the high savings rate in India.Traditionally,Indians have p

81、referred to invest in physical assets,such as gold and real estate.A significant portion of the Indian economy is still informal,where people do not have access to formal banking and credit systems.This leads to a higher propensity to save in physical assets like gold and real estate.However,there h

82、as been a noticeable shift in recent years,with more people looking towards financial assets like stocks,bonds,mutual funds and bank deposits as preferred investment options.The trend towards financialization of savings is evident in the surge of new trading and demat accounts,which saw an increase

83、of 381%and 418%,6 respectively,compared to the three years before the pandemic.This shift results from enhanced knowledge of financial assets,attractive returns from the financial markets,the ease of financial investment management,and government efforts to advance financial inclusion and education.

84、Consequently,the typical investment portfolio of an Indian investor is evolving,showing a greater allocation towards financial assets.*Source:Indian Public Policy Review,11 August 2023Indian individuals and households set aside a significant portion of their income as savings rather than spending it

85、 on consumption.The fact that Indias savings rate remains above the global average can be a positive indicator of financial institutions and investment opportunities within the country in comparison to other nations.The financialization revolution2.12.1.12.1.2Leading the world:Indias exceptional sav

86、ings rateFrom gold to growth:India embracing new financial assetsIn 2020-2021,for the first time ever,the proportion of savings in financial assets relative to the GDP(11.63%)surpassed that in physical assets(10.54%)*Source:The World BankGross domestic savings as a percentage of the countrys Gross D

87、omestic Product(GDP)in 2022Figure 728.1%29.1%17.1%17.1%27.0%22.8%25.5%GlobalIndiaUSUKGermanyJapanCanada6“Covid-19 and the Goalkeeper of the Indian Economy”-Indian Public Policy Review,11 August 202316Money in motionWithin the realm of financial assets,Indian investors are increasingly opting for man

88、aged investments,such as mutual funds and portfolio management services.The investment landscape has seen a significant increase in new Mutual Fund(MF)folios opened,average monthly inflow to MF Systematic Investment Plan(SIP)and the inflow to equity schemes of MFs by 50%,29%and 14%,respectively,7 fr

89、om pre-COVID years of 2017 to 2019 and post-COVID years of 2020 to 2022.This shift is due to the professional management of these investment vehicles,which offers the potential for higher returns and diversification of risk.Investors increasingly recognize the benefits of having experts manage their

90、 investments,especially in a complex and volatile market environment.The managed investment industry size rose to 57%of GDP in 20228.It reported an Assets Under Management(AUM)of INR135 lakh crore as of March 20229.The MF industrys AUM doubled from INR22.26 lakh crore in 2019-2020 to INR54.1 lakh cr

91、ore in 2023-202410.Amid this increasing interest towards managed investments,the growth of traditional fixed deposits(FDs)is getting overshadowed by managed investments.This is happening because of increased digitalization,rising investor sophistication in terms of retirement planning,higher awarene

92、ss and use of insurance,investment objectives aimed at beating inflation and a growing middle-income population,as per the Credit Rating Information Services of India Limited(CRISIL).The rating agency estimates assets in the managed investment segment to double to INR315 lakh crore by FY27,and the t

93、rend is expected to continue well past FY27.2.1.3Managed assets:the new favorite in financial assets Source:RBI,CRISIL MI&A Research via“The big shift in financialisation”-CRISIL,December 2022 Note:Data is for financial year ended MarchShare of financial savings to savings in physical assetsFigure 8

94、44.9%41.1%39.6%38.8%41.0%52.5%55.1%58.9%60.4%61.2%59.0%47.5%FY16FY17FY18FY19FY20FY21Financial savingsSavings in physical assets7“Covid-19 and the Goalkeeper of the Indian Economy”-Indian Public Policy Review,11 August 20238,9“The big shift in financialisation”-CRISIL,December 202210“The Mutual Fund

95、industry in India”-Bajaj Finserv11,12,13Indian mutual fund industry likely to hit Rs 100 lakh crore by 2030:Axis Capital”-Economic Times,23 February 202417Money in motionSource:AMFI,NPS Trust,IRDAI,SEBI,Life Insurance Council,RBI,CRISIL MI&A ResearchDespite the growth in financial asset investments,

96、there is a significant under penetration of financial products in the Indian market.A large portion of the population remains underserved or unserved by the formal financial sector.The penetration of mutual funds are limited in India compared to global peers.The current penetration is at 15%in India

97、 vs a global average of 74%11.With 42 million unique12 investors,mutual funds penetration in India covers less than 5%13 of the working-age population at very low-ticket sizes.This under penetration presents a substantial opportunity for growth in the financial services industry.As more people gain

98、financial literacy and the government pushes for financial inclusion,the demand for financial products and services is expected to rise.This offers a huge potential for financial institutions to expand their customer base and for the market to grow in both depth and breadth.In the prevailing opportu

99、nity for growth in the financial services industry,India is witnessing the emergence of a new investor base.There are drastic shifts in investor segments,marked by the rising investable wealth of the affluent investor and the emergence of new high-net-worth and ultra-high-net-worth indivisuals,drive

100、n by start-up boom,entrepreneurship and investment returns.2.1.4Vast runway for growth despite market under penetrationRevolutionizing markets:welcoming the new“affluent”customer2.2Growth in assets of managed investments vs fixed deposits(in INR lakh crore)Figure 9631351081702017202220172022CAGR+16%

101、CAGR+10%Managed Invested AssetsTraditional FDs18Money in motionThe investor base in the Indian capital market has shifted significantly from institutional to retail investors.This shift is driven by digitalization that simplifies trading,a young and financially literate population,regulatory reforms

102、 by SEBI to protect and encourage retail participation and a variety of accessible financial products like mutual funds and ETFs.The Indian capital market has experienced significant growth,especially during and after the COVID-19 pandemic,with an influx of retail investors.The customer base has und

103、ergone a significant transformation across key demographic dimensions,including age,income,and geography.This shift has resulted in the emergence of distinct customer segments,each with unique attributes and financial requirements.Younger clients tend to demonstrate higher levels of digital literacy

104、,an openness to innovation,and a greater tolerance for risk,while older cohorts often prioritize wealth preservation and stability.Affluent professionals generally seek long-term growth strategies and retirement planning solutions,whereas ultra-wealthy business owners typically focus on legacy plann

105、ing,tax optimization and diversification.Furthermore,the life goals and preferences of these segments vary considerably.Younger clients often prioritize short-to medium-term financial objectives,such as property acquisition or business investments,while older clients may emphasize estate planning,ph

106、ilanthropy and securing wealth for future generations.Geographical factors further contribute to these variations,with urban clients typically having access to more advanced financial products compared to those in rural or semi-urban regions.Given this diversity,wealth management firms can no longer

107、 adopt a standardized approach.Instead,they must implement highly personalized strategies,customizing their services to align with the specific needs,preferences,and financial objectives of each client segment.This includes offering differentiated products,personalized financial planning,and special

108、ized investment solutions designed to address varying degrees of digital proficiency,risk tolerance and life aspirations across the customer base.In this increasingly complex landscape,the ability to deliver tailored solutions that resonate with each clients unique profile is critical to maintaining

109、 relevance and driving sustained growth in the wealth management industry.2.2.1A new era:changing investor demographicsSource:EY internal researchChanges in investor demographicsFigure 10 Trust&transparency Requires advise/assistance Specialised/complex products Value added service+Millennials&Gen Z

110、 Digitally savvy/DIY Preference for personalisation&experience Emphasis on knowledge&information+Mass Beginner/Conservative Low ticket size products Trust&transparency Requires advise/assistance+B30 cities Beginner/conservative Low ticket size products Trust&transparency Requires advise/assistance T

111、30 cities Assisted digital Goal based investing Emphasis on knowledge&informationAged Conservative Traditional productsCorporates and HNIs Personalised service Dedicated RMs+19Money in motionSource:CAMS,EY internal research Illustrative:Millenial Persona Trends,behaviour and preferencesFigure 11Weal

112、th managers of all sizes are intensifying their focus on the mass-affluent segment as part of their long-term strategy to maintain competitiveness and ensure profitability.This shift is driven by the recognition that mass-affluent investors represent a growing and increasingly sophisticated client b

113、ase with significant potential for wealth generation.The expected household income of the affluent segment is projected to increase from approximately US$450 billion to US$800 billion,covering over three million households.To meet the evolving demands of this segment,wealth managers are rethinking t

114、raditional approaches,offering tailored solutions that align with the specific preferences of mass-affluent investors,who favor accessible,cost-effective and goal-driven financial products.Mass-affluent investors increasingly seek investment products with low minimums and fees,enabling participation

115、 in wealth-building strategies without substantial capital barriers.Additionally,platforms providing seamless access across digital and mobile channels have become essential,as this segment expects flexibility and convenience in managing their investments.Despite the rise of digital solutions,human

116、advice remains highly valued,particularly for addressing long-term life goals such as retirement planning,education funding and wealth transfer.This personalized guidance is critical for mass-affluent investors to navigate complex financial landscapes and achieve their broader financial objectives.I

117、n response,banks and wealth managers are integrating services and solutions that were previously reserved for distinct client segments,particularly ultra-high-net-worth individual,and extending them to the mass-affluent.This includes democratizing access to sophisticated products such as alternative

118、 investments,real estate and private credit strategies.By providing these previously exclusive opportunities,wealth managers enable mass-affluent investors to diversify their portfolios and enhance their potential returns.2.2.2The rising relevance of“affluent”investors in India Age:31Role:Finance Gr

119、aduateLocation:Mumbai,MaharashtraBorn between 1981-1996Digital NativeRisk TakerI aim to achieve a current balance between work and leisure while also planning for a peaceful retirementKey Millennial investment trends*(FY 2019 23)New millennial registrations85+lakh#of SIP registrations(FY19 to FY23)1

120、,5 Crore+Cumulative money invested 1+Lakh CroreShare of newinvestor base54%Share of total SIP registrations29%AuM(as at Mar 2023)96K+CroreHe began his professional journey at a corporate organization.He enjoys his work and loves to travel.He is a firm believer in 50-20-20-10 rule(Needs 50%;Wants 20%

121、;Savings 20%;Personal development 10%)Biography Salaried employee Outstanding house and car loan Investment horizon is usually short to mid-termFinancial profile Financial independence Savings and Tax planning Annual vacation Retirement planning Aspires for better standard of livingGoals Finfluencer

122、s Align income growth with inflation Potential for higher return Lack of time for research Fund managed by a reliable professional Discount brokerage platformsDrivers for MF investmentTechnology adoptionVery high20Money in motionTo remain relevant and competitive,wealth managers must prioritize buil

123、ding sustainable advisory relationships that evolve in tandem with the changing financial goals and preferences of the mass-affluent segment.1.Hyper-personalization of services:Restructuring advice models for hyper-personalization,supported by efficient CRM tools,not only improves client retention b

124、ut also ensures seamless service delivery regardless of the advisor-client interaction.2.Technology-driven solutions/platforms:Millennials prefer tech integration for investing.Wealth managers should invest in platforms that offer a comprehensive view of portfolios,investment performance,and other k

125、ey insights.3.Operational transformation:Enhancing mid-and back-office operations allows advisors to focus more on client engagement,understanding their needs,and assessing risk profiles,rather than administrative processes like onboarding.4.Informed decision-making:Beyond managing investments,wealt

126、h managers can provide macroeconomic insights and market analyses to help investors make informed decisions and understand the impact on their portfolios.5.Technology-driven financial ecosystems:Wealth managers should offer integrated ecosystems that encompass banking services(e.g.,payments,lending)

127、and insurance,complementing traditional investment management offerings.Furthermore,wealth managers must ensure that their offerings remain accessible through both digital and personalized service channels,while maintaining the flexibility to adjust to the dynamic financial journeys of mass-affluent

128、 clients.In this highly competitive landscape,the ability to meet the diverse and evolving needs of mass-affluent investors will be a key differentiator.Wealth managers who successfully combine personalized human advice,digital accessibility and a comprehensive range of investment options will be we

129、ll-positioned to thrive in this growing and complex market segment.Snapshot of integrated solutions provided by wealth management firmsFigure 12Financial adviceModel portfoliosMutual funds,ETFsLoansGoal Planning AlternativestrategiesRetirementPlanningStocksThematic portfolios12367845910InsuranceSour

130、ce:EY internal research21Money in motionTier 2 and tier 3 cities of India are equally part of the wealthtech boom as the tier 1 cities of the country.These cities boast legacy wealth and newly created wealth of the affluent and upper-affluent young population.As India grows economically,coupled with

131、 increased infrastructure development,connectivity and investments,the tier 2 and tier 3 cities are actively seeking investment opportunities beyond gold and real estate and embracing low-cost wealthtech solutions to access these investment opportunities easily.Amid the rise in demand for wealth adv

132、isory,wealthtechs are addressing the challenges of lack of trust and limited awareness of non-traditional investment products and strategies.They are investing time and resources to increase financial literacy in tier 2 and tier 3 cities to strengthen their customer base impact.Demonetization was th

133、e push needed to shift client preferences towards digital investment channels,further catalyzed by social distancing during the COVID-19 pandemic.2.2.3Bharat checks-in:the focus on tier 2 and tier 3 city investorsNote:Data is for financial year ended MarchSource:RBI,CRISIL MI&A Research via“The big

134、shift in financialization”-CRISIL,December 2022 Financial transactions by volumeFigure 1350%59%62%77%91%95%50%41%38%23%9%5%FY17FY18FY19FY20FY21FY22Digital transactionNon-digital transaction22Money in motionNote:Data is for financial year ended MarchSource:RBI,CRISIL MI&A Research via“The big shift i

135、n financialization”-CRISIL,December 2022 90.0%81.0%79.0%79.0%75.0%73.0%74.0%73.5%10.0%19.0%21.0%21.0%25.0%27.0%26.0%26.5%FY17FY18FY19FY20FY21FY22FY 23FY24T30B30Share of Mutual Fund AUM in top 30(T30)cities vs.Beyond 30(B30)citiesFigure 14One of the HNI-focused mutual fund distributors,AUM,from tier

136、2 cities surged to INR3,500 crore14 by FY23 from INR814 crore in the pre-COVID period.In terms of mutual funds investment,the AUM share of smaller cities has grown from a mere 2.55%in 2014 to 17.44%in 202315,as per AMFI.14“Wealth management firms go beyond metros to tap post-Covid surge in demand”Bu

137、siness Standard,26 June 202315“Wealth Beyond Tier-1:3 fundamentals of Bharats small-city HNIs”-Waterfield Advisors,5 April 202423Money in motion24Money in motionWealth management in the digital age:the power of tech transformation3 325Money in motionThe digital era has fundamentally transformed weal

138、th management through the integration of advanced technologies like AI and big data analytics,leading to the rise of robo-advisors and democratizing access to investment services.Clients now enjoy enhanced experiences with real-time portfolio access and expect greater transparency and convenience.Th

139、e industry has also adapted to include blockchain and emphasized cybersecurity and developed hybrid models combining tech efficiency with human expertise.The digital transformation of wealth management in India is altering the way wealth managers and clients interact by making the relationship more

140、data-driven,transparent and personalized.It enables wealth managers to provide value to their clients and manage relationships more effectively through the use of advanced technology.Wealthtech companies leverage digital platforms to interact with clients.This includes the use of mobile apps,website

141、s and social media to provide real-time updates on investments,market trends and personalized advice.These platforms allow for more frequent and convenient communication between advisors and clients.The tech-savvy Indian population is increasingly embracing these platforms,driven by the governments

142、Digital India initiative,a burgeoning affluent segment with disposable income and a massive young demographic that is comfortable with technology.With Indias high mobile penetration(77%as of early 2023)16 and a fintech sector in full bloom,these automated investment platforms offer an affordable,con

143、venient and regulated option for diversifying beyond traditional assets like gold and real estate.In India,there is a diverse range of clients with varying levels of comfort with technology.The introduction of automated tools and robo-advisors has made investment advice more accessible and affordabl

144、e.These tools can manage portfolios,rebalance assets and provide investment recommendations with minimal human intervention,allowing wealth managers to focus on more complex tasks and client relationships.The educational tools provided by robo-advisers align with the countrys focus on financial lite

145、racy,while their tax optimization strategies cater to Indias complex tax system.Additionally,the cultural shift towards financial self-reliance and the need for convenient investment solutions in fast-paced urban lifestyles,along with the ability of NRIs to manage investments remotely,further fuel t

146、he adoption of digital channels for wealth management in India.Next-gen wealth:redefining the role of relationship managers3.1Source:AppInventiv Advantages of wealthtech solutionsAdvantages of wealthtech solutionsFigure 15Increased accessibilityPersonalizationCost savingsEnhanced user experienceStro

147、nger securityImproved transparencyHigher efficiencyBetter risk managementIncreased revenue potentialAdherence to regulatory compliance1102563478916“Data Portal-Global Digital Insights26Money in motionDigital platforms for ultra-high-net-worth individuals(UHNWIs)provide highly customized,sophisticate

148、d investment services using advanced algorithms,with a focus on complex investment strategies,estate planning and tax optimization.These platforms offer enhanced security,privacy,and integration with existing wealth management systems,catering to the unique needs of UHNWIs,such as global investment

149、opportunities,philanthropy management and concierge-like services.While digital platforms and robo-advisory deliver convenience and real-time analytics,UHNWIs often prefer a hybrid approach that combines the technological benefits of wealthtech solutions with the personalized expertise of traditiona

150、l wealth managers for more nuanced financial decisions.The need for a hybrid-advisory model and hyper-personalization of services in India mirrors global trends.This stems from the countrys diverse population with varying financial literacy and technological comfort,the importance of personal relati

151、onships in financial dealings,and uneven digital penetration.Millennials hold the highest share investable wealth,and are both tech-savvy like the GenZs and value the human touch in wealth advisory like baby boomers,making the hybrid-model an essential channel of advice.These investors want wealthte

152、chs to leverage emerging technologies like AI,machine learning(ML)and big data analytics to gain insights into client behavior,preferences,and risk tolerance,and to enable advisors to tailor their advice and investment strategies to the individual needs of each client,fostering a more personalized r

153、elationship with a human touch.The millennials and GenZs demand hyper-personalized advisory services in this advanced tech era where they receive hyper-personalized services in other areas of their lives like their shopping services,streaming services.Wealth management firms and wealthtechs are depl

154、oying GenAI to drive hyper-personalization in wealth advisory services through advanced data analysis,predictive analytics and behavioral finance insights to tailor investment strategies to individual client profiles.The customer engagement layer incorporates customization and hyper-personalization

155、through features such as personalized landing pages,AI-driven dynamic risk profiling,interactive gamified experiences,life-stage-based goal planning,needs-based portfolio rebalancing,comprehensive portfolio analytics and reporting,one-click model purchases and customer model portfolio advisory servi

156、cesMachine learning is enabling them to anticipate client needs and market trends,while robo-advisors automate portfolio adjustments in real-time.Standing out in the age of personalization:hyper-personalized investment strategies3.2Varied needs of customers being powered through GenAIFigure 16Source

157、:EY internal researchMarkets,News API LayerExternal dataInternal data Community,events Products&servicesCustomer ProfileAssets and LiabilitiesBehavioural AnalyticsMillennialMass AffluentAged HNIBuy a carGrow my moneyPlan for retirementPowered by GenAIHuman like interaction voice/text/images Your fin

158、ancial companion 27Money in motionWealth management firms are currently focused on delivering an intelligent,personalized and intuitive wealth management platform,powered by GenAI,to democratize high-net-worth individual services for the mass affluent segment.Wealthtechs have incorporated natural la

159、nguage processing into their chatbots,which enhances client interactions,giving them a more humanized conversation experience with data-driven responses.AI-driven financial planning tools consider the full spectrum of a clients financial situation and life-events like childrens education,marriage or

160、 retirement specific to them and then suggests investment strategies.Wealthtechs use AI for more granular client segmentation and more personalized investment product suggestions.This enhanced personalized advisory provides the human advisor with more insights to build a better relationship with a c

161、lient.Continuous learning from client interactions refines the personalization process,and the integration of external data sources provides a comprehensive view of client preferences and market influences,ensuring that wealth management services are more relevant,timely and effective than ever befo

162、re.28Money in motionIndia is rapidly advancing its wealthtech sector through a robust digital ecosystem,underpinned by initiatives like Digital India,which aim to digitalize the nations infrastructure.The introduction of the Unified Payments Interface(UPI)has revolutionized financial transactions,pr

163、oviding a solid foundation for fintech and wealthtech platforms.The wealth management landscape has evolved from traditional distribution through physical channels to a modern,unbundled wealth stack delivered via digital channels,encompassing key stages such as onboarding,risk profiling,curated port

164、folios,heldaway analytics rebalancing,etc.Despite these advancements,the ultimate objective remains to provide integrated and hyper-personalized customer wealth journeys.This is achieved through robo-advisory services that offer persona-based risk profiling,personalized financial management with inc

165、ome and expense analytics,consolidation and recommendations on heldaway assets,goal-based automated investing,and interactive dashboards.Additionally,these journeys are enhanced by educational resources,learning materials,and 24/7 customer support via GenAI-powered chatbots.The industry is progressi

166、vely aligning with this vision by integrating these capabilities into their customer journeys,supported by GenAI and robust digital infrastructureRobo-advisory:an evolution of wealth management proposition for the mass affluent segment3.3Evolution of wealth management proposition for mass affluent s

167、egmentFigure 17Distribution through physical channelsUnbundled wealth stack via digital channelsIntegrated&hyper personalised customised wealth journeys Link to the illustrationDigital onboardingMulti-factor based risk profilingGeneric models and curated portfolioAnalytics on heldawaysPortfolio reba

168、lancingDashboards and consolidated viewNo personalized insights and adviceGeneric risk profiling and goal planningFocussed on point in time investmentsEducation&learning24/7 client support with AI chatbotsProduct distribution (Stocks&MFs)via intermediary channels Product distribution to advisory and

169、 insightsNorth StarGoal tracking and portfolio rebalancing Personalized landing pageRobo Advisory020304050607Persona based risk profilingPersonalized financial mgmt.Income/Expense analytics and insightsAnalytics and advice on held-awayConsolidation of investmentsAutomated investing based on goalsPer

170、sonalised modelsInteractive dashboardsSingle view,Performance forecasting and attributionSource:EY internal research29Money in motion30Money in motionCompetitive landscape-the great convergence4 431Money in motionProduct offeringsSegmentUHNIHNI/Mass AffluentRetailThe wealth management industry compr

171、ises a diverse range of players,including full-service platforms,private banks,boutique firms,wealthtech platforms and brokers.Each of these segments brings specialized expertise,catering to varying clientele across the wealth spectrum.Today,convergence within the industry is increasingly pronounced

172、,with all players shifting their focus toward High-Net-Worth Individuals(HNI)and affluent segments.Traditionally,access to wealth management services for certain segments was limited,but wealthtech firms have disrupted this space by offering sleek,digital apps that provide seamless,user-friendly exp

173、eriences,making these services more accessible than ever before.With the growing popularity of wealthtech,these platforms are increasingly attracting the interests of investors in the funding landscape.The year 2021 saw the highest investment in wealthtech,mainly attributed to COVID-19,which acceler

174、ated the adoption of wealthtech services.Along with the revival,there are Mergers&Acquisitions(M&A)and strategic partnerships taking place between different players in the wealthtech and traditional wealth management spaces.Reasons can be attributed to leveraging the countrys ongoing digitization an

175、d catering to a young,tech-savvy population that is increasingly becoming financially literate.360 ONE,one of the leading financial services providers,offering specialized solutions in the fields of wealth and asset management,has agreed to acquire the wealthtech platform ET Money17 to enter the pro

176、mising wealthtech landscape.Wealthtech start-ups Dezerv and Stable Money secured funding of US$30 million and US$17 million respectively in April 202418.Another wealthtech start-up,Fisdom,received approximately US$5 million from an existing investor,PayU,in December last year19.These collaborations

177、are enabling traditional firms to access innovative technologies and untapped markets,while wealthtechs are benefiting from established brand trust and a wider customer reach.Both entities are diversifying their services,ensuring regulatory compliance,and competing with global players in a market ma

178、rked by a rising affluent segment,growing wealth and the governments focus on financial inclusion.This strategic convergence is driven by the need to adapt to Indias unique demographic trends,its evolving digital payment ecosystem,and the regulatory landscape that is continuously supports fintech in

179、novation.Taxation/Trust services Asset monetization Investment advisory AIF/PMS Fixed income LAS and Unlisted companies Equity broking IPOs Equity and debt mutual funds Insurance and FDsCompetitive landscape of wealth management in IndiaFigure 18Source:EY internal researchForeign BanksNon-banks weal

180、th managersPrivate BanksBrokersDistributorsWealthtechs17“360 One acquires ET Money for Rs 366 crore to enter wealth tech space”Economic Time,13 June 202418,19“Wealthtech start-ups Dezerv,Stable Money close fresh funding amid larger fintech stress”-Economic Times,3 April 202432Money in motionKey tren

181、ds driving this convergence include strategic pursuits of cost-income efficiencies,exits from non-core markets and restructuring initiatives.Many firms are integrating retail,wealth and private banking services into unified offerings to attract a broader client base.However,as firms consolidate serv

182、ices and expand their reach,they face the challenge of tailoring their offerings to diverse client segments,each with unique needs and preferences.Balancing the demand for personalized,relationship-based services with scalable digital solutions is critical to maintaining competitiveness in an increa

183、singly diverse and digitally connected market.Source:2022 Wealth and Private Banking:Future of Advice,EY internal researchConvergence of business modelsFigure 19Source:“Unlocking Indian Enterprise Fintech Market”,-Chiratae Ventures,2024Deals in the overall wealthtech space in India(US$million)Figure

184、 2092621933470201820192020202120222023Funding in the overall wealthtech space in India(US$m)Depth of advice offeringMass affluentHNWUHNWForeign BanksWM providersBoutique Wealth ManagersFamily officeFull-service firmsDigital wealth platformsBy investibleassetsDomestic BanksIndependent Advisors/Regist

185、ered Investment AdvisorsAnticipated area of industry convergenceBrokers33Money in motion34Money in motionEvolving regulatory landscape5 535Money in motionThe wealthtech industry in India has been growing rapidly,and with this growth,regulatory bodies like the SEBI and the Reserve Bank of India(RBI)h

186、ave been updating regulations to ensure investor protection,market integrity and financial stability.As the sector continues to grow,with advancements in technology and the emergence of innovative business models,the evolving regulatory landscape may address new challenges and unlock opportunities.U

187、nderstanding the changing regulatory landscape in IndiaWealthtech services,depending on the nature of services,fall under the SEBI(Investment Advisers)Regulations,201320or SEBI(Research Analysts)Regulations,201421.Wealthtechs that offer stock broking services fall under the SEBI(Stockbrokers)Regulat

188、ions,199222.SEBI has introduced regulations to ensure that only registered investment advisors(RIAs)can provide personalized investment advice.Wealthtech firms registered with SEBI as investment advisors must comply with the regulatory framework that includes qualifications,certification requirement

189、s and adherence to a code of conduct.SEBI has also issued guidelines for robo-advisory services,which require transparency,disclosure of algorithms used and human intervention in advisory services.The RBI and SEBI have introduced regulatory sandbox frameworks that allow fintech and wealthtech compan

190、ies to test their products in a controlled environment with real customers,but with certain relaxations in regulatory requirements.This helps wealthtech companies innovate and develop new products while ensuring that they are viable and compliant with regulations before a full-scale launch.SEBI has

191、rejected sandbox applications of wealthtech platforms for products such as fantasy stock games,investment in fractional shares,and use of distributed ledger technology to improve the settlement process,indicating SEBIs cautious approach towards the entry of players into the wealthtech space.Furtherm

192、ore,SEBI is concerned about the data risks that are associated with usage of advanced AI tools by investment advisors(IA)and research analysts(RA).In its recent consultation paper23,SEBI has suggested that an IA/RA who uses AI tools for servicing its clients must provide complete disclosure of the e

193、xtent of use of such tools to its prospective clients,to enable them to take informed decisions of continuance or otherwise with the IA/RA.An overview of the regulatory landscape impacting wealthtechs*Figure 21Type of wealthtechServices providedExecution Only Platforms(EOPs)An EOP is a digital or on

194、line platform which facilitates transactions,such as subscription,redemption and switch transactions in direct mutual funds schemes.The SEBI has made it compulsory for EOPs to get registered with the regulators and barred them from offering regular plans of mutual funds schemes as part of the new re

195、gulatory framework introduced for such platforms for direct mutual fund investing.As per the SEBI,no entity would be allowed to operate as an EOP without obtaining registration from SEBI or the Association of Mutual Funds in India(AMFI),as the case may be.SEBI(Investment Advisers)Regulations,2013(an

196、d subsequent amendments)These regulations govern the activities of investment advisers in India,requiring them to register with SEBI and adhere to specified qualifications,capital adequacy,and conduct regulations.Wealthtech platforms offering investment advice must ensure compliance with these regul

197、ations,which could impact their business models,especially in terms of transparency,fees,and the segregation of advisory and distribution services.Fractional ownership platformsIn May 2023,SEBI released a consultation paper with respect to fractional ownership platforms.In the consultation paper,SEB

198、I has proposed to regulate fractional ownership platforms on the same lines as it regulates“real estate investment trusts”20,21,22“Fintech Laws and Regulations 2023”-Global Legal Insights23Investment advisers,analysts must disclose AI tool usage to clients:Sebi*The list of regulations is not exhaust

199、ive.36Money in motionAlong with benefits,regulatory changes can also have negative implications.Regulatory changes can lead to increased compliance costs,impacting profitability and operational challenges.They can also create barriers to entry and lead to consolidation among smaller players who migh

200、t find adhering to increased regulatory requirements cumbersome.The future impact of regulatory developmentsTo positively impact wealthtechs in India,regulations should evolve to foster innovation while ensuring consumer protection and financial stability.This could involve establishing a regulatory

201、 sandbox for start-ups to test products,providing a clear regulatory framework for digital wealth management,updating data protection laws,implementing robust cybersecurity standards,streamlining KYC processes with digital solutions and encouraging an open API ecosystem.Additionally,initiatives for

202、financial literacy,tax incentives for investments in wealthtech,cross-border regulatory collaboration,strengthened consumer protection laws,fintech-friendly policies that promote partnerships with traditional financial institutions,and support for sustainable and ethical investing are crucial.Such m

203、easures would balance the need for innovation with consumer protection,contributing to a thriving wealthtech sector in India.Source:EY Insight analysisBenefits of recent regulatory changesFigure 22Clear regulatory frameworks help in maintaining the integrity of financial markets by preventing fraudu

204、lent activities and ensuring that all market participants adhere to the same rules.Regulatory changes often aim to make financial services more accessible to a broader segment of the population,which can lead to increased financial inclusion.With the rise of fintech and wealthtech,data security regu

205、lations are crucial to protect sensitive financial information from cyber threats.Enhanced regulations ensure that wealthtech platforms operate with greater transparency and accountability,safeguarding investor interests.Regulations can be designed to encourage innovation by providing a clear legal

206、framework within which new wealthtech services can be developed.Regulations may require wealthtech firms to implement robust risk management practices,which can help in preventing systemic risks and protecting the financial system.Investor protectionInnovation catalystRisk managementMarket integrity

207、Financial inclusionData security37Money in motion38Money in motionShaping tomorrow:the future of wealth management in India6 639Money in motionWealth management in India is transforming with rapid growth.By embracing digitalization,expanding their reach to new investor segments,and navigating the re

208、gulatory landscape adeptly,wealth management is redefining its service and experience for millions of Indians.These newer trends are creating underlying challenges for wealth managers who need to address them to create value for clients,stakeholders and the society.Shift towards hyper-personalised s

209、ervices with heightened engagementStrike a balanced approach with phygital advisory modelHarness cutting-edge tech to refine and amplify operational efficiencyStrategic partnerships between agile wealthtech startups and entrenched financial institutionsSource:EY insights analysisTransition of wealth

210、 management sector in India towards a robust operating ecosystem1356Figure 23Transition from product focused-model to solution-focused model 2Expansion to underserved demographics,enhancing financial literacy and inclusion440Money in motionTo maintain their edge in the future,incumbent wealth manage

211、rs must:1.Reimagine customer journeys:Design intuitive,seamless and engaging customer journeys by embedding valuable insights and relevant information at every touchpoint.Collaborate closely with vendors for efficient data capture,streamlined payment processes and responsive service functions.This i

212、ntegrated approach aims to reduce drop-offs and significantly enhance the overall user experience,ensuring a smooth and satisfying client journey from start to finish.2.Personalized wealth solutions for life needs:Develop an engagement model that is customized to each customers unique needs,preferen

213、ces and life circumstances,avoiding generic product sales.Leverage artificial intelligence and detailed client insights to create personalized solutions that align with their individual life journey.This approach ensures that each interaction is relevant,meaningful and effectively supports their fin

214、ancial goals.3.Future of advice:Implement a hybrid model that combines part-digital and part-physical offerings,effectively merging digital interfaces with human services to ensure seamless interoperability.Clients increasingly value tailored engagement features and are willing to invest in them.Fir

215、ms can capitalize on this trend by monetizing differentiated advisory solutions,delivering a cohesive experience that integrates digital convenience with personalized human interaction.4.Operating model simplicity:Effectively integrate optimized administrative workflows,sophisticated data management

216、 systems,and enhanced client engagement protocols,alongside cutting-edge technology.This approach aims to streamline wealth management operations,boost operational efficiency,and provide comprehensive,tailored client services.By synchronizing these elements,firms can improve service delivery,enhance

217、 client satisfaction and drive overall operational effectiveness.5.Build future-proof technology and data infrastructure:A strategic framework integrates scalable technology infrastructures,sophisticated data management systems,and state-of-the-art cybersecurity protocols with strategic vendor partn

218、erships and advanced AI capabilities.This comprehensive approach aims to enhance the client experience in wealth management by ensuring robust security,efficient data handling and seamless technology integration.It supports delivering personalized,secure and effective wealth management services.6.Me

219、eting complex investment needs with financial innovation:Clients with intricate and nuanced risk-return profiles demand solutions beyond conventional offerings.To address their unique needs,it is essential to develop and deploy alternative investments,structured products and sophisticated wrapper so

220、lutions.These advanced financial instruments provide tailored approaches that effectively meet complex investment requirements,offering greater precision in managing risk and optimizing returns.7.Segment-specific differentiated offerings:Establishing a broad market footprint across various client se

221、gmentsmass affluent,high-net-worth individuals(HNI),and ultra-high-net-worth individuals(UHNI)requires a hybrid model that combines robo-advisory solutions with high-touch relationship management.This approach balances cost efficiency with personalized service,enhancing market penetration and creati

222、ng opportunities for upselling.By integrating these methods,firms can effectively address diverse client needs and expand their reach.8.Essential emphasis on regulatory compliance:Wealth models must be both adaptable and compliant,providing the flexibility to adjust to changing regulations and guide

223、lines.They should maintain transparency in their processes,methodologies and organizational structures.Any modifications should be accompanied by clear and well-supported rationale,ensuring that adjustments are not only compliant but also well-understood and justifiable within the context of evolvin

224、g financial regulations.Overall,the wealth management landscape in India is poised to become more dynamic,inclusive and efficient by leveraging cutting-edge technologies to offer cost-effective,personalized and secure wealth management solutions to a wider audience.41Money in motion42Money in motion

225、Core Team:Insights team:AcknowledgmentsVishal Madia Partner,Financial Services ConsultingShishir Mankad Partner,Financial Services Strategy and Transactions Karan R Teluja Global FS Senior Analyst,InsightsShristi Sarda Global FS Senior Analyst,InsightsJyoti Bachwani Global WAM Analyst,InsightsVaibha

226、v Mishra Global FS Analyst,InsightsSaurabh Joshi Partner,Financial Services ConsultingNilesh Naker Partner,Technology Consulting Chetna Khanna Senior,Technology Consulting Vivaan Madhok Senior,Financial Services ConsultingRishi Agarwal Senior,Financial Services ConsultingGaurav Kadakia Senior,Financ

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