2024 Predictions – Wealth Management, Fintech & AI Trends

2024 Predictions – Wealth Management, Fintech & AI Trends

In a recent conversation with Nuno Godinho, Industrial Thought’s CEO, we discussed the trends set to shape the finance and wealth management industry in 2024 and covered everything from standardisation initiatives to the rise of digital-first approaches. This article delves into the key themes that will influence how businesses, investors, and customers navigate the finance and wealth management industry.  

Digital Transformation Acceleration: 

COVID fast-tracked digital transformation across many industries, and the financial industry was no exception. We predict further acceleration within private banks and wealth management providers with increased focus on serving clients in a digital-first manner, exploring innovative ways to enhance user experience and meet evolving expectations.  

A key motivation for this being the movement to adopt ISO 20022 in time for the November 2025 deadline, creating a significant industry shift towards standardising open finance for wealth and asset management.  

The Rise of Digital Front Doors & Ecosystems: 

We’re already seeing financial institutions starting to embrace open finance, offering a holistic view of clients’ holdings and comprehensive advice that goes beyond traditional boundaries. 

There’s an increased demand for the flexibility to choose and customise financial services, driving the rise of platform ecosystems. Therefore, new entrants into the market are adopting a digital front door approach, offering an ecosystem where customers can view pensions, ISAs, and more, all in one place.  

This approach is also influenced by the growing pressure for fee transparency, with investors seeking a clear understanding of the advice-to-fee relationship. The rise of ecosystems is becoming crucial, allowing customers to choose services with quick switching capabilities and a consolidated view of their financial landscape. 

Portfolio Diversification & Personalisation: 

A key trend among investors is the attention towards diversification, spreading investments across smaller banks, diverse asset types, and providers to mitigate risks. With polarisation predicted to reach an all-time high in 2024, we will see an increase in purposeful investing as investors align their preferences and ethical considerations with their investment choices. In turn, this will bring a demand for the personalisation of their portfolio and an increase in self-directed investment as people want to be in the driver’s seat of their wealth journey.  

Going forward we expect to see ultra-high net worth investors becoming more selective, opting for peer collaboration over traditional advisory relationships. Notably, certain private banks are already adapting to this trend, establishing trust by incorporating a Venture Capital arm. This strategic move allows them to invest their own funds in alignment with the recommendations they offer to clients. 

Increased Speed in Industry Consolidation:

We can anticipate continued consolidation among providers through mergers and acquisitions. This trend is reducing the number of end solutions, with Independent Financial Advisor (IFA) networks actively engaging in buying and merging operations. Market consolidation is set to reshape the industry landscape, as major players opt to acquire smaller businesses that excel in specific areas, rather than providing the entire end-to-end spectrum of services themselves.