The fintech revolution is in full swing and has profoundly disrupted the wealth management industry. It has catalyzed a shift from traditional banking to digital/neo-banking while reshaping the financial landscape with more efficiencies, cost-effectiveness, and user-friendly experiences for customers.
MENA has witnessed its fair share of FinTech developments with an influx of related startups in recent years — from only 30 FinTech companies in 2017(1) to over 750 in 2020. A recent study(2) has projected that MENA will see 45 unicorns worth over USD 100 billion by 2030. Many Middle Eastern Governments have launched initiatives to accelerate FinTech growth and drive financial inclusion.
Wealth management is a traditional industry, and it has been slow to embrace change as most companies rely solely on traditional advisors and shy away from using AI-powered solutions to manage client portfolios. The situation is drastically changing now with the rise of the tech-savvy, younger population in the Middle East. More millennials and Gen Z are demanding convenient, personalised, and omnichannel experiences at their fingertips.
Wealth managers who are inclined toward improving their services by harnessing the power of AI and ML are creating a new domain, WealthTech, which leverages complex algorithms to advise clients on the best investment or savings plans with minimal human intervention. Robo-advisors are financial AI assistants that offer automated portfolio management and suggest the least expensive and risky options to clients.
The UAE ecosystem has been highly receptive to blockchain technologies and cryptocurrencies. Likewise, it needs to explore more use cases for such technologies in the finance industry. From a regulatory standpoint, Smart Dubai has certain guidelines in place for the ethical use of AI and for ensuring data protection and transparency. Such favourable, people-centric regulatory environments must be emulated across the region.
I am not implying that technology is going to replace human advisers. Many investors still trust their financial advisers over AI, but their experiences can be enhanced, made seamless, and personalised with more FinTech in the mix. Traditional banks and other financial institutions need to rethink their business models and adopt new technologies to stay ahead of the curve. With a hybrid model, their customers can either opt for contactless self-service via Robo-advisors or seek personal interaction with human advisers to achieve the best financial and wealth management outcomes. The bottom line is you need to cover all the touchpoints throughout the customers’ journey and provide support on all channels.
Most importantly, the integration between FinTech and wealth management bodes well for overall socioeconomic development, especially in terms of women’s financial independence. FinTech brings greater transparency, accountability, and efficiencies, which can be consequential. In a way, it democratizes wealth management, reducing entry barriers for economically weaker sections of the population. That is to say, people across socioeconomic strata can access financial services and reap the benefits. So, it is encouraging to see FinTech gain ground in the region.
1. https://www.statista.com/topics/8699/fintech-in-mena/#dossierKeyfigures
2. https://stv.vc/insights/en/2022/8/9/insightsen2
