Wealthtechs: Why Open Finance is your Competitive Advantage
Our APIs help wealthtechs offer tailored advisory and much more to build personalised experiences that retain high-value customers.
Wealthtechs—sub-players in the fintech industry—go as far back as 2008, when the first Robo advisors emerged. The core offering of wealthtechs is to digitise wealth management, making it possible for anyone to invest right from their internet-enabled devices. And in more recent times, the offering has extended to fractional investing.
With fractional investing, investors access investment offerings by pooling a fraction of the required amount with others. This pooled amount is then invested on their behalf through the wealthtech.
The revolutionary impact of democratised access to wealth management by wealthtechs has not gone unnoticed by venture funds worldwide. In the first half of 2021, about $14 billion was invested in wealthtechs globally. This level of funding only proves that there's significant interest in the wealthtech space.
However, funds will only flow to companies that demonstrate their worth. Some key metrics used to measure the value of a wealthtech are:
- Assets Under Management (AUM)
- Number of signups
- Active users
- Churn rate
- Concentration ratio
This article will demonstrate how open finance can help you optimise these metrics and position your wealthtech for success!
Wealthtech success: It starts with the user
The average internet user is accustomed to speed, personalisation, ease, and security. Anything less falls short of expectation, and personalisation is arguably the most important.
According to Segment's Personalisation Report, customers expect businesses, including wealthtechs, to create custom experiences for each user. In fact, 6 out of 10 customers point out personalisation as the main factor that converts them to returning users.
With access to the financial information of their customers, wealthtechs can offer personalised financial services that help:
- groom more active users,
- reduce churn rates,
- grow their Assets Under Management (AUM), and
- attract more funding for expansion.
The open finance advantage
The focus was primarily on payments with open banking, but open finance does more for wealthtechs in particular. Open finance does not depend on financial institutions to share financial information; instead, it places the privilege in the user's hands.
With users in control of their financial information, wealthtechs can build what might have been termed as impossible years ago. Here's a list of challenges that open finance solves for wealthtechs:
- Onboarding: Speed is the order of the day, with customers wanting to onboard as fast as it takes to make a tweet. The longer the process takes, the higher the possibility of drop-offs. Thankfully, with Okra's Identity APIs, wealthtechs can onboard customers in seconds with various means of identification.
→ Learn how to speed up your KYC
- Tailored Advisory: Customers—particularly high net-worth—have their financial information spread across various financial accounts. Using the Transactions API from Okra, you'll get a full view of this information to offer advice specific to each customer.
- Failed Card Payments: Card payments are pretty standard with wealthtechs for recurring deposits, but that comes with the worry of failed payments that significantly impact AUM growth. Also, some customers have heavily funded accounts without bank cards. In such cases, a recurring deposit plan is only possible through bank transfers, and Okra facilitates recurring bank transfers, which are more reliable than card payments.
- Trading Leverage: If your wealthtech offers trading activities, there will be instances where your customers need credit support or leverage to carry out a trade. Making funds available to them in such moments is an important feature. However, that requires quick verification to match them with amounts they can afford to pay back. A quick income verification system can be embedded in your app to make this happen.
Are you ready to scale?
In addition to the offerings mentioned above, open finance makes it possible to onboard your customers quickly. Most of the information required to verify a customer is already available through their financial institutions.
Using Okra's Identity APIs, your customers can get verified and onboarded within seconds. This fast onboarding experience can grow your onboarding success rate to 98% and, in turn, reduce users drop-offs at the point of verification.
→ Scale your wealthtech today!
How can we help your business?
Whatever financial product you are looking to build, we will step in to make things digital within minutes. Check out the product suite and find what you need here. And if you'd love to see a demo, we have you covered; book your exclusive session here. Let's build the unimaginable together!