WealthTech: The Money Multiplier

“Can you suggest a few shares and mutual funds where I can invest this money?” A question like this is becoming more common in Indian households, but it still surprised me when it came from my father-in-law—a firm believer in the safety of traditional investments like fixed deposits, PPFs, and government bonds. It signaled a subtle yet significant shift: a willingness to explore newer, growth-oriented investment avenues. This mindset reflects a broader change in how Indians are approaching their finances, moving from a singular focus on saving to an interest in strategic wealth creation.

The evolution of India’s financial landscape post-pandemic has been remarkable. With the Blue-chip NSE Nifty 50 growing over 200% during this period, it’s unsurprising that more individuals want to participate in this wealth-generation story. This is not merely about chasing trends; it’s about aligning with the idea of making your money work for you, a philosophy that is reshaping how wealth is perceived and managed in the country.

The Numbers Driving WealthTech

India’s Mutual Fund industry provides a clear snapshot of this changing narrative. As of November 2024, assets under management (AUM) had crossed USD 800 billion, with monthly SIP contributions nearing USD 3 billion. Interestingly, smaller cities accounted for 18% of the total AUM. However, the story doesn’t end there. While these numbers are promising, less than 5% of India’s population invests in mutual funds, indicating enormous untapped potential for InvestmentTech.

This opportunity is further underscored by the growing pool of wealth in India. High Net Worth Individuals (HNWIs) grew by 12.2% in 2023 and are expected to sustain this growth trajectory. Beyond just the numbers, younger HNWIs, particularly from Tier 2 and Tier 3 cities, are showing an increasing preference for modern wealth management solutions. These demographics are redefining the demand for sophisticated yet accessible financial tools and advice. However, as summarized by The Notorious B.I.G, “Mo Money, Mo Problems”.

A Fertile Ground for Innovation

Despite significant strides in the wealth management space, large gaps remain. WealthTech startups have stepped in to bridge these gaps, leveraging technology to deliver tailored solutions. The changing profile of the Indian HNWI, brings the need for a new suite of offerings - newer investment opportunities, products and enhanced services. Several factors are driving the growth of this sector:

• Demographic Shifts: Millennials and younger HNWIs are increasingly adopting digital-first solutions for convenience, transparency, and personalization

• Technological Advancements: AI, machine learning, and blockchain have revolutionized decision-making and efficiency in financial management

• Increased Financial Awareness: A growing emphasis on financial independence has fueled demand for platforms offering education, tools, and actionable insights

• Cost Efficiency: Robo-advisors and automated solutions are democratizing access to wealth management services by lowering entry barriers

WealthTech startups like Dezerv, Zerodha, and INDMoney are already capitalizing on these trends, combining user-friendly technology with comprehensive financial solutions. From automated investment portfolios and AI-driven financial advice to multi-asset platforms, the innovation in this space is remarkable.

Technology as the Catalyst

The role of technology in WealthTech cannot be overstated. Platforms are making wealth management more accessible, seamless, and engaging. Government initiatives like eKYC, DigiLocker, and UPI have lowered operational hurdles, enabling startups to scale efficiently. WealthTech solutions now encompass everything from personalized robo-advisors and gamified financial literacy apps to blockchain-based security tools.

The Opportunity for Entrepreneurs and Investors

For aspiring entrepreneurs and investors, the WealthTech sector presents an unparalleled opportunity. The market for WealthTech is growing rapidly, and expected to reach USD 63 billion by FY25, up from USD 20 billion in FY20.  With less than 15% penetration in organized wealth management—compared to 75% in developed markets—India offers a fertile ground for innovation. WealthTech startups like Dezerv, which achieved a $205 million valuation in just 2.5 years, illustrate the explosive potential of this space.

Whether it’s tapping into underserved markets in smaller cities or developing next-generation tools for portfolio optimization, the opportunities are diverse and compelling. The focus is on building platforms and creating ecosystems that enable users to grow their wealth effectively and securely.

WealthTech is redefining how Indians manage money, combining efficiency with accessibility. The question is no longer whether to invest in this sector—it’s about how quickly you can get started. With the right mix of technology, strategy, and vision, WealthTech offers an unparalleled opportunity to shape the future of finance in India.

- Monica Anand, Equanimity Investments