- Wael Salem, CEO, Tradesocio
- Tanya Rawat, Portfolio Manager, Daman Investments
- Amir Tabch, Director Global Capital Markets & Financial Institutions & Head of Multi-Asset Class Trading & Brokerage Relationships, Emirates Investment Bank
The year 2020 has been a wake-up call for many companies and organizations of the need for digital services. The wealth management sector has not been immune to the sudden changes felt across the global economy. The three speakers provided some useful insights, sharing their experience in the region. The webinar aimed to shed light on the current trends in regional fintech landscape, the keys to success in digitization, the rules of investment through technology, as well as machine learning and AI in investment management.
Digitization in the region is spreading across MENA and nearing maturity. The region is currently in the process of embracing digitization with a high rate of digital adoption and an enabling ecosystem.
The Middle East is one of the preferred destinations for entrepreneurs and startups. According to Wamda Research, UAE remains a focal point for entrepreneurs and startups in the region with more than 35% of pre-seed startups based there, followed closely by Egypt with 27% and Jordan with 10%.
MENA’s FinTech and WealthTech landscape
- The MENA region is in the process of embracing digitization in the fintech sector, particularly in WealthTech. The platform and ecosystems in the region have helped the segment move closer to maturity.
- Regulations are supporting this transition from the offering of the digital product to the full investor cycle to the stakeholders physically running the full digital system.
- Fintech companies were first movers and now banks and major financial institutions are following this wave of digitization.
How financial institutions can take advantage of WealthTech
- The region accounts for the majority of HNWIs and UHNWIs globally and this is expected to double by 2022, with personal wealth increasing exponentially. These groups of investors are sophisticated and demand quick access to information and innovative smartphone solutions. They are more likely to embrace WealthTech solutions.
- Robo-advisors are currently booming in WealthTech. With high investor expectations, tech and data-driven decision-making tools, such as robo-advisors, are becoming very important for investment managers to be able to compete in providing investment solutions.
- Micro-investment is particularly interesting to the mass affluent in the region. These platforms allow users to invest small amounts regularly without having to pay any commissions - requiring only a management fee.
- There is a major opportunity for challenger banks in the region. There are currently only four challenger banks and this is appealing to millennials - who make up a large demographic in this region.
- Democratization of investments and easy-money managing will also appeal to millennials and HNWIs.
- A marriage of automation and human interaction is the way forward.
Building blocks to success in digitization for startups
- Clearly identifying the company’s value proposition and how it impacts or improves every stakeholder in the entire service cycle.
- Identifying how to improve the financial institution's business process management.
- Ensuring scalability of the technology according to the institution’s growth.
Self-directed investment opportunities in MENA
- Demand for wealth managers amongst millennials is increasing. This is a demographic that will soon be the largest in the world, with aggregated assets worth US$24 trillion this year.
- Investors are now more interested in working with wealth managers that can provide mobile apps. Mobile investing applications are important in giving instantaneous updates on the market and having constant access to the portfolio.
- Most brokers are increasingly making trades on their mobile phones, through apps, voice-enabled technology and even Amazon Alexa.
- Fractional trading is also becoming more of an interest amongst investors of all demographics, looking at long-term investment propositions rather than short-term.
Technological tools such as machine learning and artificial intelligence are a natural advancement of the investment allocation process. They complement and enhance the process altogether, helping wealth managers maintain quality whilst analyzing a large quantity of data. This is where artificial intelligence and machine learning are particularly useful in learning trends in a dataset from the past and correlate it for future projections.
WealthTech does not only make processes easier and more manageable freeing up time for wealth managers to explore new themes, but also increases liquidity for the market and the entire ecosystem. With more liquidity in the system, markets become more accessible for individual and institutional investors, and listing becomes cheaper, attracting more IPOs to the region. The advantages of WealthTech resonates from the micro to the macro perspective.