Local WealthTech venture funding shrank slightly to exceed US$161 million ($225.29 million) in 2021, down from US$164 million in 2020. That said, the figure represents a sevenfold increase from just US$23 million in 2017.
This surge drastically outpaced the corresponding threefold increase seen globally (from US$2.63 billion to US$8.8 billion) and Asia’s twofold increase (from US$1.1 billion to US$2.2 billion) in the same period.
WealthTech firms are a nascent but growing subset of the wealth management sector, with products and services that incorporate technology such as algorithm-driven portfolios and automatic rebalancing.
Digital wealth manager Endowus and international auditor KPMG tracked WealthTech developments over four years for the Endowus-KPMG WealthTech: Looking Ahead report, released on Sept 12.
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According to the two firms, WealthTech funds grew alongside the ultra-rich population in Singapore. “This upward trend came in response to the rapidly growing pool of high-net-worth individuals (HNWI) and ultra-high-net-worth individuals (UHNWI), which rose by 126% and 158% respectively between 2016 and 2021.”
Driven by a perceived outlook of increased political stability, Singapore is also seeing further inflow of wealth from other leading Asian hubs and is the third largest wealth centre globally, having amassed over US$1.5 trillion in cross-border wealth in 2021, says the report’s authors.
Early-stage and late-stage average venture deal sizes in Singapore each surged to a record-high of over US$15 million in 2021.
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WealthTech venture deals here have also begun to shift from angel and seed to early-stage deals, with angel and seed deals decreasing from a 60% share of all deals in 2017 to 39% in 2021.
A survey of more than 600 private bankers, wealth advisors, intermediaries and family offices found that 49% cited wealth transfer to the next generation as a key opportunity.
Endowus and KPMG note that HNWI and UHNWI families in Asia are relatively young — led by first- or second-generation individuals. “Succession planning will become increasingly important as these families grow. Covid-19 has also served as a key trigger event for families to act on their wealth transfer plans. The large transfer of wealth across generations will drive innovation and development of unique wealth management solutions.”
Samuel Rhee, chairman and chief investment officer of Endowus, says: “While uncertainties may remain given the current macroeconomic conditions, we anticipate massive growth opportunities for the WealthTech sector. There is a unique opportunity for WealthTech players to transform and reform the current state of the wealth management industry to improve outcomes for all clients regardless of demographics and wealth levels.”
Anton Ruddenklau, partner and global head of fintech at KPMG International, says: “WealthTech is relatively young in Singapore, with key players in the space sprouting up in the mid to late 2010s. Through combining contemporary technologies with a digital-first experience, they have brought new models that embed wealth management into daily lifestyles and empowered the average layperson that traditional wealth management had mostly left out.”
He adds: “Aligned with this is a generational shift in consumer behaviour, where the Gen Z demographic are truly digitally native and concerned about their current and future well-being. WealthTech firms that are able to scale services and products to address the mass affluent while creating a secure, intuitive and customised experience will be the frontrunners in redefining the future of wealth management.”
Infographics: Endowus, KPMG
