- WealthTech: The Global Market Projects Growth of $22 Billion by 2027
- Mexico is one of the countries with the highest levels and capacity for household savings in the world, which presents a significant opportunity.
A report from the Organisation for Economic Co-operation and Development (OECD) revealed that Mexico is the Spanish-speaking country where citizens save the most money.
This is a crucial piece of information for WealthTech ventures, a sector that has been experiencing significant growth in recent years. According to a report by FinTech Global, the global market is projected to grow substantially, from $7.67 billion in 2023 to $22.81 billion by 2027.
Latin America is not immune to this trend: the region is witnessing the emergence of new WealthTech companies, the expansion of international firms, and the incorporation of cutting-edge technologies in wealth management.
Through digital platforms, robo-advisors (automated investment algorithms) represent one of the major innovations in the sector, as we reported in this study; along with other advanced financial analysis tools, WealthTech companies are redefining how financial institutions manage their clients’ assets.
Revolut Invest will be the new wealth management feature launched shortly by the famous English bank, which includes stock trading and a robo-advisor function. It will provide access to 5,000 assets, including U.S. and European stocks, ETFs, commodities, and bonds. Additionally, the app will introduce new features such as contracts for difference (CFDs). Users will also have the option for a premium subscription, Trading Pro, which offers reduced commissions, higher limits, and better analytical tools.
WealthTech in Latin America
In Latin America, according to a report by GLOBAL FINDEX, 60% of people do not save. In a context characterized by economic inequality and a limited financial culture, the emergence of these technological solutions has the potential to democratize access to wealth management and improve investment efficiency.
To the surprise of many, Mexico is one of the Spanish-speaking countries where families save the most money in the world, even surpassing the United States.
The net household savings analyzed in the study represents the total amount saved as a percentage of disposable household income (i.e., net salary plus social benefits received, minus taxes paid) and provides an overview of the average proportion of income that households save.
Despite this, in recent years, the WealthTech offering has also grown within the fintech ecosystem in the region. For example, the Chilean company Valuelist has consolidated a partnership with the Colombian tech firm Elemento Alpha to expand its presence in the Colombian market, aiming to attract over 200,000 users. The agreement focuses on developing joint technological solutions to optimize wealth management for both business and individual users. Both companies are considering the possibility of expanding their collaboration to other Latin American countries such as Brazil, Mexico, and Chile.
Many other companies already have a history in Latin America. Founded in 2016, Fintual has impacted access to investments in Chile, with a simple and accessible approach to managing investment funds. The platform is user-friendly and clearly targets young investors.
Another example is Wakeful, a recently founded app in Argentina; it is the first WealthTech in Latin America that allows Latinos to invest in the U.S. stock market in an automated manner and plan their finances. The app automates the onboarding process for investment, ensuring that each user can set up their risk profile and financial goals.
Additionally, some international companies have begun to expand into Latin America, attracted by the growth opportunities the region offers. For instance, Betterment, one of the largest robo-advisor platforms in the United States, has identified Latin America as a market with great prospects due to the growing demand for digitized investment products.
New technologies in wealth management
The adoption of new technologies is one of the main reasons behind the growth of WealthTech in Latin America. Some of the most significant technological trends include:
Robo-Advisors
Robo-advisors use algorithms to manage investment portfolios without human intervention. In Latin America, where many people lack access to traditional financial services, these platforms provide a low-cost and easily accessible solution for managing investments.
Artificial Intelligence (AI) and Big Data
AI and Big Data analytics are enabling WealthTech companies to optimize financial decision-making, personalizing investment strategies and improving operational efficiency. These technologies allow platforms to analyze large volumes of data to predict market behavior and quickly adjust to economic changes.
Blockchain and cryptocurrencies
The rise of cryptocurrencies has captured the attention of investors across Latin America, especially in countries with volatile economies. Some WealthTech companies are beginning to offer blockchain-based products, allowing clients to diversify their portfolios with digital assets.
Challenges and opportunities
While the growth potential for WealthTech in Latin America is immense, there are also challenges. The lack of financial education remains a significant barrier. However, this challenge also represents an opportunity for companies willing to educate and train their users, helping to close the financial access gap in the region.
Moreover, regulation is another critical aspect. Although some countries, such as Brazil and Mexico, have made progress in creating fintech regulatory frameworks, there is still work to be done to ensure a safe and conducive environment for financial innovation across the region.