What can a forward-thinking bank do to stay ahead, keep their customers, and win new ones? Vacuumlabs has been active in the fintech industry for 12 years – the major opportunity we are seeing today is the growing demand for digital-first wealth management solutions.

What is digital wealth management?

Digital wealth management refers to the use of digital technologies, such as apps, to provide comprehensive financial planning and investment management services. These tools enhance the client experience by delivering personalized financial advice, managing portfolios, and tracking investments across multiple devices and platforms.

Benefits of digital wealth management

• Boost client engagement, keeping them with your bank longer 
• Automation and self-service tools
• Access to a wealth of new information and data
• Improve the performance of your clients’ financial asset
• Overall a cost effective and modern solution

Taking a look at investing data in the EU

Many traditional banks provide non-transparent and inflexible options – most of them mutual funds. With this gap in the market, people will go to fintechs that meet their needs. On top of that, investment in the EU market specifically lags behind the United States. This creates a perfect environment for building a digital wealth management platform. 

Let’s take a closer look at these gaps: 

• 15% of adults in the EU invest vs. 58% in the U.S. 

• The wealthtech market in Europe is expected to grow at a CAGR of 14.7% from 2021 to 2028, reaching a value of $39.74bn by 2028.

• Banks are in a great position to take advantage of this untapped potential in digital wealth management by creating innovative user experiences
• In all of Europe, except Estonia, the share of household-held assets invested in equity is far below 50%. In the UK, that number is only 10.4%, 11.4% in Germany, and 22.2% in France. In the US, that share is around 37%, highlighting a significant difference in wealth management.

• Overall, a minority of Europeans invest in the stock market. Data shows that only 33% of UK citizens and 15% of Germans do so, showing sensible differences compared to the 55% of Americans in 2021. However, especially in the last two years, the number of people investing in the stock market is slowly increasing, particularly among those under 30.
• The ETF market in Europe is primarily dominated by institutional investors, rendering it hardly accessible to retail investors. Only 20% of retail investors invest in ETFs, compared to 40% in the USA. This highlights a significant opportunity for retail-focused investment platforms, as ETFs are considered an excellent product for this market segment, offering lower fees compared to mutual funds and no commission fees bundled with distribution and advisory.
  
  Read more of the study one the state of investing in the EU here.

 Why is digital wealth management important?

Overall, building a digital wealth management solution can be simple, yet transformative: a digital-first investing app designed specifically for retail customers. This can bridge the gap between antiquated mutual fund approaches and contemporary wealth management strategies.

If you are curious to learn more, read the full guide on wealthtech here.