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Crises change investment habits and create opportunity for Wealthtechs

Last week, we launched a Fintech PR Playbook, looking at the key trends, topics and media that are shaping UK Fintech, to help businesses plan their strategies for the next six months and beyond. We are passionate about the sector – which is showing great promise to bounce out of the pandemic – but we recognise that fintech isn’t one industry. Rather, it’s an umbrella term used to showcase the best of financial services firms that utilise technology to provide adaptable and best-in-class services. The Wealthtech sector is a perfect example of an industry that is successfully leveraging technology to shake-up traditional investment services models.

As outlined in our Playbook, getting on the investment ladder is becoming progressively easy for the everyday consumer. As interest rates remain at a record-low, leaving limited options for us to grow our capital via traditional means such as savings accounts and ISAs, Wealthtechs, such as Wealthify and Moneybox, have capitalised on the opportunity to give everyday consumers more options. More options – catered for everyone regardless of financial acumen or status – brings with it more investors. And more investors, of all generations, brings greater diversity of values and demands.

For example, not only are we living through a health crisis right now, but we’re also living through other crises. Just think about systemic racism and climate change. Younger generations have been at the forefront of protests and movements to try and drive change. And this is reflected in investment behaviours too – with Environmental, Social and Governance (ESG) becoming ‘officially mainstream’. As regulatory discussions around benchmarks continue, ESG scoring will become much more standardised. But on an individual level, what’s considered socially responsible to one person, might be different to another. For example, the once cherished vegan milk brand, Oatly, is now facing boycotts over selling a stake of its business to Blackstone, a private equity firm headed by a Trump donor that is allegedly contributing to deforestation in the Amazon.

The need for hyper-personalised investments is greater than ever before. And technology plays a key role in making this a reality, with solutions that utilise data and machine learning to invest or divest based on personal values or preference. Wealthtechs, then, whose business models are often built without the constraints of legacy systems, have a great opportunity to flex and adapt according to the individual demands of this new wave of investors.

In terms of media, there has been a lot of scepticism about ESG due to the lack of standardised benchmarks, as well as the lack of transparency – for example, with companies criticised for ‘greenwashing’ or ‘wokewashing’. But many publications now have dedicated ESG sections, which demonstrates that the topic is here to stay.

There is still a great opportunity for Wealthtechs to communicate that they understand the changing demands of all investor demographics on an individual level, as well as how they are leveraging technology to meet these demands. It’s also a good opportunity for Wealthtechs to communicate their own ESG credentials – for example, showcasing corporate diversity by leveraging diverse spokespeople from a variety of backgrounds, as well as providing any stats or proof points that highlight their efforts to do business in a sustainable way. We can expect the media to continue reporting on topics such as hyper-personalisation and ESG, for the remainder of this year and beyond.

Wealthtech funding more than doubled in Q2 2020 – so clearly there is a lot of room for growth and maturation in this sector. I’m excited to see how Wealthtechs will continue to flex their services, to ensure investments reflect the growing demand for diverse values and positive contributions to society.

Sofia Romano, Account Manager, Nelson Bostock – an UNLIMITED agency