Wealthtech Landscape: Trends, Drivers, and Challenges

Open banking is a system that allows financial data—with consumer permission—to flow between banks, fintech firms, and other financial institutions. Through application programming interfaces (APIs), software programs can communicate with each other and share data.

Open banking gives consumers more control over their data and empowers financial players to change how they deliver financial services.

Open banking is already gaining steam in the European Union, propelled by regulations. In the United States, firms have come together to create new, collaborative opportunities. Wealthtech hopes to leverage big data and automation to do more for advisors and investors.

As intermediaries, financial data aggregators will play a critical role in the connections and movement of data throughout the new ecosystem.

For wealthtechs and their partners, creating new connections can come with a cost. New data providers can be expensive to integrate, which can give some firms pause. Growing webs of connections also need to grow with a business, leaving an organized record trail for future audits.

When data breaches dominate the news, consumers are understandably worried about the safety of their information. Wealth management firms must protect sensitive data to retain business and generate referrals.

Direct connections provide a more reliable data source. Instead of a consumer re-entering login credentials, creating more access points for bad actors, direct connections allow one institution to securely store data.