WealthTech investments down sharply in 2023

Joy Agwunobi

A recent report by FinTech Global has revealed a significant five year  decline in global WealthTech deal activity in 2023, with only 615 deals recorded,epresenting a 27 per cent decrease compared to the previous year.

Along with a decrease in deal activity, investment levels in WealthTech companies also dropped by 66 per cent , with only $4.1 billion raised in 2023. The fourth quarter  of last year saw a particularly notable drop, with 127 deals raised, a 22 per cent  decrease compared to the previous three quarters.

The report  further revealed that Atom Bank, a UK-based digital bank, had the largest WealthTech deal in 2023, raising £100 million in their private equity  funding round from BBVA, Toscafund, and Infinity Investment Partners. Atom Bank’s success is highlighted by its recent financial results, which show the company’s first year of profitability. The Bank’s revenue increased by 62 per cent   in 2023, it doubled its customer base to 224,000, and its savings deposits rose to £6.6 billion.

In addition to its impressive financial performance, Atom Bank has also been recognised for its excellent customer service. The bank has a five-star rating on TrustPilot, iOS, and Android, and its Net Promoter Score (NPS) has consistently been in the high 80s. 

The findings emphasise that WealthTech in 2023 saw a focus on the use and adoption of AI technology, particularly generative AI. 

In a recent review of WealthTech, industry leaders have expressed excitement about the potential of AI to transform financial services operations. This trend is expected to continue in 2024, as companies explore more use cases and applications for generative AI. 

Fredrik Davéus, CEO and co-founder of Kidbrooke, a financial analytics API developer, predicts that “we will see even more use cases and uses for generative AI, along with integrations with existing technologies to get even more capabilities out of it.”

Industry experts believe that artificial intelligence (AI) has the potential to drive innovation and growth in the WealthTech sector in Nigeria. For example, Atom Bank in the UK has been successful in leveraging AI to create a more efficient and convenient banking experience for customers. This could serve as a model for Nigerian fintech companies, who could leverage AI to create innovative financial products and services tailored to the needs of the local market.

According to experts,companies like Kidbrooke are providing an important service to the financial services sector by offering platforms that make it easier for developers to build and deploy AI models. This is particularly important for the development of WealthTech in Nigeria, as it allows for the rapid creation of new applications and solutions that can be tailored to meet the specific needs of the market.