Despite facing challenges throughout 2023, WealthTech stocks displayed a robust recovery towards the end of last year and into Q1 2024, but are still lagging compared to other FinTech verticals. Valuations also experienced a strong rebound in Q1 2024, driven by the resurgence of alternative asset classes such as cryptocurrency and ESG investments, as well as evolving regulations driving increased demand for WealthTech solutions.
Strategic buyers have dominated the market, accounting for over 70% of all M&A activity over the past 16 months. The average M&A deal size saw a notable increase, surging to $145 million in Q1 2024 compared to $98 million in 2023. Following a decline in funding activity, investment in the WealthTech sector is gradually regaining momentum. Among the top consolidators, within both strategic and financial entities, a focal point remains on acquisitions within the United States and Europe, underlining the significance of these markets within the landscape.
Our first
WealthTech Report extends our series of FinTech sub-sector deep dives (check out our
Payment Market Update for insights into this area). Download the full report below for more information, including:
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- Our key takeaways on the WealthTech market and its future
- Development of share prices, funding activity and valuations
- Landmark deals dominated by strategic buyers
- A market map across the entire value chain
What to expect for the future of the WealthTech market
Looking into the future of the market, we expect further consolidation, driven by the growing necessity for profitability and high-quality products, changing regulations, diversification of asset classes, a focus on fraud prevention, and the utilization of sophisticated algorithms for robo-advisors.
Sam Levy, Partner at Drake Star: “WealthTech players see the potential for AI to profoundly transform their industry. From supporting the largest ever generational wealth transfer to augmenting user experience, the AI-opportunities are real. However, panelists at the Global Wealth Tech Summit warn against AI hallucinations and data privacy. Humans remain critical in interpreting and interfacing with clients and the results of AI cannot become a black box, but rather needs to be auditable, traceable, and disclosed as such to the clients.”