Robo-Advisors- A Low-Cost Investment for KSA Residents to Invest by Automating Trading Decisions and Eliminating Human Emotions

 

1.  KSA Robo-Advisory in Wealth Management to grow at CAGR of ~50% by 2026F

In 2021, approximately 20% of KSA’s wealth is derived from Ultra High Net Worth (HNW) individuals who are worth more than USD 100 million, and it is expected to remain the case in the coming future. Competition is fierce among KSA-based Wealth Management firms. For instance, clients are more interested in sustainable & ethical investments. Equities and investment funds made up the largest asset class of total personal wealth in 2021 and is expected to grow the fastest.

2. Digital investment platforms to provide low-cost options to Millennials and mass affluent clients in KSA

KSA Robo –Advisory in Wealth Management Market is expected to emerge as one of the leading destinations for wealth management & private banking globally, driven by burgeoning HNWI (high net worth income) population that demands technologically advanced and highly customized banking and management solutions.

Digital technology has changed customer expectations at a rapid pace over the past five years. The availability of accessible and tech-savvy solutions as Robo-Advisors will ensure a competitive advantage for firm providing it. Millennials and Generation Z have largely grown up in a tech-laden world. They are twice as likely as some older investors to consider using a Robo-Advisor.

3. Pain Points in KSA Robo-Advisory in Wealth Management

• Tedious process of looking for reliable Robo-Advisory platform as buyer/investor.

• Market is still at a nascent stage, therefore low adoption than expected due to lack of consumer awareness. Competition is very limited creating a situation of monopoly, reducing customer’s bargaining power.

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• Cyber Security risks are high in such investing platforms. As these Robo-Advisory platforms are prone to data privacy, malicious software on user’s device.

4. Few solutions to the above problems

• Banks are expected to take the lead in the market very shortly. These would do well due to their cost-effectiveness, trust, ease of movement of money, captive base and larger credibility with the customer.

• FSRA is one such organisation that issues regulatory framework for Robo-Advisors in KSA. Thus, more such rules & regulations can help regulate and undermine the risks.