By Eric Noll, CEO, FusionIQ
Digital wallets have fundamentally changed how consumers interact with financial services, merging the simplicity and accessibility of digital payments with sophisticated capabilities that allow for secure, seamless financial transactions. Wallets are now powerful platforms for broader financial empowerment, allowing users to access, grow, and manage wealth directly from their mobile devices. As this technology has developed, it has introduced not only new conveniences but also exciting opportunities for democratizing wealth management.
With the rapid shift from physical to digital payments, the financial sector faces a critical need to adapt to evolving consumer expectations or risk obsolescence. Today’s consumers demand instantaneous, secure, and user-friendly digital experiences, pushing traditional financial models to expand their approach. In this context, digital wallets stand out as powerful tools for democratizing wealth management. Today, these wallets are not just payment tools; they are platforms for investment and financial growth, accessible to everyone from the palm of their hand: In the U.S., 65% of adults use a digital wallet at least once a month, with 53% using it more frequently than traditional payment methods.
The Evolution of Financial Services
The financial services industry has seen tremendous change over the last several decades. Milestones in digital payments have reshaped consumer expectations, from the invention of credit cards in the 1950s to the advent of mobile wallets and “buy now, pay later” (BNPL) services in the 2020s. Each advancement underscores an ongoing demand for faster, more integrated services that provide consumers with seamless ways to manage and grow their finances.
This historical evolution is also a testament to changing consumer needs. With each new development, consumers increasingly expect immediate access to their funds, whether for everyday purchases or financial investments. As a result, digital wallets have quickly become preferred by users who value both convenience and efficiency in financial transactions. Today, this expectation extends to wealth management, with users seeking simple, secure, and accessible options for investing and growing their money – all within a familiar platform.
The Role of Digital Wallets in Democratizing Wealth
In this environment, wealth management platforms designed specifically for digital wallet companies can empower wallet providers to expand their service offerings beyond payments by integrating sophisticated wealth management capabilities, such as goals-based digital advice and self-directed investing. This innovative approach addresses a growing market need for wallets that can do more than facilitate payments. For instance, gig workers, 1099 contractors, and employees paid through digital wallets can now access investment advice, robo-advising, and self-directed trading all in the same platform where they receive their earnings. This level of integration is unique within the wealthtech space and promises to open up a new market segment for wealth management.
By embedding wealth management tools directly into payment wallets, we reduce the friction between earning and managing money. Over time, this frictionless approach has the potential to unlock new levels of wealth for a broader segment of the population. Closing this gap for all investors is part of a larger movement to democratize finance, where digital tools are broadening access to investment resources for consumers who may not have been previously engaged with traditional wealth management.
Technology also allows users to onboard directly from their payroll wallet, credit union, or local bank, gain access to financial markets as self-directed traders, and receive registered or digital investment advice. This transformation parallels shifts in the trading world. Historically, trading was a manual, exclusive process, but with the introduction of electronic systems, it became accessible and grew exponentially. Similarly, digital wealth management is scaling as we remove barriers, lower costs, and make wealth-building tools more inclusive.
Convergence of Payments and Wealth Management
As wallets grow in popularity – accounting for 30% of point-of-sale transactions in some regions – wallet-based wealth management becomes an accessible, flexible option for a larger portion of the population. The simplicity of managing investments within a familiar platform enhances the user experience and deepens consumer engagement. The convergence between payments and wealth is set to fuel adoption by bridging the gap between payments and wealth management. A unified experience delivers ease of use, while efficiencies lower costs and speed up transactions. By becoming a single source or one-stop shop for consumers on their phones, wallets can be transformed into comprehensive financial hubs, effectively eliminating friction in the market.
Eric Noll is the CEO and chairman of FusionIQ, a provider of cloud-based wealth management solutions offering modules for hybrid digital advice, self-directed investing, digital model marketplace, and finTAMP.
