How FinTech is Democratising Access to Wealth

When we talk about “impact technology”, FinTech is rarely at the top of the agenda. More often than not, we’d think about CleanTech, EdTech, or HealthTech solutions centred around healthcare equity, and so on. Yet, financial inclusion plays a significant role in the progress we’ve made so far.

Financial exclusion perpetuates generational inequality, preventing people from maximising their earnings and building up a financial legacy for their children. A staggering 1.7 billion adults globally remain unbanked and excluded from the financial system, according to the World Bank. Therefore, alongside investing in projects and technologies that create opportunities to break the cycle of poverty, we must support projects that help everyone benefit from their economic activity in the long run. That’s where financial education and democratising access to capital come into play.

At 1818, we’re passionate about everything FinTech, but we’re equally passionate about achieving positive change. It’s our sincere belief that democratising access to wealth is an important aspect of achieving a more equal, prosperous future for us all. Here’s why:

Levelling the Playing Field with Technology

Traditionally, wealth management has always been an exclusive club, with high fees and minimum investments keeping most people out. Modern FinTech has finally lowered this barrier by introducing financial tools and services accessible to everyone, regardless of income or background. Over the last decade, we’ve witnessed the rise of platforms that have made banking and wealth management solutions:

● Cost-Effective: Technology streamlines operations, reducing costs that are passed on to consumers.

● Easily Accessible: Digital platforms provide on-demand financial services from anywhere in the world.

● Inclusive: Designed to cater to diverse needs, ensuring everyone can benefit.

Even before the AI and Web3 boom, the banking sector became increasingly digital, finally putting control over one’s finances into the hands of individuals. Additionally, the widespread adoption of smartphones has allowed FinTech companies to reach larger audiences, providing financial services to people who may not have access to traditional banking.

Next, we’ve observed the popularisation of apps for investing in stocks, making it almost as easy as purchasing groceries on Uber Eats — a revolution of its own, considering investing was once a privilege mostly available to the wealthiest.

The 2020s took this transformation to a whole new level. The democratisation of AI has made personalised financial advice — again, something that used to be a major, costly privilege — accessible to everyone for very low cost, if not for free. Moreover, emerging automated portfolio management solutions have made investments easier than ever, reducing the need for human involvement from both investment bankers and consumers.

But with great opportunities come great dangers and challenges. To make access to wealth truly beneficial and safe for all, we need more technologies focused on:

● Financial education and portfolio building support: Throwing one’s lifetime savings into stocks may result in a concentration of risk and overexposure to one asset class. That’s why we need FinTech to support those learning to handle and harness their capital in the best way.

● Top-notch security: GenAI has virtually opened Pandora’s box when it comes to digital fraud — and personal finances are, sadly, no exception. Wealth management solutions should be hyper-secure at all costs — for the very same reason: losing one’s savings over the years may hinder generational progress.

● Pushing down regulatory barriers: We will only achieve financial equality when wealth management is available to everyone, regardless of where they were born or what language they speak. Therefore, solutions enabling and simplifying cross-border financial operations are becoming increasingly relevant.

Doing Our Bit: 1818’s Portfolio

According to FinTech Global, global investment in wealth management technology reached $4.6 billion in 2018 and has continued to grow, highlighting the increasing demand for innovative financial solutions. Being progressive supporters of this trend as we are, we have been on an active lookout for such innovations.

Our portfolio includes the following companies dedicated to democratising wealth management:

Wealthify (Exited in 2020)

Wealthify is a multi-award-winning online investment service which lets you build personal investment plans and then manages them for you. The company takes pride in offering online investment portfolios starting at just £1.00. From its inception, Wealthify has been driven to make investing easy, affordable, and accessible for everyone, thereby promoting financial inclusion and ethical investing.

Wealthify’s core mission resonated with 1818’s investment philosophy: addressing the increasing demand for savings and investment solutions in a time of increased longevity. By offering accessible investment options with very low minimum amounts, Wealthify enables a broader spectrum of individuals to invest in diversified portfolios that track major benchmarks. The firm places a strong emphasis on ethical investing to ensure high ethical standards, making Wealthify a pioneer in both accessible and responsible investment. In 2020, we assisted in connecting Wealthify to Aviva. Aviva subsequently acquired the entire business in 2020.

Sidekick (Invested in 2024)

Sidekick is on a mission to democratise access to financial products and services that are currently only available to High-Net-Worth investors with existing private banking relationships. Targeting the younger mass-affluent generation, Sidekick provides access to a comprehensive suite of expertly managed, personalised portfolios, including high-yield savings accounts, and a competitively priced line of credit to provide liquidity when needed. They’re also planning to introduce alternative asset classes, such as private equity, private credit, and venture capital.

At 1818, we see Sidekick as a potential game-changer in wealth management — especially considering their early traction and engaged Founding Member Community. Their experienced team, combined with an innovative approach to providing liquidity through investment portfolios, sets them apart. With plans for expansion across multiple geographies and a strategic D2C/B2B2C distribution model, we are very optimistic about Sidekick’s future growth and impact in the financial services industry.

Conclusion: Building a Brighter Financial Future

When more people participate in the financial system, they are more likely to invest, save, and spend wisely, thereby contributing to economic growth. The need for financial inclusion is especially acute in the turbulent times we live in. FinTech solutions also cater to underserved markets, bringing financial services to communities that previously had limited access. This inclusivity fosters a more stable and prosperous economy while reducing social tension.

While we may not be the largest impact VC fund, we strive to make a difference by doing what we do best: supporting the next generation of FinTech innovators. And we always welcome allies onboard.

To learn more about 1818’s investment thesis, please visit our website: https://www.1818venturecapital.com/