The Future of Wealthtech in Emerging Markets

Published in
7 min readDec 3, 2021


The middle class in emerging markets is not only expanding but also enjoying robust income gains. Indians save about 30% of their disposable income, with annual savings totaling >$450B. This situation is not so different in México, where households save 22% of their disposable income, or Indonesia where they save 24%. However, much of this income has traditionally been invested in physical assets like real estate, in low-yielding fixed income, or, even worse, sits as cash, where savings are eaten away by inflation.

While financial markets globally have offered the most efficient way for middle-class investors to compound their savings over time, most in emerging markets have avoided this idea. We believe this is going to change. With a middle-class enjoying higher disposable incomes than they have ever seen, COVID-19 driving digital adoption, and a new generation of retail consumers eager to invest and grow their savings, we believe there’s a structural opportunity for disruption in the investment space with long-term potential in wealth management.

Disrupting a Huge Market

For most of modern history, developed markets accounted for the vast share of wealth. But this is changing. The past 20 years saw the emergence of a world in which the emerging markets of Asia, Eastern Europe, Latin America, the Middle East and Africa enjoyed rapid expansion, propelled by strong GDP performance and higher rates of household saving of disposable income. As a result, the share of wealth held by growth markets has steadily increased — 669% over the last 20 years as seen below, part of the Global Wealth Report 2020 produced by Boston Consulting Group.

Global Wealth Report 2020 by Boston Consulting Group

The wealth management opportunity in emerging markets closely follows wealth creation. India, whose wealth management market size is about $1.5Tn, has been witnessing a steady rise in the number of Wealthtech players, with 400+ platforms operating in the market as of December 2020. The country’s brokerage business recorded more than $3.8bn in revenue in 2020, and according to Inc42’s India’s Online Trading Market Report 2021, the country’s online trading market is set to reach $14.3bn by 2025.

India’s Online Trading Market

Among the Wealthtech subsectors, the ones we believe will capture most of the opportunity of retail investors in emerging markets are the new generation of online brokers, for while the number of retail investors is increasing exponentially, it remains far from reaching its maximum potential.

The number of individual investors registered on B3, the Brazilian stock exchange, jumped 92% from 2019 to 2020, reaching 3M accounts at the end of last year. In México, the number of people with access to capital markets grew 270% from June 2020 to June 2021, reaching 1.8M people. The same is happening in Indonesia, where more than 1M new investors joined The Indonesia Stock Exchange (IDX) in the first eight months of 2021. That is almost twice the ~600K stock market entrants registered over the whole of 2020, bringing the total number of Indonesian retail equity investors to 2.7 million as of August ‘21.

Significantly, though these figures indicate tremendous growth, they continue to reflect that so far, only a small percentage of the population (less than 3% in most cases) has been engaged.

Percentage of Population Registered as Individual Investors

Increasing the participation of retail investors in capital markets presents a multi-billion dollar opportunity, and here at Alter, we believe that companies that lower the entry barrier for new investors, boost financial literacy, and embed social features will capture the retail investment market opportunity in emerging markets.

  1. Lowering the Entry Barrier for New Investors:

Investing has long been considered an activity of the rich and privileged. High minimum investment amounts, the significant length of time needed to monitor the volatility of the market, and the difficulty to execute trades created several obstacles for retail investors to join the stock market. A new generation of online brokers is solving these problems by (i) offering a comprehensive user experience with a mobile-first approach and relevant stock information within their platforms, (ii) letting customers buy fractional shares without minimum purchase requirements and (iii) offering competitive pricing by charging low or zero-fee trading costs.

2. Boosting Financial Literacy:

The rise of the Southeast Asian (and broader Asian) consumer will be a dominant economic theme for the next several decades. It is forecast that by 2030, two-thirds of the global middle class will be living in Asia, becoming major consumers with rapidly growing disposable incomes. The challenge is that in most Asian countries, there is a significant shortage of widespread financial literacy, with Southeast Asia ranking among the worst according to S&P Global FinLit Survey. The situation is not significantly different in Latin America, where all countries scored below the OECD average in Financial Literacy in 2018.

Educating and ramping first-time investors will be key for companies that want to operate in this space, and some are leading the way in showing how this can be achieved.

Zerodha’s Varsity app is already one of the largest financial learning resources in India with more than 1M downloads. Through its gamified platform, in-depth and practical tips and insights on trading, learning modules on key financial topics and more, the company was able to increase new account creation by 300%.

Zerodha’s Varsity User Interface

Ajaib, the first investment app unicorn in SEA, is working with IDX, Indonesia’s stock exchange, on a joint financial literacy education initiative that targets millennials in districts with low financial and investment literacy. The Capital Markets School offered by Ajaib and IDX teaches newcomers how to open an investment account, the basics of stock analysis, and other tips around navigating the market.

The Capital Markets School Platform

3) Embedding Social Features:

The use of social media platforms and messaging apps in emerging markets has been well documented by several research institutes. Some data points are particularly interesting for us:

  • Out of the top 5 countries with the most active users on Instagram, 4 are emerging markets.
  • A recent survey from Statista showed that users from these markets also spend the most time on social media.
Statista Survey on Social Media Use By Country

These data points, together with the fact that these countries have generally younger populations and that Gen Z and millennial inventors get most of their investment advice from social media — since its more relatable, entertaining, and can be consumed on the go — makes us strong believers that social trading platforms increase the defensibility of these online brokers and create network effects due to superior user engagement. is a great example of creating a social and community-driven approach to investing. Its social feed allows investors to learn from each other and grow collaboratively. Like any social app, on Public one can brag about selling at a profit, influence investments in certain companies, or even teach about investing through their own experience. Discussion Groups enable users to create open/closed chat groups to discuss stocks, earnings calls, and investment strategies. Discussion Groups Direct Messaging

As another example, Smallcase creates a social experience for customers by giving access to an in-house team of licensed professionals who offer 100+ theme-based portfolios of stocks and exchange-traded funds, as well as connections to independent investment managers, brokerages and wealth platforms. By enabling new advisors to come to the market, offering different business models (charging a % of AUM) and exposing new customers to them, the company was able to successfully reduce friction to new investors.

Smallcase’s Social Customer Experience

Finally, eToro is reputed to be the leading platform in social trading. The company, which is going public via SPAC merger in Q4 2021, in a massive $10.4 billion deal, allows users to share trade ideas within the community, view each trader’s portfolio and stats, and above all, copy the best of them.

eToro ‘s Many Features

So, How is Alter Looking at Wealthtech Tools Being Developed in Emerging Markets?

As Rex Woodbury shared, “Traditionally, investing was solitary — it was just you poring over stocks listed in the newspaper. If you were lucky, you might occasionally talk to a financial advisor. Today, investing is deeply social.”

With wealthtech startups from every high-growth country rapidly entering the market, the new generation of online brokers is rapidly evolving, and those that focus on social trading continue to excite us. Social trading enables anyone to participate in discussions, contribute to research, and share their learnings, something previously reserved for an elite few. Alter is committed to supporting high-character, emerging market entrepreneurs providing access to financial services and investment products to those historically underserved.

As we continue to refine our thinking on the space, we hope to engage with other investors and operators interested in this area. If you are a founder or an investor and would like to connect, please reach out to us at Thank you!




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