In some markets, #banks and fintechs are a long way from overcoming the dependence on cash. This challenge is felt at #Germany’s Commerzbank. As one of the country’s top five banks, with €452.5 billion ($ 513 billion) in assets, and boasting a 50-person #innovation lab, implementing #fintech for a fiat-focused market has its challenges. “What is striking […]
Bank Innovation
With 23 #robo-advisors, Germany is Europe’s most #crowded market when it comes to automated, algorithm-based portfolio management advice services.
According to reports from Techfluence, there are currently some 64 robo-advisors in Europe, with the two predominant markets being Germany and London, with 23 and 13 platforms respectively. The two locations are followed by Zurich and Paris, with four platforms respectively.
In Germany, the rise of robo-advisory has been largely fuelled by incumbents which have been deploying numerous products to serve retail investors. Notably, the launch of VisualVest by Union Investment was one of the first independent moves by one of the established institutions into the robo-advisory field.
Launched as a corporate startup, VisualVest provides a platform offering retail investors access to more than 13,000 investment funds via 14 different portfolios: the so-called VestFolios.
Other examples include Fintego, a service provided by Commerzbank&8217;s subsidiary ebase, as well as comdirect, which started offering automated portfolio advice as well.
As for Deutsche Bank, the financial institution has entered into a cooperation with FinCite to offer its maxblue AnlageFinder. AnlageFinder offers a selection of securities in the respective asset class based on criteria selected by the client, such as rating, product costs and performance.
In the space, Germany&8217;s prominent players include Cashboard, Scalable Capital, Vaamo, and Growney, among others.
Not far from Germany, Swiss bank UBS is set to launch a new online wealth manager in Britain in early 2017. The service, called SmartWealth, will target a younger audience.
UBS is the largest wealth manager in the world, managing US$ 2 trillion in client assets. Initially, UBS SmartWealth will be available to a small number of UK residents.
UBS&8217; Shane Williams, the co-head of UBS SmartWealth, told Business Insider in a recent interview that the decision to launch in the UK was influenced by the relative high affluence of the population, favorable local regulation and the advice gap.
But the firm plans to expand internationally in the future.
“We&8217;ll look at where the best places in the future are to go but we&8217;ve not decided yet. But the design of the platform is there ready to move, whether that&8217;s language or different regulatory requirements,” Williams said.
UBS SmartWealth was created especially for those who don&8217;t meet the £2 million asset minimum of UBS&8217; current wealth management clientele. With £15,000, an investor can sign on to SmartWealth. Similarly to other robo-advisors, the platform culls the investor&8217;s goals, assets and risk threshold before suggesting an investment portfolio.
One of UBS SmartWealth&8217;s unique features is that the platform offers users a choice between an active or a passive investment approach. The active approach scours the globe for investments and strives to outperform the market. This strategy makes changes based upon UBS corporate research that includes economic and other factors. The passive approach employs lower cost UBS index tracker and smart beta funds.
As of the fees, UBS SmartWealth is set to charge 1.7%! of assets under management for the actively managed approach and 1%! for the passive one.
It took a year to build the SmartWealth platform, Williams said. Today, the team is made of 80 people based in London.
&8220;What we tried to do with SmartWealth is to be like a #fintech, to go at that pace but within a large organization,&8221; said Williams. &8220;It&8217;s trying to get the best of both worlds.&8221;
UBS is one of the numerous #banks that are looking to tap into the growing popularity of robo-advisors. In the UK, still, Barclays has recently launched a digital investment product that promises lower fees than historical investment services. Lloyds and Santander UK are also reportedly developing their own robo-advisors.
UBS also formed a strategic alliance with US based Wealth management #technology company Sigfig in May 2016.
The post Germany&8217;s Robo-Advisory Sector Is Getting Crowded appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
The Germany’s burgeoning #fintech industry is quickly emerging as a regional leader with a number of startup gaining international recognition and Berlin becoming a “strong contender for London&8217;s fintech crown,” according to a new report by UK payments startup GoCardless Ltd.
&8220;It&8217;s no secret that Germany took its time to enter the scene, especially with investors erring on the side of caution due to the complex nature of German financial regulations, the #report says.
&8220;But now the gap is finally closing on the UK. As Brexit places London’s ‘EU passport’ in jeopardy – the UK may soon find itself overtaken by Germany in the near future.&8221;
Germany&8217;s fintech universe by city, EY Analysis 2016
With now 250 companies employing approximately 13,000 people, Germany&8217;s fintech industry is growing rapidly.
A report by EY released in March, suggests that the German fintech market is fragmented but has developed three main hubs: Berlin, Rhein-Main-Neckar region and Munich, each standing for a distinct characteristic.
In terms of investment, Germany is lagging behind the UK, with €524 million invested in domestic fintech startups in 2015 compared to €707 million for UK startups.
Ventures focusing on banking and lending alone have attracted a big chunk of Germany&8217;s overall fintech investment, raising €402 million in 2015.
GoCardless ‘What you didn’t know about German FinTech&8217; report
The report notes the involvement of Peter Thiel, the co-founder of PayPal and a prominent figure in the tech industry, in a number of deals. These include participation in funding rounds of Zinspilot, a platform for comparing interest rates, and Hamburg-based consumer loan platform Kreditech.
Traditional #banks and financial institutions have too been involved, with a number of them either acquiring or partnering with startups to add innovative products and services to their portfolios. These include Sparkesse which acquired the majority of shares in payments startup Payone in 2015, as well as Deutsche Bank which has been collaborating with domestic startups such Gini and Fincite.
Gini is a B2B focused financial data analytics startup delivering an API that uses artificial intelligence to enable businesses to automate paperwork, while Fincite is a German #robo-advisor provider.
Deutsche Bank has further announced plans to invest €1 billion in digital banking in the next five years as part of its &8220;Strategy 2020&8221; to boost efficiency, cut down on risky businesses and boost its capital base, as reported by Handelsblatt in March.
One of the UK&8217;s competitive advantages over Germany is the supportiveness and openness of the Financial Conduct Authority (FCA) related to the UK&8217;s ambition to become the fintech capital of the world. &8220;A major component of that policy includes tax incentives to encourage seed investments, along with government programs to support innovation,&8221; the report says.
This has helped foster a flourishing fintech startup community with widely renowned ventures such as TransferWise, Funding Circle and Monese.
Germany&8217;s Federal Financial Supervisory Authority (BaFin), on the other hand, is deemed &8220;more complex and more conservative towards the development of fintech.&8221;
&8220;The BaFin is still far behind on implementing policies similar to the FCA&8217;s,&8221; it says.
&8220;For many German FinTech startups, acquiring a banking license from the BaFin is considered a path to profitability as it enables establishment of faster processes. But it also requires startups to implement strict controls and supervision for fraudulent activity. The application process can be long, complex and costly for recently founded startups, which discourages venture capitalists from making major investments in the industry.&8221;
In light of the regulatory hurdles, banks have been trying to bridge the gap through investment funds, while players such as &8220;fintech company builder&8221; FinLeap have introduced products and services to help startups with financial regulations.
For instance, FinLeap&8217;s SolarisBank is a fully licensed digital bank focusing on powering e-commerce businesses and fintech startups with modular, API-accessible financial services.
While some local fintech startups have to rely on partnerships with existing financial institutions to help them grow, others such as N26, formerly known as Number26, have been awarded a full German banking license.
Berlin-based N26 is a digital challenger bank that allows users to open an online banking account from their smartphone &8220;in under 8 minutes.&8221; N28 provides customers with a free MasterCard payment card, as well as the ability to send money abroad in 19 different currencies.
N26 is currently available to customers residing in Germany, Austria, Ireland, France, Spain, Italy, Greece and Slovakia.
Another challenger bank that holds a German banking license is Fidor Bank (Fidor Group), which was acquired by France&8217;s Groupe BPCE in July 2016.
&8220;There&8217;s already lots of activity in the German FinTech scene and some of the established players mentioned earlier have already laid the groundwork,&8221; the report says.
It concludes:
&8220;There is massive potential for Germany to rival, and perhaps even take over from, the UK when it comes to fintech. The UK leaving the EU may also pave the way for Germany to take that lead sooner than expected, with the UK’s so called ‘EU-passport’ in jeopardy.&8221;
The post New Report Highlights Germany&8217;s Fintech Industry&8217;s &8216;Impressive Growth&8217; appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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