Press article
“It’s about more than Robos!”
Published: 07.07.2021 | By investify
In an interview with Citywire Deutschland, the managing directors talk about the new focus on wealth managers, the robo industry and why Apple or 1&1 could also become interested in wealth management.
The German-Luxembourg service provider investify Tech once entered the German market as a digital wealth manager for private clients. About two years ago, the company then changed its business model from end customers to B2B business and developed a digital wealth management platform based on its own robo advisor, which investify now sells to other companies. The old business model had not worked out.
Things seem to be going better with the new orientation: investify regularly collects new clients, such as recently the Bank für Sozialwirtschaft and the asset manager Maiestas. Managing directors Christian Kratz and Harald Brock talked to Citywire Deutschland about the new focus on asset managers, the robo industry and why Apple or 1&1 could also become interested in wealth management.
Mr Brock, the retail business with robo advisors finally seems to be picking up speed in Germany. Do you regret the decision to switch investify to B2B?
Harald Brock: No, not at all. We still believe that we took the right steps. This is also proven by our numerous cooperations in recent years. When the market for robos picks up, we continue to be there in the background as a technology and regulatory provider and benefit. We have implemented robo solutions with numerous B2B partners.
You also cooperate with private banks and asset managers. What role do these customer groups play at investify?
Brock: Our focus is on the digitalisation of asset management – this often involves more than just robots. For us, the hybrid market, i.e. where advisors also use our technology, now plays at least as important a role as the pure robo business. When it comes to investing, personal support continues to play an important role. That is why we have expanded our range of services to include private banking solutions and routes for personal advice, for example with the asset manager. Some of our customers additionally combine these with robo solutions.
Why was the direct end-customer approach difficult for investify?
Brock: The robo is and remains only one facet of investing. But you need an extremely large amount of money or a good existing customer base to convert customers to robo. Scalable has done it, thanks to the cooperation with ING. Cominvest did it with the support of Comdirect. Then there is also Quirion, which benefits from its work with Quirin Privatbank.
Kratz: Firms that already have a client base and want to add a digital offering have good opportunities. This applies to banks and asset managers but also to lateral entrants who do not come from the financial sector and want to expand in this direction. We see with our clients that robos are also being sold more and more frequently in customer meetings in the branches.
Why is it so capital-intensive for newcomers to the robo market to get started?
Kratz: The costs for customer acquisition in the retail business are very high, so it is also easier for the companies that already have customers, whom they only have to convince of the new offer, or if you get customers referred by a partner.
So changing the whole business model was easier for you than the end-customer business?
Brock: Access to the B2B market is easier with our network, acquisition is cheaper and the leverage is enormous. Our development proves us right. We are constantly winning new well-known B2B cooperations and just secured a million-dollar financing in December. The things we worked on before our “pivot” towards B2B services were not for the bin, much of which we have been able to incorporate into our current offering. Take our portfolio management licence, for example, we use it today with clients who do not come from the financial sector themselves, but still want to offer asset management. We can take over the entire asset management for such companies and put together an all-round carefree package.
Is this a trend? Will more companies from outside the industry offer asset management?
Kratz: We see the non-financials sector as a big growth market for digital asset management. All the providers that currently offer digital payments or processing, for example PayPal, Google Pay and Apple Pay, already have a large customer base and huge trust. Millions of people trust them with sensitive data sets. Imagine if these brands came up with the idea of offering investment or savings plans for wealth accumulation! I am sure it would have great success. I could also imagine the entry of companies like 1&1, which already offer everything from electricity tariffs to mobile phone contracts.
So far, however, most of your customers still come from the financial sector. Is there also growth potential there?
Brock: Yes, we clearly target both: financial and non-financial companies. It is important to us that our B2B customers can concentrate on their core competencies. Especially with financial companies, such as asset managers or banks, we play to our strengths because there is still a lot of manual work there. These are often unnecessary cost blocks that we can take over completely or even make completely superfluous. In addition, we take care of all the mandatory regulatory tasks.
You recently started a partnership with the Cologne-based Maiestas. Do you also plan to target independent asset managers more strongly
Kratz: Quite clearly, we want to win more asset managers but also liability umbrellas and marker pools for us. Besides Maiestas, ICM Investmentbank, an asset manager from Berlin, is also one of our clients. Other well-known asset manager partners will be communicated in the coming weeks. The demand we find for digital solutions is huge. More and more are now going down a fully digitalised path to become more competitive.
Why do asset managers become your clients?
Brock: You can save the entire back office and concentrate on what is important to you: portfolio management and client advice. The coordination effort with the custodian bank is also eliminated. Because we are licensed as asset managers ourselves, we can also take over all regulatory tasks, for example – these processes usually place a particularly heavy burden on an asset manager. In addition, we provide the complete technology from a single source – from onboarding to reporting. Our clients and we are firmly convinced that this is the only way to achieve true digitalisation. Otherwise, it remains a piecemeal approach with many interfaces.
