Digital Wealth: Santander using SigFig to launch roboadvisor PathFinder
Meanwhile, BlackRock sells FutureAdvisor's retail business and Allfunds does not get acquired by Euronext
Hi Fintech Futurists —
Happy Thursday! Today we highlight the following —
NORTH AMERICA: Santander Bank Enlists SigFig For Digital Investment Tools
NORTH AMERICA: Riskalyze Partners With Opto Investments To Expand Access To Private Market Investment Solutions
EMEA: Wealthtech Huddlestock Acquires Dtech & Huddlestock Receives Ownership Approval For The Acquisition Of Trac Services
GEOGRAPHIC NEWS CURATION
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Digital Wealth Short Takes
⭐🇺🇸 Santander Bank Enlists SigFig For Digital Investment Tools
Santander Bank NA has partnered with SigFig, whose wealth management platform serves 70MM+ users, to launch Santander PathFinder, a roboadvisor tool for Santander Investment Services.
The bank is focusing on adding digital and automation capabilities, while trying to stay connected to a personalized approach to financial planning. We know that HNW customers prefer hybrid channels, combining a digital and human experience. The advisor experience will also be integrated into a platform to view client investments, and connect with financial advisors.
This is a fairly conservative approach to roboadvice, well established by Betterment and Wealthfront — each sitting at around $35B in AUM today. Santander’s offering auto reviews and balances portfolios comprising ETFs tailored to customers' risk preferences, there’s a minimum of $2,000 to get started, and the annual fee is 50 basis points.
The rapid rise in interest rates drove the values of future cash flows downwards, resulting in poor equities performance of low-profit, high-growth companies. Asset allocations that were positioned overweight in such exposure suffered, as you can see in the rankings above (i.e., Performance category). Yet by now, most major banks and brokers have launched a digital or hybrid advice offering, while simultaneously closing physical branches.
US bank branch closures reached a new record high of 2,927 in 2021, rising by 40% year-on-year. In the UK in February, the leaders of Barclays, HSBC, Lloyds and Natwest assembled for a meeting in the UK parliament, in response to the fact that the banks shut down 5,000 locations in eight years. The rise of neobanks and digital investing has unfortunately led to a financial access issue for more vulnerable, lower income populations. But you’re already uploaded to the Metaverse, right?
⭐🇺🇸 Riskalyze Partners With Opto Investments To Expand Access To Private Market Investment Solutions
Opto Investments, a platform connecting independent investment advisors with access to the private markets, is partnering with wealthtech Riskalyze. Opto holds a $475MM valuation as of last September, while data available for Riskalyze shows total funding of $23.7MM and a $300MM valuation as of 2021 (when a majority stake of the business was sold to Hg Capital).
We previously covered the emergence of Opto and its growing client base of 80+ RIAs as it entered a space dominated by larger alt-tech incumbents such as iCapital, which has $135B in assets across 1,300+ RIAs. Opto benefits from notable venture backing from the likes of 8VC, Tiger Global, and MSD Capital.
Riskalyze, founded in 2011, is known for its novel method of using the Prospect Theory to assign a “Risk Number” to identify a client’s risk tolerance and align portfolio expectations with investments that suit their risk profile. This feature, along with others (advisor marketing, compliance, benchmarking, etc.), has enabled them to scale to 1,500+ clients.
Product innovation among players in the alt space is promising, but has a way to go. Historically, the asset class focused on large institutional investors, and did not focus on distribution and marketing infrastructure to reach smaller clients. Emerging platforms like iCapital or Moonfare demonstrate that low-cost access to more types of alternative investments through digital distribution is an attractive proposition for digital investors. The Riskalyze and Opto partnership is another symptom — clients and advisors increasingly seek alternative ways to diversify outside of traditional equity/fixed-income allocations.
👑Related Coverage👑
⭐🇳🇴 Wealthtech Huddlestock Acquires Dtech & Huddlestock Receives Ownership Approval For The Acquisition Of Trac Services
Huddlestock, Norway's first fintech company to be publicly traded and a new name to us, has agreed to acquire Dtech, a Norwegian software company for portfolio management and fund order technology for the pension market. The acquisition of Dtech is an all-share transaction, with earn-outs if revenue targets are met. Moreover, Huddlestock has just received approval for the all-share acquisition of Trac Services, which serves 12,000 end clients and $380MM in assets, providing Huddlestock with Trac's regulatory brokerage license and ability to settle various assets.
Thereafter Huddlestock offers: (1) a wealth management platform with access to portfolio creation, alternative data sets, and back-office and reporting tools; (2) a trading platform of stocks, ETFs, and funds, which can be integrated via APIs; (3) technology integration support for legacy systems using cloud-based solutions, and (4) business analysis, software design, development and project management consulting.
The acquisition of Trac makes Huddlestock one of the few European players in providing brokerage-as-a-service. Dtech, on the other hand, is a software-as-a-service model focused on pensions, serving 73,000 individual pension schemes for 6,000 corporate customers.
Whether this company can be a large regional champion remains to be seen. We are generally supportive of scaled companies, like FNZ or ENV, doing meaningful acquisitions across the industry to enhance their product suite. In this case, the component parts are still all small, so it may be difficult to grow and expand each one to market at the same time. Thinking of them as acquihires with equity maybe is more appropriate.
Curated News
North America News
🇺🇸 BlackRock Sells FutureAdvisor's Direct-To-Consumer Business To Ritholtz - WealthManagement.com, February 28, New York
🇺🇸 RealBlocks Launches $1B Liquidity Solution For Alternative Investment Funds - Businesswire, February 23, New York
🇺🇸 Assetco And Westwood Partner With Investcloud On Innovative Asset Management Distribution Solution - Businesswire, March 1, California
🇺🇸 Clearlake And Motive-Backed Software Platform BetaNXT Expands Capabilities, Growth Opportunities With Acquisition Of Mediant Communications - Businesswire, March 1, New York
🇺🇸U.S. Bancorp Invests In Digital Assets Fintech, Ownera - TMCnet, March 2, Minnesota
EMEA News
⭐🇳🇱 Euronext Pulls $5.8B Offer To Buy Allfunds - Reuters, March 1, Amsterdam
🇰🇪EFG Hermes Kenya Launches Digital End-To-End Registration Of New Trading Accounts - Kenya, February 27
Asia Pacific News
⭐🇵🇭 UNIONBANK: Blazing Digital Trails In The Philippines And Beyond - International Banker, March 2
🇭🇰 Aspen Digital Launches Inaugural Web 3 Investment Summit for Traditional Private Wealth Investors - Asiaone, February 28
Blogs, Webinars, Podcasts
🇺🇸 RIA M&A Set Another Record In 2022 - Investopedia, February 28, New York
🇬🇧 Europe Finally Serious About Growing ETF Market - ETF Stream, March 1, London
🇬🇧 Dealmaking Jumps As PE Drives Wealth-Management Consolidation - PitchBook, March 1, London
🇸🇬 Wealthtechs Win By Managing Wealth And Not The Wealthy - Singapore Business, February 28, Singapore
Events & Reports
🇺🇸 Envestnet Summit 2023 Elevate - Envestnet, April 26 - 27, Colorado
🇺🇸 Wealth Management Edge - Informa Connect, May 21 - 24, Florida
🇺🇸 Finovate Spring - Informa Connect, May 23 - 25, California
🇬🇧Private Banking & Wealth Management London Conference & Awards 2023 - Arena International, June 14, London
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