Fincite introduces advisory board members

Advisory Board Members

senior executives form a four-person committee

 

Fincite started to bring the investment processes of established financial institutions into a new, digital age. In order to build on the successes of the past five years, the Frankfurt-based software provider has now presented its new advisory board.

Katja Lammert, Dietrich Voigtländer, Franz Josef Nick, and Peter Schwicht are experienced top managers who previously held leading positions in established financial institutions: Lammert as COO & General Counsel of Bayern-Invest, Voigtländer as COO of DZ Bank and then CEO of WestLB, Nick as CEO of Targobank and now GM of C24 Bank, and Schwicht as CEO of JP Morgan Asset Management EMEA

Fincite | Board of Advisory
From left to right: Dietrich Voigtländer, Katja Lammert, Peter Schwicht, Franz Josef Nick

“I am very pleased to continue to support Fincite in the further development of the company and to assist the founders on strategic matters,” says Schwicht, who also acts as advisory board spokesman and has been advising the founders for several years.

Fincite benefits from the recently appointed advisory board on several levels. On one hand, long-standing experience at C-level can be directly incorporated into product development and on the other hand, the company gains a new perspective on questions regarding internal bank processes, such as ensuring compliance requirements.

“The advisory board represents different customer segments and helps us to understand our customers even better,” said Ralf Heim founder and Co-CEO, Fincite. In addition to new challenger banks, private banks, and asset managers, the software provider’s customer segment primarily includes international banks. Here Fincite wants to invest significantly, especially in the European market. Thanks to the strong network of the advisory board members, the company founders are looking forward to continued positive business development.

With Fincite.CIOS, financial institutions can aggregate, analyze, and optimize the entire assets of their customers and thus offer customers better advice – from hybrid to fully digital. Up to now, this service is only offered to high-net-worth customers. CIOS optimizes these processes so that investment advice becomes affordable and beneficial again.

“Over the last three years, we have seen a significant effort in the market for digitization. As the advisory board, it is our mission to advise Fincite in the long term, to generate impulses and thus ensure an optimal product-market fit” Schwicht says.

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Digital conversion from wealthy savers to first-time investors

everyoneINVESTED Fincite

everyoneINVESTED is the wealth tech spin-off of KBC, offering omnichannel investment journeys for life that bridge the digital distance between your clients and your investment solutions. everyoneINVESTED partners with Fincite for mobile integrations. This article introduces two such integrations that lift net sales of digital investments to higher levels.

A silver lining of COVID-19 is that COVID-19 gave society, in general, a digital boost. Yet, investments continue to be the least digitized financial product. Conversion rates of a digitized investment process fall way below the conversion rates at a branch. How then can we improve digital conversion? How can we lever the expanded reach of digitization to approach for example the many banking clients that do not yet hold any investment? Let’s look at two aspects of this challenge: end-to-end digitization and addressing first-time investors.

The digitization of investments in many cases restricts to automating the processes we know. But it takes more to engage investors digitally. The challenge is to preserve the human touch and take care of the emotional component of investing. Conversion rates substantially improve when powering your process with behavioral finance findings, the key expertise of everyoneINVESTED.

Use case: The API toolkit of everyoneINVESTED includes The Profiler, a solution that replaces and improves the questionnaire for risk profiling. Pushing the questionnaire on the screen of a smartphone is known to kill conversion, apart from its poor ability to anticipate future investor behavior. The Profiler is “fun”, which contributes to its high conversion, and crucially improves the mapping of investor preferences very much in line with regulatory suitability consultations. The Profiler is operational and has been living up to the expectations indeed.

 

Addressing wealthy savers, hence clients that do not hold any investment requires a particular mindset and vocabulary. Those clients are not interested in hearing a story on diversification, preservation of purchasing power, or bonds versus equity. Presenting the same situation from a different perspective, which is crucially their perspective, makes a big difference in the decision- making.

Use case: The API toolkit of everyoneINVESTED includes The Conversion Engine, a solution that turns your mobile banking app into a digital conversion engine. The API literally converts savers into first-time investors. The solution seamlessly integrates into your process. The API takes as input pseudonymized client-specific financial data. The API presents you on a golden plate the order request for a first investment, ready for execution.

 

by Jurgen Vandenbroucke,  managing director at everyoneINVESTED
Contact: jurgen@everyoneinvested.com

 

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How a customer-centric reporting can increase your customer engagement.

Ralf Heim on customer-centric reporting

Within the financial industry there are two major statements you might have heard before: “Financial products are sold, not bought” and “When the product is sold, the best customer is the one who never calls.”

After the deal is made, the focus shifts to the next customer. The customer who just invested is left with access to his/her deposit and a mediocre reporting. As a result customers often feel left alone. Left on their own to find out if the investment was the right decision or not. This results in unhappiness, reluctance to further investments, and sometimes even churn.

Given this: Why is investment reporting today still often seen as a “regulatory burden”? And how can it become a customer experience that is as delightful as the ones we know and love from other industries? Can a better engagement increase the investors’ confidence? And finally: How might this affect the economics and the strategic position of the financial institution? Let’s take a look together.

 

Personal Finance Apps have shown the power of customer engagement

Why should a financial institution worry about customer engagement?
Let’s take a look at personal finance apps. With open banking, they gained more relevance and users in the recent years.
Today, I use a personal finance app (in my case it is Finanzguru) to oversee my 4 cash and 2 portfolio accounts in one seamless experience.
And my bank? I rarely log into my mobile banking apps or my online banking. My engagement with my banks went down to almost zero. The personal finance app became my “place to go” for checking at my bank account. In other words, my bank went from my “financial home” to an “account infrastructure”. But what about the investment industry?


3 steps how Reporting can become a “financial home” for investors

What will a “financial home” for investors look like? Similar to personal finance apps, the financial home for investors is the place where I have a 360° view on my full portfolio and all my assets matched with my personal goals and supported by helpful insights.

This does not sound like what the reporting institutions offer today.

Portfolio or deposit reportings don´t engage with the customers. It is often reduced for displaying the past performance for each investment product, I have within this single deposit. We call this product-centric reporting.

The 2nd level of reporting maturity is a portfolio-centric reporting. This aggregates all products the customer has within this deposit with comprehensive analytics around the allocation, potential cluster risks, the sustainability of investments (ESG), and much more.

An excellent reporting creates valuable insights based upon a 360° view of the customer covering all his/her accounts (also at 3rd party banks) and his/her assets (e.g. real estates) and matches this with personal goals and financial plans. This is what we call a customer-centric reporting. A customer-centric reporting can become the financial home to the investor. 

 

It’s not just the customer who benefits

For a financial institution, reporting can be a means to increase customer satisfaction, unveil upselling potentials, or see where churn occurs and offer options to prevent it. It is crucial to highlight it again; great reporting is about customer engagement! It’s about building bridges between the customer, the advisor, and the portfolio.

In the long run, this will help to “remain” engagement with your customers. It might prevent them to start using 3rd party tools to understand their investments. It might prevent your relationship to follow the path that we saw with personal finance apps: From Home to Infrastructure.

 

But where to start?

Using the reporting as a starting point for your journey to engage with your customer, allows you to build your relationship starting from where he/she spends his time today: Within your Reporting.

It does not need to take much effort to incorporate existing data and existing products into a superior experience. Building a portfolio-centric reporting on top of your existing data might take just take a couple of months. And it can be a better starting point to improve your experience and engagement with your existing customers than investing all the budget into offering the next Robo Advisor.

Let’s improve the investment experience for the customers.

Let’s start to engage with investors!

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KBC spin-off everyoneINVESTED and German Fintech Fincite partner to digitize investing.

everyoneINVESTED

 

Digital add-ons to be launched in European markets to improve the efficiency of end-to-end digital investment processes of financial service providers.

– Leveraging technology to go beyond the status quo
– Address the main obstacle of investors: the fear of loss
– Strong partnership: Fincite provides technology & everyoneINVESTED
brings know-how and research experience

In times when financial markets are under pressure, converting retail clients from “banking only” into first-time investors is as challenging as important for every institution. KBC´s spin-off everyoneINVESTED addresses this hurdle with its unique approach of a behavioral investment service. “Our technology wraps know-how with proven business value into digital add-ons to the benefit of other financial institutions.  As stated in our company name, we contribute to a world where everyone invests.” Jurgen Vandenbroucke, former head of innovation at KBC Asset Management and now leading everyoneINVESTED, points out.

 

Turning banking clients into first-time investors

For many banking clients, the main obstacle for investments is the fear of loss. But simply digitizing the banking sales process doesn’t address the client´s concerns. Investing is an emotional process, which explains why digital conversion rates are way below those of a physical branch. The answer is a behavioral investment service that tackles these concerns in a digital customer journey.

everyoneINVESTED combines behavioral insights, sound academic underpinning and financial expertise. With these investment add-ons, financial institutions increase the recruitment, retention, and rejuvenation of their clients. The service can be implemented as an add-on into existing customer journeys and banking applications, separately or in combination, to form unique tailor-made solutions. “With the implementation of our services, financial institutions upgrade their current business model to boost sales conversion and retention. For the integration of our addons in the digital process of financial institutions, we are glad to have the tech experts from Fincite as our preferred partner” Vandenbroucke points out.

 

Combining strength: German Fintech and Belgian Investment Service

With a proven track record among KBC’s retail clients, everyoneINVESTED now brings its services to the European market. “That is where we come into play,” says Ralf Heim, Co-Founder and CEO of Fincite, one of Germany´s fastest-growing Fintech companies. The German investment software provider integrates everyoneINVESTED solutions and supports market expansion. “Their unique investment approach and experience has immediately inspired us and we are proud to bring this new service to other European markets” Heim explains. The company’s core software product Fincite.CIOS is a composable software suite that aggregates, analyzes and optimizes the whole financial situation of a client. This unique approach helps financial institutions, wealth managers and insurers to get a better understanding of their client’s financials needs and eases the sales process for their internal advisors. Fincite’s technological know-how combined with the proven track-record of everyoneINVESTED creates a unique value proposition for financial institutions to tackle the key challenge of client conversion.

 

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How to win clients for digital banking solutions: put the client’s interests first!

Fintech on Fridays

Increase simplicity for the advisor and the client by efficiently managing complexity in the backend! 

We live in an overwhelming world, especially so for banking clients. Every day new apps and opportunities advise on how to invest your money or on how to improve your finances. Despite all that, financial education is still at a low point and people don’t like to think about their finances. Under such circumstances how do you stand out and engage with clients while offering them what they need? 


Focus on 
offering the best experience and not on having many functionalities

It seems that among some financial institutions “more is always better” is still a widely spread notionOffering an abundance of functionalities in offline branches, appsor online banking portals does not help established players win new clients. Neither does having every conceivable app or participating in the latest tech trendMoreover, pushing funds, insurances, or other investment products does not inspire anyone to buy. It is just an attempt to scream the loudest. Competing based on product features, price, or marketing budget won’t get them far either 

What clients want is a solution. Instead of focusing on what productsbanks happen to have and trying to convince clients that they have a problemfinding a solution is keyEverybody likes to discover new solutionsso the clients should discover how a financial institution can help them with their concerns. 

Let’s play through an example: You aim to offer retirement investment product. One option is to tell your clients that they are going to need more money for early retirementFor this, your clients have to go through a lengthy questionnaire, bank statements, and masses of documents. And in the end, they find out that they won’t have enough money and should buy product XYZ. Not very exciting. 

How about using technology? By doing so, your client can add current accounts, investment portfolios and real assets (like real estate), all via API and done automatically by smart softwareAfter this process, you can indicate the potential retirement gap in a simple number: the probability of reaching the retirement goal. If that number is low, you offer to take care of this and let the client invest without much fuss. Over time you keep the client updated by showing how the probability changes according to market movements, saving habits and other factors. The client doesn’t care about the backend product as long as that probability goes up. To clients, it is important that their needs are your top priority, not the product.


Seamless integration and Simplicity

To achieve seamless integration and to build a simple application that is both fun and efficient to use, I want to propose a motto: Manage the complexity, so your client can enjoy simplicity. 

A single probability score relies on a lot of complexityTo be precise, here are some examples: Connecting the different APIs to information providers, checking markets and calculating the probability, keeping an eye on account transactions checking if there are any changes for the client. Amid all these complexities, it is essential to pay attention to the integration between accounts, your backend, the frontend systems, and the investment product. Only through handling the complexity for your clients, you can win them over.  potential client that has to jump through countless hoops to connect the problem (e.g. retirement gap) to a solution (e.g. your investment product) won’t become a client.  

The same applies to different functions that try to give your clients a better understanding of their financials. When client has to use 5 different apps in order to get a view of all assetsthose apps won’t be used at all. Everything needs to be seamlessly integrated:

Wealth aggregation that gets connected to financial planning.  

● Current account analysis that automatically leads to the retirement gap.  

● The retirement gap that can be filled automatically with the right investment product.  

● Progress report based on the product’s development and current account status.  

● The better integrated all these functionalities are, the better a client perceives your offering.  

To sum it up: Make sure to offer smart features, but not only for the sake of having them, rather have a simple and coherent process. Have a strategy on how to integrate new features into a compelling customer journey that seamlessly leads from one offering to the next. This will let your clients perceive taking control of their finances as easy because they will have trust in you to handle the complexity.

See how simplicity can grow out of complexity:

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Fintech 2020 – What You Should Know!

Ralf Heim Fintech 2020 Fincite

 

How will the Fintech year 2020 be? What major events happened in 2019 and still have an impact today? Which new developments can you expect this year?

In his evaluation, Ralf Heim, co-founder and managing director of Fincite and Fincite Ventures, provides you with a first overview of the most critical topics in 2020.

 

 

Ralf, the Fintech market in 2019 was characterized by acquisitions, new challengers and, of course, new records. What progress, do you think, did digitalization in the financial sector make in 2019?

At the beginning of 2019, many people named AI as the topic of the year. It has become a strategical and a trendy topic for financial service providers. However, in the operational areas of the business, the problems are quite different.

For example, in the investment sector, topics such as MIFID2, digitalization and automation of consulting, asset management (including Hybrid Robo Advice), and open banking dominated the roadmaps of the financial service providers.

Among the advancements in business in 2019, banks’ internal interfaces are worth mentioning. As a software provider, we at Fincite are increasingly encountering more modern interfaces to core banking, portfolio management, or CRM systems.

Such modern improvements in interfaces shorten the implementation cycles of innovative solutions. Also, many banks have made significant progress in UX.

N26, Revolut and Co., all these B2C start-ups with impressive international growth figures, show that time is running out for traditional banks.

 

Since you have already given us the first names, which financial technology providers or offers really impressed you in 2019?

The Neobanks have shown that international growth in banking is possible with low customer acquisition costs. That seemed impossible for a long time but besides these banks, I would also like to mention Finanzguru. 

In a year in which PSD2 accelerated the open banking movement in Germany, over 500,000 users of the Finanzguru app spoke for themselves and they made one thing clear: Customers want open banking! This kind of interest will certainly continue to grow if intelligent suggestions increase the added value of linking accounts and security accounts. In that respect, I am very excited about 2020.

Other than that, I was also impressed by a start-up outside the Fintech sector: Celonis has shown that with Process Mining it is possible to build a potential global software market leader from Germany by analyzing data, creating intelligence insights and with a simple UX. 

 

So far, so good, and what do you think, which Fintech trends will be significant in 2020?

Topics such as Blockchain, AI, Virtual Reality, and Voice, are listed by most analysts, but I believe that even in 2020 we will still have lab-status rather than a real breakthrough in the core business of those areas. 

I believe that three “buzzwords” of the last three years will make the difference in 2020 though:

1. Open Banking will be combined with valuable insights and will increase its importance for the customer and the bank (and its management). In addition, Open Banking will increasingly become a starting point for the advisory process.

2. Customer intelligence in core processes – By applying simple rules and learning procedures, banks will run initial tests to generate customer-specific recommendations or sales impulses.

While everyone in the world is already using A/B testing in online dialogues, I am looking forward to the first bank to optimize its advisory or asset management process with A/B testing. These kinds of rules and optimizations are the bases before starting any big AI projects.

3. Automation: The systems used in asset management and advisory processes are becoming more and more interconnected and thus more open for automatization.

While these buzzwords sound rather unspectacular, they will shape the future of the banks enormously. On the way to a zero-marginal-cost society, margins in the industry will continue to fall. 

Without improved services and increased efficiency through automated and intelligent processes, it will be harder than before for any bank to pave the way into a successful future.

 

Okay, these trends primarily affect financial institutions in the first place. What innovations in the financial sector can retail customers look forward to?

Retail customers can look forward to services that are more tailored to their personal goals. At the same time, banking products are becoming more intelligent and personal too.

By 2020, for example, I expect the first banks to offer digital, individually tailored investment advice based on open banking data for end customers.

This means that financial advisors will be able to tell their customers when they could retire after looking at their bank accounts, or whether their existing portfolio has a risk/return mix that suits them, or whether their investments are too expensive.

The current “off-the-shelf investment offer” approach is no longer appropriate in a digital age.

In the investment field, access to alternative investment forms will also become easier through personal loan platforms such as Mintos, or private equity platforms such as Moonfare, or the alternative investment platform Ianua, in which we hold a stake at Fincite Ventures.

As an entrepreneur, I am looking forward to a change that allows business customers to get a decent UX at last. Until today I still do not understand why banks do not offer customers much more additional insight into their financial data.

Furthermore, I believe that Fintech services will increasingly reach business clients and institutional investors in 2020. Especially in the institutional sector, there are also many processes that involve huge sums of money, which have, however, been “spared” from digitalization.

 

Thank you for the interview Ralf.

 

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How technology  improves  the client-advisor relationship

Fintech on Fridays

The relationship between financial advisors and their clients is built on trust.  The levels of this trust and reliability are often formed over an extended period and sustained by repeating human interactions as well as a solid understanding of the client’s financial (and often private) circumstances.  

At the same time, the market for financial advice is facing numerous challenges. Rising regulatory and transparency requirements oblige the advisor to engage in time-intensive and often manual tasks. Examples include gathering information on the client’s financial situation and riskbearing capacity or providing suitability reports and advisor protocols. As a result, advisors have less time to build trust in existing relationships or forge new oneswhile the quality of their services simultaneously diminishes. 

In addition, an increasing number of clients, particularly younger generations, demand online access to their investment and a seamless experience with their advisors. The advice itself becomes a key element integrated into a digital, transparent and constantly available service offering. Advisors lacking a digital offering are at risk of not being able to cater to these client requirements. 

Key elements of technological contribution 

In this context, technology acts as an enabler to build trust and enhance service quality & scope: 

1. Trust  Foster trust by increasing transparency over the advice and investment process 

2. Time  Use time savings to focus on the client and improve the quality of service  

3. Insight – Develop a holistic view of the client’s assets in order to provide better, tailor-made advice 

4. Investment efficiency – Improve the risk-return relationship by providing the best products for the client’s financial and risk-bearing capacity 

5. Access – Adapt to “alwayson” clients requirements by providing constant access to investment and advice via online channels 

Dealing with such an important topic as personal finances will likely continue to require human interaction, however, technology is a necessary factor in a hybrid model of financial advice by enabling the advisor to have the time and tools to focus on the human factor. 

Whereas the use of technology in financial advice is still perceived as an added value to achieve a competitive advantage, it will evolve as a prerequisite in every advisor’s service offering. 

Provide a digital client experience  

The use of technology allows the advisor to save time to focus on the client relationship while improving their service to cater to the needs of an increasingly digitalized society. With Fincite CIOSwe have built a modular software that allows advisors to choose specific functionalities from a comprehensive toolset: 

Fincite CIOS

 

From an economic perspective, using these tools allow the advisor to increase revenue per customer by generating net new assets and reduce costs by cutting manual efforts along the value chain. 

 

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Financial Advice 2.0: Inventing super-human advisors

Fintech on Fridays

In a world where technology is ever-changing and regulations ever-increasing, human advice is costly, ineffective, and risky. Robo-Adviceon the other hand, doesn’t resonate with clients on a personal level. Now, what is there to do? Here the Cyborg, the Hybrid-Advice philosophy enters the scene. human advisor with techsupported superpowers. 

The best of both worlds: efficiency with a human touch 

The problem today is, that human-centered advice is more expensive than ever. And clients are reluctant to spend money on itespecially when there are alternative services in the market available free of charge. Regardless of the availability of such services though, customers still have complex needs. And the faster financial markets advance, the more complex those needs get. A demanding regulatory environment for banks and their advisors puts them in an unpleasant spot. So, what is the current quick-fix given these circumstances? Private banks increase the minimum assets required to become a client or they abandon the typical financial advice altogether. Some banks and Fintechs try to disrupt the market for financial advice with Robo services, but with mixed success. What are the main obstacles for both? Robo Advisors lack the human touch and Private Banks are less efficient.  

The answer to this challenge is technology that enables financial advisors to be more efficient in targeting the right clients and giving them personalized proposals. Instead of going through many different lists and investment guidelines (blacklist, recommendation list, etc.), the software handles the process. Instead of checking if the proposal is within the boundaries of the portfolio, or if any client or bank-restrictions are violated, the software can handle that within secondsThe advisor can focus on the needs, wishes, and financial status of the client. You tease out what the client needs, manage the relationship, and the software calculates the right portfolio, the right products, gives you the right story with every possible recommendation and handles all regulatory aspects for you. 

“Humans lack efficiency and Robos lack humanity. Give advisors super-human capabilities by supporting them with software in a hybrid advice model. Give them the power of software efficiency with a human touch 

How to save 10 weeks per year for every advisor

Imagine you offer your advisors a tool that frees up 10 weeks of their time every year. 10 weeks focusing full time on the client. Establishing and caring for better client relationships. Here are practical ideas on how to get there: 

1. Be clear about your investment philosophy and set up a clear investment structure and process that contains:

● Categorization of Risk Profiles (How do you categorize your client’s risk profiles?)
● Risk and Strategy Offerings (What investment strategies or risk levels do you want to offer?)
Mapping of risk profiles and risk levels
Asset Allocations and Time Horizons

2. Set up a regulatory compliant advice journey that includes:

Sufficient Regulatory Information
Regulatory Restrictions

3. Define your investment universe

Set up a set of securities that you wish to use as possible investments for your clients
Include buy/sell/hold recommendations from your research

4. Define bank restrictions on the allocation

Have a blacklist containing, e.g. non-ethical investments
Have certain risk boundaries for asset classes or single investments

5. Give your client and advisor the possibility to include their wishes

Ask if the client wants to limit exposure to an asset class or investment
Ask if the client has a blacklist or darling stocks  

6. Connect for a seamless and efficient process

Integrate the advice software to your core banking system to process orders directly
Automate regulatory reasoning to have a compliant and transparent decision process 

All of these proposals can be configured and extended to your business model.  With our hybrid Advice Softwarefinancial advice gets more reliable and transparent without losing individuality and gives you the edge in a competitive market space.

 

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How Software Can Close the Retirement Gap

Fintech on Fridays

 

Challenges of an aging society and how we can use technology to win the game 

It is one of the most pressing financial concerns for most of us: how do I ensure that my savings are sufficient to maintain my standard of living during retirement? 

Yet this concern remains heavily disregarded by most individuals, particularly in Germany where over 90% of retirees rely mainly on public pension schemes¹Several developments related to our society and its economy, such as the demographic shift in the population towards older generations as well as the sustainably lowinterestrate environment, lead to the unsuitability of public pension to provide sufficient coverage for retirement. 

Raise Awareness

Despite several additional savings products other than public pensions, such as company or private pensions, the main challenge of converting cash assets into suitable investment products remains. 

For most people, the challenge starts with awareness. The majority of future retirees are not even aware of their existing retirement gap. Also for the case of retirement planning, the simple logic prevails: the sooner one is aware of existing retirement gaps and the earlier one starts investing, the higher the expected returns and hence the lower the risk of facing such gapsThe issues resulting from retirement gaps can be severe and may very well result in poverty. Already today, 20% of the German population live in or are at risk of old-age poverty²The issue of existing and widening retirement gaps thus requires urgent attention from both the public and private sectors. The governments in countries like Norway, Sweden, and Denmark have already identified the issue and provided their citizens with the necessary tools to understand their current state of pensions. These tools allow citizens to access a holistic online-view on their earned pension and also supply them with useful forecasts to simulate changes to their pension income. Although there are ongoing government-driven initiatives in Germany, the task of increasing awareness remains with the private sector for nowNevertheless, the subsequent step of closing identified gaps remains.

Provide comprehensive tools 

With our digital solutions, Fincite provides the necessary toolset for users to become aware of existing retirement gaps and derive the right actions to close them. During this process, we not only take into account the user’s existing pensions but additionally consider their aggregated wealth in a holistic view. This might include additional assets, such as real estate, which can significantly impact the financial situation during retirement. By analyzing a user’s current and planned living and financial conditions, our software enables them to determine their required retirement savings and identify existing gaps. A workflow could look as follows: 

1. Understand the client  connect current pensions, cash & investment accounts, real estate, and other assets to develop a 360° view of the client’s wealth 

2. Determine financial needs  develop financial goals for retirement by exploring all incomes and expenses

3. Identify existing retirement gaps  determine existing gaps by comparing the expected returns of current assets with the client’s financial planning

4. Provide suitable products  choose suitable products to close the retirement gap, taking into account the client’s financial and risk-bearing capacity 

5. Keep track – employ algorithms to monitor and realign the investment strategy during the saving and withdrawal period 

With this approach, you’re able to provide your clients with investment solutions to address the most pressing financial concern and at the same time generate useful insight into the client’s state of wealth.  

Find out more about our Financial Planning Software or contact us directly, our experts are happy to help you.

 

  • ¹ Bundesinstitut für Arbeit und Soziales, 2017
  • ² Süddeutsche Zeitung, Artikel „Rentner stärker von Altersarmut betroffen als gedacht“, Februar 2019

 

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ESG Investments – An introduction to sustainable investments

Fintech on Fridays

 

ESG Introduction 

It is a myth to think that sustainable responsible investing is unrewarding and decreases profits  in fact, it is the opposite. The number of investment funds incorporating ESG factors has been growing rapidly and is expected to continue rising. By the year 2021 more than 92% of Asset Owners will implement ESG criteria in their investment screening process. So, what is ESG and why is it becoming highly significant?

 

ESG Definition 

ESG stands for Environmental, Social and Governance, and refers to the three key factors that are a subset of non-financial performance indicators which include ethical, sustainable and corporate governance issues. Here are the factors which ESG addresses: 

● Environmental criteria examine business performances based on natural environment (waste and pollution)

● Social criteria focus on people and relations inside the company (employee relations & diversity)

● Governance criteria look at how a company is governed (e.g. tax strategy)

 

How ESG investment criteria have been established 

ESG caught greater attention in September 2015, when 193 countries adopted 17 measurable (“SDG-Index”) Sustainable Development Goals (SDGs) to build international cooperation and contribute to economic sustainable development. As a result, an agreement was signed in Paris to further strengthen the sustainable belief. According to this Paris agreement which deals with reducing greenhouse-gas-emissions mitigation, each country must determine, plan and regularly report on the contribution that it undertakes to mitigate global warming. In order to meet the ambitious goals of the UN and the Paris agreement, the EU created an action plan to: 

● Include sustainable considerations within financial decision-making

● Enhance transparency for private investors to increase private investments in ESG compliant companies and thus, deliver on ESG targets

 

ESG investment goals within the EU 

That action plan shall enable the EU to hit the following energy targets by 2030: 

● 40% cut in greenhouse gas emissions compared to 1990 levels 

● 27% share of renewables in energy consumption 

● 30% energy savings compared to a business-as-usual scenario

Currently, there is a wake of different KPIs trying to determine which corporations are sustainable. The viable question raised at this point would be on how to enhance transparency on sustainable investments. Thus, one of the main tasks of the European Commission is to implement a unique set of ESG KPIsThe implementation of these KPIs is an ongoing process but established data providers have already calculated ESG scores at quite robust level.

 


ESG 
impact on investment returns

ESG criteria are not only important when measuring the sustainability of investments but they also have a material impact on the returns and long-term risk of portfolios.  Private investments are adopting ESG measurements due to innovations in risk management practices. These innovations create new opportunities for long-term value in business and society. Businesses that adopt ESG standards, therefore, are more conscientious, less risky and more successful in their long-term commercial goals. Nowadays, ESG has become a necessity rather than an experimentThat is why various actors in the investment value chain, including investors, banks, and companies, have been increasing including ESG and sustainability information in their processes. Financial institutions and investors also check companies’ ESG criteria to screen investments and to evaluate the behavior of companies, as well as determining their future financial performance in the market. 

 

The Fincite ESG Software for Financial Institutions

Being aware of these new developments and consistently overlooking the financial markets, we developed a Software Solution making ESG the main element for asset management. We enable investors to analyze existing portfolios according to their ESG compliance or help them to set up an ESG compliant portfolio from scratch – fully automated and utilizing data from established data providers. For more information please visit ESG Investment Software

 

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