Developments with focus on January & February
- CIOS-Engine of the ABN AMRO developed by fincite GmbH allows customers a fully automated and rule-compliant analysis based on individual data for an optimal offer creation. Advantages: efficiency, speed and increased customer satisfaction (presentation: https://youtu.be/earNPAKNJTE).
- Samsung invests together with twelve international companies (among others Allianz, Deutsche Bahn, Daimler, Springer, Bundesdruckerei) to establish the Verimi ecosystem. Such platforms for digital identities will benefit banks and insurance companies in particular in the future.
- Everblue Managent (Family Office of hedge fund manager Eric Mindich) leads Series A Funding of G2 eSports in the amount of USD 17.3 million. Participation in eSports as an extreme future growth market.
- Vontobel’s Robo Advisor Sky will be available as an app, following a hybrid approach to management and allowing for title and theme specific investments. Based on a platform already in use for real-time selection from over 450,000 investment instruments.
- Fintego reduces its fees by 5 basis points. All-in fee is now between 0.3 and 0.9 percent, depending on investment volume.
- Continental and Siemens have successfully implemented a pilot transaction in cooperation with Commerzbank using corda. The reasons: shorter lead times and faster time-to-market. Capital market transactions can thus be carried out more easily, quickly and efficiently. Money and documentation can be exchanged in minutes instead of days.
- Now that BaFin has approved Bitbond’s securities prospectus, more STOs will be placed in Germany in the near future. Previously this seemed unthinkable in the medium term due to the wait-and-see attitude of the BaFin. Bitbond mediates thereby with the partner solarisBank loans to SMEs. The framework for STO investors is: up to 30 % discount depending on the financing round on the investment, basic token price € 1, interest rate of 4 % promised, plus 60 % profit participation for investors. The token is valid for 10 years.
- The fixed money portal Raisin (brand Weltsparen) gets 100 million euros in Series D funding for the purpose of internationalizing the offer and for takeovers. Total funding to date: 170 million, whereas 10 billion euros imparted in fixed-interest products. The largest competitor is Deposit Solutions.
- N26 stops its offer N26-Invest and thus the cooperation with Vaamo for the time being. After Sina of Santander Bank, Vaamo loses another cooperation partner. Vaamo was taken over by the British Robo Advisor Moneyfarm in November 2018.
- With Smavesto, the Bremener Sparkasse complements its offer to address not only the investment advisory service “Bremen Kapital” but also in particular digitally affine customers. Developed by niiio finance group AG; algorithm by GET Capital AG and custodian bank is Baader Bank.
- Insoro is a new Robo Advisor from Cologne, which relies on modular investment consulting as a Software as a Service solution (provider: https://www.insoro.de). Insoro does not manage client assets and does not have a corresponding license.
Other current Developments
- Liechtenstein intends to enact a blockchain law in 2019 to regulate crypto currencies, Initial Coin Offerings and the token economy as a whole. This law will create legal certainty for companies and predestine Liechtenstein as a prime location for such projects.
- Together with the Federal Ministry of Justice, the Federal Ministry of Finance has published a key issues paper discussing electronic securities and crypto tokens. Measures should strengthen Germany as a digitization and FinTech location (Key issues paper: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Internationales_Finanzmarkt /2019–03–08-eckpunktelelektronische-wertpapiere.pdf?__blob=publicationFile&v=2).
- In relation to FinTech’s increased investments in PropTech’s (example: Deutsche Bank invests millions in PropTech house gold).
- First Crypto-Exchanges for Security Token.
- In 2018, 254 billion euros were invested worldwide as venture capital in start-ups. This is a plus of about 50 % in the
Comparison with the 174 billion euros in 2017.
- Competition among Robo Advisors is intensifying: new providers (insoro, Smavesto), funding and acquisitions from abroad (Blackrock, Moneyfarm), more cooperations (such as between Fidelity and Daimler, or growney and Signal Iduna), first consolidations (Werthstein, N26 Invest, Sina), reduction of minimum investment amount necessary (Quirion), premiums (Robin — Deutsche Bank), fee reductions (fintego) and stronger expansion of USP through green, themed or gender-specific options and in general a higher degree of individualization.
Trends in Asset Management & Robo Advisory
- Sustainable investments as a trend, but a confusing range of products and services as well as a lack of uniform standards. 46 % of people in Germany consider sustainable financial products attractive according to an Union Investment survey, but according to an NKI survey only 4.8 % take such criteria into account when investing. There are various indices, seals and ratings in this area. The EU Commission commissioned a group of experts for analyzing a possible European standard for green bonds and its regulation.
- eSports as an investment opportunity with generally high expected growth rates.
- Use of AIs to manage the data pool, market monitoring and processing.
of data (example: analysis of legal documents).
- Trend: Robo Advisors try to differentiate themselves more clearly in competition. In current offers the range of counseling services is often expanded to include more individualized, more value, group or theme strategies. In particular, these refer to women, children, sustainability or megatrends.
- In relation to FinTech’s increased investments in ProTechs (example: Deutsche Bank investing millions in PropTech HAUSGOLD).
- Various so-called crypto funds have already specialized in cryptoassets (coins and tokens) and enable a systematic investment in these. Although the trend has slowed down due to the relative weakness of crypto currencies in the past year, corresponding funds will remain highly relevant in the future. Approach examples:
- Blockwall Capital I — Investment in Layer-1 Protocols
2. Crypto Vario Fond — Coins and Token
3. Tobam Bitcoin Fund — Bitcoin
4. Bitreal Real Estate Blockchain Opportunity — 75 % commercial properties & 25 % coins and tokens
- Trend: Funds and VCs are increasingly investing in coins and tokens and in STOs in particular.
- Based on its own crypto index cdx, Coindex will be the first German Robo Advisor to offer a systematic investment in crypto currencies. This eliminates the need for the investor to deal with the specific portfolio composition and the cumbersome trading of the various positions via different trading venues. Custody takes place by Coindex until the portfolio is dissolved.
- Last year, the Robo Advisor Quirion was able to increase the number of its customers by 110%, whereby the currently managed assets amount to approximately 160 million euros.
- Trend: More and More PropTechs arise that aim to tokenize real estate projects or make use of DLT to increase the degree of functions and services in such projects. Some examples of this are (addition function in parathesis):
1. SWINCA — Investment tokens (debit card connection, participation in rental income, memberships, combination with SWINCA Bank for additional financial products and services);
2. Elements Estates — Investment tokens (held properties can be rented from token holders, payment card, real estate services related to smart contracts, loan facility for acquisition of fund assets).
- Vantik establishes a digital and mobile form of retirement provision with a focus on the younger generation. It is characterized by a maximum of flexibility. Thus the account can be created within minutes, saving starting from 1 euro without minimum running times as well as the option of depositing the money at any time. The money is invested in the Vantik Fund and thus in about 7,000 companies worldwide, whereby the risk is reduced by a security buffer.
- The market for Robo Advisory in 2018 was characterised by numerous new providers and cooperations, with assets under management increasing significantly.
Trends in Technology
- After VideoIdent now also more and more AutoIdent providers for KYC testing on the market. AutoIdent allows the automatic verification of uploaded documents by algorithms and can thus improve efficiency and the customer experience as well as reduce the costs of the verification. The AutoIdent provider is usually connected via a REST API.
- Specialized Crypto Forensics providers are currently establishing themselves to track historical Crypto Currency transactions. Traceability allows criminal origins to be traced and AML regulations to be fulfilled.
- Improvement of the AML & KYC checking by Blockchain (error rate on AML messages were about 95 % to this point).
- In addition, offers of platforms with modular and integrated offerings, for example for the creation of digital identities and simultaneous AML & KYC verification etc. like for example IdentityMind (USA).
- Trend: Use of Smart Home devices for portfolio management (Example: Aixigos API allows verbal on-demand request information on the portfolio as well as market and news, for example by using Amazon’s Alexa. Large amounts of data are condensed and refined so that detailed analyses and regular portfolio reporting are available at all levels (presentation: https://youtu.be/N73JW5odRk8).
- Crypto ATMs are becoming more and more popular. At the end of 2018 there were 4,000 Two-Way Bitcoin ATMs. The current market volume in this area is USD 16.3 million, but is expected to grow to USD 144 million by 2023 (CAGR 55.7%). In the USA, more than 100,000 regular ATMs operated by Genmega also allow the purchase of Bitcoin
- Chatbots are increasingly being used, particularly because of advances in the use of artificial intelligence. They can lead to large savings and improve accessibility and information availability for customers. However, current chatbots still have a number of shortcomings. For example, they do not recognise irony, have difficulty interpreting emotional states and have problems with multilingualism. In addition, the models underlying the bots limit application and require extensive and ongoing “training” to accommodate new situations and contexts.
- Various crypto indices already exist, although there is currently only a relatively small number that can be described as scientific. These do not only include the market capitalization, but also establish various rules and characteristics with regard to the valuation and inclusion of the coins. The following examples are given with links to performance and composition:
- F5 Crypto Index (Germany) — https://f5crypto.com/de/f5-krypto-index/
2. cdx (Germany) — https://www.coindex.de/cdx
3. Coinbase Index — https://am.coinbase.com/index
4. CCI 30 — https://cci30.com
- The FinTech Bitwala offers a regular bank account (with debit card) with a connected Crypto-Wallet. For example, a conversion into Bitcoins is possible, whereby the transactions of the Bitcoin provider are checked for AML. At the end of December, 40,000 people were on the waiting list for the product. The project will be financed by an STO, with the aim of raising 15 to 75 million euros through the issuance of profit participation rights. 1 million euros of Bitcoin have already been traded in the past two months. The waiting list has already been served.
- Trend: Decrease in the number of ICOs in favour of an increase in the number of STOs (number of STOs with stronger growth rates).
- Trend: Tokenisation of assets and funding through STOs — such as real estate, company shares, fund shares or art etc.
- A construction financing can be done technologically fully digital over all process phases by different solutions.
About micobo GmbH
micobo GmbH is a leading European software company for security token offerings and blockchain software development. micobo offers fully compliant software solutions for security token offerings and advises on the structuring of DLT- and blockchain-based securities.
Kai Lorberg is a consultant at micobo GmbH. You can reach him by e-mail (email@example.com)