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Fintechs in the wealth management sector, such as Betterment and Scalable Capital, have achieved success by using proprietary algorithms and automation to slash the cost of these services and offer them to previously underserved groups. This has pushed incumbents — including HSBC and Santander — to roll out their own digital wealth management offerings as they seek to tap into the demand catered to by their tech-savvy competitors.
While some are developing these solutions in-house, others are forming strategic partnerships with specialist fintechs to roll out such services. The partnership between Dutch banking giant ING’s German subsidiary ING-DiBa and Scalable Capital is an example of the latter. To understand why these two partnered and the benefits the collaboration offered, Business Insider Intelligence spoke to Erik Podzuweit, founder and chief executive of Scalable Capital, and Simon Miller, UK CEO of Scalable Capital.
Challenge: ING-DiBa wanted to bolster its limited product offerings with investment services. Although ING-DiBa has a sizable customer base — 9 million — its offerings were limited to core retail banking services. It wanted to add wealth management to provide its customers with more options, Podzuweit said. This point was also made by ING-DiBa’s CEO Nick Jue in the press release announcing the collaboration. Scalable Capital, meanwhile, wants to become a leading pan-European wealth manager, and needed to accelerate its customer acquisition, according to Miller.
Strategy: The partnership allows ING-DiBa’s customers to invest with Scalable through the bank’s app. Interested customers are able to register and invest within 15 minutes, and the process is entirely paperless. Initial onboarding takes place through the bank’s app, and then client journeys are passed on to Scalable. In this way, ING-DiBa handles certain administrative elements — including the initial customer identity verification — while Scalable handles the asset management. The service is not a white-label offering, but rather a cobranding [...]