Swiss Financial Center and Fintech CFA Switzerland – November 2015
Christine Schmid, Head Global Equity and Credit Research
[email protected] +41 44 334 56 43
Switzerland in an international context: Low rates for longer
Source: guardian.co.uk, breitbart.com, zeit.de, theolivepress.es, faz.net, federalreserve.gov, boj.or.jp
Global Macro View Summary Economy – EM slow growth or recession, Europe slight recovery, US domestic led – Solid growth in the US and (slow) normalization of inflation – Eurozone with slow recovery, but Greece unsolved – Mixed outlook for emerging markets – Uncertainties surrounding China, recession in Brazil
Monetary policy and interest rates: At its limit – First US rate hike expected 2016 – Bank of England to follow with delay – Japan remains extremely expansive – EZB to do QE for longer – SNB decides upon negative interest for long time
November 2015
2
Manufacturing Sector Sentiment Time for global recovery?
Last data point: 27.10.2015
Source: Bloomberg, Credit Suisse / IDC November 2015
3
BRIC countries PMI manufacturing new orders Disappointing stars Index
Values above 50 indicate increasing economic activity
80
70
60
50
40
30
20 Jan 06
Jan 07
Jan 08
Jan 09
Jan 10 Russia
Last data point: 30.09.2015
Jan 11 India
China
Jan 12
Jan 13
Jan 14
Jan 15
Brazil Source: Bloomberg, Datastream, PMIPremium, Credit Suisse / IDC November 2015
4
Worldwide government debt as % of GDP (IMF estimations) Emerging markets still at a low level < 10% 10% … 25% 25% ... 40% 40% … 55% 55% … 70% 70% …85% 85% … 100% > 100%
Last data point: 27.10.2015
Source: IMF, Datastream, Credit Suisse / IDC November 2015
5
Low inflation risks, rather the opposite High stability in developed countries % YoY 10 8 6 4 2 0 -2 -4 1997
1999
2001 USA
Last data point: 15.09.2015
2003 Japan
2005 Eurozone
2007 Germany
2009
2011 China
2013
2015
Zero inflation Source: Datastream, Credit Suisse / IDC November 2015
6
US: Labor market improves continuously Jobless claims in survey week vs. nonfarm payrolls 1'000s
1'000s 600
0
hires vs job cuts
400
100
200
200
0 300 -200 400 -400
jobless claims
-600
500
-800
600
-1000
700
2007
Last data point: 26.10.2015
2008
2009 Payrolls
2010
2011 2012 2013 2014 Initial jobless claims in survey week (rhs, inverted)
2015
Source: Datastream, Credit Suisse / IDC November 2015
7
Currencies: Dollar-strength expected to continue USD exchange rates to major currencies (2 years rolling) 135 130 125 120 115 110 105 100 95 90 Oct 13
Last data point: 26.10.2015
Feb 14
Jun 14 USD/EUR
Oct 14 Feb 15 Jun 15 USD/JPY USD/CHF USD/GBP
Oct 15
Source: Datastream, Credit Suisse / IDC November 2015
8
Emerging markets: Brazil's economy hit by recession Index
QoQ change (in %) 4
62
2
56
0
50
-2
44
-4
38
2008
2009
2010
2011
Brazil GDP Growth (lhs) Last data point: 30.09.2015
2012 Brazil PMI
2013
2014
2015
Brazil Services PMI Source: Bloomberg, Credit Suisse / IDC November 2015
9
China: Recent stock market crash Not for the first time ... 000'S 30
25
20
15
10
5 Jan 05
Jan 06
Jan 07
Last data point: 26.10.2015
Jan 08
Jan 09
Jan 10
Jan 11
Jan 12
Jan 13
Jan 14
Jan 15
Source: Bloomberg, Credit Suisse / IDC November 2015
10
Europe: Continental Europe GDP growth Back to the positive side Real GDP growth (QoQ, %) 1.0
0.5
0
-0.5
-1.0
-1.5 Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Germany
Q4 2012
France
Q1 2013 Spain
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Italy Source: Datastream, Credit Suisse / IDC November 2015
11
Europe: Unemployment Rates Sustainable recovery in southern Europe? % 30
25
20
15
10
5
0 Jan 95
Jan 97
Jan 99
Jan 01
Eurozone Last data point: 15.08.2015
Jan 03 Germany
Jan 05
Jan 07
Jan 09
France
Italy
Spain
Jan 11
Jan 13
Jan 15
Greece Source: Datastream, Credit Suisse / IDC November 2015
12
Europe: Private consumption loosing steam % YoY, 3 month average 5.0
Index, Level
0 2.5 -10
0.0 -20
-2.5
-30
-5.0 1996
-40 1998
Last data point: 15.10.2015
2000
2002 2004 Retail sales
2006 2008 2010 Consumer confidence (rhs)
2012
2014
Source: Datastream, Credit Suisse / IDC November 2015
13
Interest rates: Time to speak about a turnaround? Yields of 10 year government bonds Yield in % 6.0 5.0 4.0 3.0 2.0 1.0 0 -1.0 Oct 05
Oct 06
Oct 07
US Treasuries Last data point: 23.10.2015
Oct 08
Oct 09
German Govt Bonds
Oct 10
Oct 11
UK Govt Bonds
Oct 12
Oct 13
Oct 14
Oct 15
Switzerland Govt Bonds Source: Bloomberg, Credit Suisse / IDC November 2015
14
Switzerland: Monetary policy – no room to move for the SNB Waiting for EUR-recovery? 1.70 1.60 1.50 1.40
EUR/CHF
1.30 1.20 1.10 1.00 0.90 1999
2001
2003
2005
2007
2009
2011
2013
2015
Source: Datastream, Credit Suisse / IDC November 2015
15
The Swiss Financial Center
1 0.7
Others (incl. Dubai & Monaco)
0 0.7
United States
1.0
Luxembourg
1.1
United Kingdom
1.2
Caribbean and Panama
1.4
Channel Islands and Dublin
Hong Kong & Singapore
Switzerland
Destinations of offshore wealth in USD trillion 3
2.3
2
0.6
Source: Boston Consulting Group – Global Wealth 2014 November 2015 17
Contribution of financial centers to GDP 30% 25% 20%
15% 10% 5% USA*
UK
Luxembourg*
Germany
Singapore
Hong Kong*
Switzerland
0%
* values for 2012 Source: SIF, German Federal Statistical Office, Statistics Portal – Grand Duchy of Luxembourg, FSO/SECO, Singapore Department of Statistics, Office for National Statistics (UK), Bureau of Economic Analysis (USA), Census and Statistics Department (Hong Kong) November 2015
18
Positioning of the Financial Centers Key Strengths Switzerland The wealth management hub of the world • Traditional safe haven with stable political environment, high competitiveness and significant innovative capabilities. • The largest offshore wealth management center. Hong Kong Trade & financial hub for dynamic Greater China • Benefits from rapid economic growth. • Major financial center for trade finance.
Singapore Aspiring global wealth management center • Stable political climate, favorable tax regime. • Attracts clients from Asia’s rising economies. Source: Credit Suisse – Switzerland as a financial center 2014 November 2015
19
Switzerland, Hong Kong & Singapore Leading countries in terms of competitiveness
GDP per capita
1
(USD, 2013)
WEF Global Competitiveness Index
1
(Rank, 2013-2014)
IMD World Competitiveness Score
1
(Rank. 2014)
Human Development Index (Rank, 2013)
1
81,000 1st (-) 2nd (-) 3rd (-)
2 2
2 2
55,000 2nd (-) 3rd (+2) 9th (+3)
3 3
3 3
38,000 7th (-) 4th (-1) 15th (-)
Source: Worldbank, World Economic Forum, IMD, United Nations Development Programme November 2015
20
Traditional success factors of financial centers 1. People
5. Competitiveness
4. Infrastructure
Success Factors
2. Bus. Environment
3. Market Access Source: Credit Suisse – Switzerland as a financial center 2014 November 2015
21
Future success factors for international financial centers • Digitisation FinTech
• Lack of internationally harmonized regulation Costs and rules
Risks/ Opportunities
• Data security and storage • Technology infrastructure
CyberCrime
Business environment
Market access
• Little bureaucracy • Well-capitalized banks
• Growth in a multipolar world Regional wealth shift
November 2015
22
Swiss Financial Center Banking – a Sector in Transition Financial Crisis Loss of confidence / risk aversion More rigorous equity capital and liquidity guidelines Flood of regulation Deleveraging Extraterritoriality Fragmentation
Development of Real Added Value (Switzerland;1993=100)
Digitization Increasing transparency Decline in transaction costs Democratization of knowledge Rise of social media Data security/individual privacy
160 150 140 130 120 110
100 Debt Crisis Expansive monetary policy Pressure to comply in tax matters Maximization of tax revenues and introduction of new taxes (e.g. FTT, etc.) Weak euro/strong franc, negative interest rates
90 80 1993
1998 Banks
2003
2008
2013
Shift of Balance Increasing significance of emerging markets Rising importance of shadow banks
Swiss economy
Source: BAKBASEL. (2014). The economic significance of the Swiss financial sector.
November 2015
23
Costs on the rise – size and e matters Global Rise in Costs and Strong Growth of Competitor Locations Cost/Income Ratio in Private Banking Europe 60%
07
73%
08
78% 2'500
08
09
10
11
12
71%
73%
75%
75%
09
10
11
12
Cross-border assets under management in 2013 (CHF bn) Switzerland
2'000
1'500
Caribbean & Panama
1'000
GB
Channel Islands & Dublin
Singapore US
Asia 68%
77%
65%
North America 68% 64%
07
75%
Size vs. Growth of Offshore Wealth Centers
73%
76%
77%
79%
76%
Luxembourg
500
Hong Kong
0 07
08
09
10
11
12
0%
Sources: Booz & Company. (2014). Global wealth management outlook 2014–15.; SBA & BCG (2014). Actively shaping change.
2%
4%
6%
8%
10%
12%
Growth forecast for 2013-18 (p.a.) November 2015
24
Consolidation ongoing Consolidation of the Swiss Banking Landscape set to continue Number of Banks in Switzerland (Institutions) 1992 468
-185 (-40%)
Other banks Stock market banks1 Foreign banks2 Cantonal/regional banks3 Major banks
-30 (-55%) -10 (-24%) -28 (-18%) -115 (-56%) -2 (-50%)
2013 283
1
Institutions specializing in securities transactions and wealth management; 2 Includes foreign-owned banks and branches of foreign banks; 3 Including Raiffeisen
Source: SNB. (2014). Banks in Switzerland 2013.
November 2015
25
Costly - Regulation: System Stability The end to Too Big To Fail: 5% leverage and 28.6% RWA TLAC capital Composition of FSB TLAC
Comparison of Basel III, FSB TLAC & Swiss TBTF Legislation
Basic requirements 16.0%
20.0%
Buffer1
19.5%
∑ =19.5%-25% CH TBTF: 28.6%
a Gone concern
25%
Total loss-absorbing capacity (TLAC) as measure of capital robustness Includes stabilization ("going concern") as well as resolution ("gone concern") capital
25%
b
Going concern
c
Minimum Pillar 1 TLAC
Buffers1 ~5%
20%
∑ =19%3
15%
Capital Conservation Buffer 5.5%
∑ =13%
10%
5%
Requirement for CS (as per current status) 20%-24%2
Buffers1 ~5%
a
Other GLAC 8%-12%
?
c
Low-Trigger CoCos 6%
Tier 2 2.0%
Tier 2 2.0%
AT1 1.5%
AT1 1.5%
≈
High-Trigger CoCos 3%
Minimum CET 1 4.5%
=
Minimum CET 1 4.5%
Minimum CET 1 4.5%
b
0% Basel III 1 Includes
FSB TLAC
Swiss TBTF Legislation
capital conservation buffer (2.5%) and G-SIB buffer (1%-2.5%); 2 CS: capital conservation buffer (2.5%) and G-SIB buffer (1.5%); 3 Based on original calibration
November 2015
26
Market Access is key for the Swiss Financial Center Short- and Long-Term Measures to Secure Market Access as Priority Short Term Global
Europe
Long Term
Bilateral solution (e.g. free trade agreement, tax treaty, financial dialogue) with Russia, Turkey, Saudi Arabia, UAE, China, Brazil, Argentina, and Mexico
Adjustment of regulation in Switzerland, where relevant for market access (equivalence) and aiming at a standardized, principle-based recognition process at EU level Improvement of bilateral market access to key countries (Germany, France, Italy, UK, Netherlands, Spain)
WTO-TiSA Greater involvement of Switzerland in standard-setting bodies
Market access for financial services providers as part of the future overall European policy (e.g. via (financial) services agreement – (F)SA)
November 2015
27
For international business Switzerland joined AEOI OECD/G20 Establish Global Standard AEOI Standard
Functionality of AEOI
Comprehensive definition of financial information to be exchanged automatically (including trusts) Operational platform to be based on FATCA model 1 Multilateral legal platform based on the OECD / Council of Europe Convention on Mutual Administrative Assistance in Tax Matters and bilateral agreements Monitoring by Global Forum – ratings on the progress of participating countries
Basic Documentation Model Agreement: ensuring data protection, specialty principle, reciprocity Standardized exchange of information: common reporting standard Interpretation commentary Basic data of IT solution
2016 January 1 Launch of new accountopening processes1 1 Timeline
Taxpayer in Country A has account with bank in Country B: Country A
Country B
Authority A can review foreign account data
Automatic transfer from Authority B to Authority A
2017 January 1 Start of general data compilation
Bank B reports data to Authority B
Account number Name, address, date of birth Tax ID number Interest, dividends Income from certain insurance policies Balance on account Income from sale of financial assets
2018 September 30 First exchange of information1
First general exchange of information
for early adopter nations and EU
November 2015
28
Risks - Future success factors for int. financial centers • Digitisation FinTech
• Lack of internationally harmonized regulation Costs and rules
Risks/ Opportunities
• Data security and storage • Technology infrastructure
CyberCrime
Business environment
Market access
• Little bureaucracy • Well-capitalized banks
• Multipolar world Regional wealth shift
November 2015
29
Global population growth 10 billion by 2100 Population (billion)
Forecast: +3 bn in the next 90 yrs
10 8 6 4 2 0 1500
1600
1700
1800
1900
2000
2100
Source: United Nations, OECD, The Conference Board
Source: United Nations, OECD, The Conference Board November 2015
30
Emerging middle class as main growth driver Growth Engine – EM Middle Class: •
Over 2,5 bn in BRIC states to spend between USD 10-100 a day
•
Approx. 5 times OECD volume
Em erging Consum er Survey CS engages with AC Nielsen to conduct primary research on EM consumers, interviewing 15’835 consumers.
Persons with daily expenditures (PPP-adjusted) between USD10 and USD100 (m people)
Share of middle class by country
3000 2500 2000
1500 1000
2000
2015 2030
500 0 Africa
LatAm
OECD
BRICs Source: OECD, Credit Suisse November 2015
31
Growth of Global Middle Class driven by Asia EM with favorable demographics
%
Rapidly expanding middle class in Asia Size of global middle class (millions of people with a daily income of between USD 10 and USD 100, PPP-adjusted) 5,000
Old age dependency ratio (po pulatio n aged 65+/po pulatio n aged 15-64 years)
80 70
4,000
60
3,000
50 40
2,000
30
1,000
20
0 2009
10 0 1950
1960
1970
1980
Emerging M arkets
1990
2000
Japan
2010 US
2020
2030
2040
Western Euro pe
2050
North America Central and South America Sub-Saharan Africa
2020
2030
Europe Asia Pacific Middle East & North Africa
Source: United Nations, OECD, Credit Suisse November 2015
32
Ageing is a global but African problem Emerging markets lack pension systems in need of wealth advise Working population growth (million people) 400
Advanced economies Africa other developing countries India China
Forecast
300
200
100
0
-100 1955
1970
1985
2000
2015
2030
2045
2060
2075
2090 Source: UN, Credit Suisse November 2015
33
Risks - Future success factors for int. financial centers • Digitisation FinTech
• Lack of internationally harmonized regulation Costs and rules
Risks/ Opportunities
• Data security and storage • Technology infrastructure
CyberCrime
Business environment
Market access
• Little bureaucracy • Well-capitalized banks
• Multipolar world Regional wealth shift
November 2015
34
We Are Living In A Digital World That Is Here To Stay And That Is Big And Fast Growing
1.4BN
ACTIVE USERS
Facebook biggest “country” in the world ahead of China and India
4.2TN
IN G-20 ALONE
Internet economy by 2016. Were it a national economy it would rank in the world’s top five ahead of Germany
90%
IN 2 YEARS
90% of the global data available today have been created in the last 2 years alone
Source: BCG and IMB 2014 November 2015
35
Technology Progress & Innovation Have Changed Consumers’ Habits And Behaviors
97%
57%
10.4
Say An Online Experience Influenced Their Purchase Decision.
Talk More Online Than They Do In Real Life.
Average Number Of Sources Consulted Prepurchase
Source: Google and Adweek 2012 November 2015
36
BANKING LANDSCAPE Will Change As A Result Of These Forces Long-term structural trends
ILLUSTRATIVE
Client Behavior
Wealth shift towards Gen. X/Y (U)HNWIs
Declining clients’ trust in banks New quality & quantity of regulation
Pure digital Hybrid
Post-crises trends
Face-to-Face
&
Client Service Expectations
New technologies empowering clients
Self-directed Selector
Validator
Delegator
Upstart Upstart online online competitors competitors E.g., Interactive Brokers, Cortal Consors, .comdirect, Swissquote, Saxo Bank, Wealthfront Hybrid / Big Hybrid / Big players E.g., UBS, Credit Suisse, Barclays, Deutsche Bank, Julius Bär Traditional players Traditional players
November 2015
37
“ Half of the world’s banks set to fall by the digital wayside.” Francisco Gonzalez BBVA Chairman/CEO BBVA is perceived as a leader in digital transformation, having spent billions – bought Wizzo, Simple.
“ The financial sector needs a disrupter.” “ If banks don’t change, we will change banks.” Jack Ma, Alibaba November 2015
38
BANKING LANDSCAPE – EXAMPLE WELLS FARGO
&
November 2015
39
What is FinTech ? Intersection between technology and finance Technical innovations/enabler or disrupting technologies towards to traditional banking Highly dynamic market (16’000 startups) Main market segments: – Analytics/ operations and risk management – Investment/ wealth management – Digital currencies – Payments – Lending and financing.... Aim to simplify and revolutionize banking
Source: Credit Suisse, CIB insights November 2015
40
FinTech revolution 45% of independent financial advisors and 24% of bank branches to disappear by 2020E – SocGen announced to cut 20% of its branches till end 2016 While FinTech earnings for the moment lower than 1% of whole banking segment’s earnings, they are expected to reach 5% by 2018 16’000 start ups estimated whereof in 15 years, more than 90% of current active players will have disappeared from the market because of unprofitability or acquisition from banks/ bigger player The 10% that will have survived have the potential to change the banking sector fundamentally
Source: Credit Suisse, McKinsey, BCG, CIB insights November 2015
41
FinTech in focus for funding How much is funding to FinTech startups booming? Almost USD 14 bn funded in last 12 months. From less than USD 1 bn in Q2 2010 to nearly USD 3 bn in Q1 2015. 6000
250
5000
200
4000
3000 100 2000
Number od deals
Million USD
150
50
1000
0
0 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Funding (FinTech)
Deals (FinTech)
Source: Credit Suisse, CIB insights November 2015
42
Success drivers of the FinTech sector
Innovation
• Lower individual costs
Lowcost
• Be customer friendly • Have fast processes • Adapt to new technologies
Simplicity
Success Drivers
• Attract young talents • Bring innovative ideas • Apply existing and new technologies
Plusvalue
Market access
• Take away parts of banks’ existing business volume • Create new customer needs/ serve untouched segments • Serve an increasing number of customers
• Be connected • Employ different user-interfaces (incl. mobile)
November 2015
43
Key risks faced by the FinTech sector •
Bigger Players
•
FinTechs are active in a very competitive market
Competition
•
Key risks
Larger innovator (Google, Amazon, Apple, ...) can eat an entire segment Lack of client base
Longterm profitability
•
Small generated revenues per customer must cover fixed costs
Regula -tion •
Banking is highly regulated and complex
November 2015
44
Challenges for traditional financial players – Speed and selection Fast pace of innovation and implementation of technology financial services players need to move quickly but processes are currently too slow Number of FinTech firms is exploding over time driven by much lower launching costs competition increasing
Banks are counting too much on loyalty of their customers change of financial provider is not a big issue anymore Goldman Sachs: –
“USD 4.7 trillion in revenue for traditional financial services is at risk of being displaced by new technology-enabled entrants.”
Jamie Dimon, CEO of JP Morgan Chase: –
“Silicon Valley is coming. There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking.... They are very good at reducing the “pain points” in that they can make loans in minutes, which might take banks weeks.”
Source: Credit Suisse, CIB insights November 2015
45
Sources of banks’ revenue are at risk Retail banking revenues at risk by 2020
Mortgage 8%
Payments 25%
Consumer credit 17%
Asset management 79%
Deposits 83%
Current account 16%
Credit cards 29% Source: Accenture, The Everyday Bank, October 2013 November 2015
46
Value chains are under pressure – in retail banking … Challenge in several parts of the value chain
Product Management
Sales
Origination
Service & monitoring
Collections and recoveries
Credit risk management
Source: “Retail lending origination exercise”, Accenture, Credit Suisse, companies’ websites November 2015
: 47
… such as in the payments process New players want to grab a share of the cake
Merchant
Acquirer
Network
Bank/Issuer
Consumer
Source: Credit Suisse, companies’ websites November 2015
48
… or in wealth management Banks no longer the sole provider of all services – competition
Account
Proposal
Trading & settlement
Asset allocation optimization
Performance review
Source: Credit Suisse, companies’ websites November 2015
49
Lending Fundamental business for traditional banks.
Notable FinTechs active in lending
All traditional segments in lending business are under pressure. FinTechs are providing new ways of lending: – – – –
Crowdlending/ Crowdfunding Peer-to-Peer lending Peer-to-Business lending Social (non-profit) lending
FinTechs are simplifying and widening the lending process. It is much faster, uses current technologies and is enlarging the number of players that are providing loans
Peer-to-Peer lending amounted to USD 25.5 bn in 2014 and could reach USD 290 bn in the next five years (MS estimates)
Source: Credit Suisse, Venture Scanner, Morgan Stanley, companies’ websites November 2015
50
LendingClub (www.lendingclub.com) World largest online platform that provides Peer-to-Peer lending Aim to provide more attractive interest rates and rates of returns than traditional players by lowering operational costs Possibility to negotiate the interest rate Loans up to 35,000 USD Near USD 2 bn loans have been funded in 2014
Source: www.lendingclub.com, August 2015 November 2015
51
Payment Banks earn non-interest income from payment processing services and help merchants set up payment systems.
Notable FinTechs active in payment
The collected fees and commissions are usually small taken individually but aggregated they can represent a substantial part of banks’ income FinTechs are providing innovative, simpler and faster payment solutions. Banks stands a chance if they position themselves rapidly and acquire the new developed technologies 43% of all FinTechs focus on payments (Too?) many FinTechs are active in the payment space and the market seems overcrowded; only a handful of solutions will take the flow.
Source: Credit Suisse, McKinsey, Venture Scanner, companies’ websites November 2015
52
Venmo (www.venmo.com) Payment service to make and share payments between friends Since 2013, Venmo is under the control of PayPal (PayPal bought Venmo from Braintree for USD 800 m)
Venmo differentiates itself from other competitors by the social aspects that are coupled with each transaction (i.e. details are shared) Payments are sent instantly, for free, from a Venmo account or debit card or a linked bank account. Payments per credit cards and non-major debit cards are charged a 3% fee
Source: www.venmo.com, August 2015 November 2015
53
2015 focus - Investment & wealth management Individualized investment solutions from banks are targeted toward wealthy individuals. Thus, the process is often personalized and costly
Notable FinTechs active in investment
Drive to zero cost and not time friction. Most of FinTechs use an internal algorithm not only to determine the risk profile of the investor but also to allocate different portfolios. Cost for investors are reduced to attractive levels and the simplicity of the investment process helps FinTechs reaching a wide audience – but still very standardized at the moment (for example ETF based) FutureAdvisor bought by Blackrock
Source: Credit Suisse, Venture Scanner , companies’ websites November 2015
54
Wikifolio (www.wikifolio.com) Online investment platform (for DE, CH and AT) Investment
Investors
Profit
Trades + Know how
Performance fees
Attractive for small investors that can look for investment ideas and invest trough certificates that replicate a trader’s strategy The platform can be risky for retail investors that follow a strategy that doesn’t match investor risk profile
Main advantages of Wikifolio are the low costs and its community Source: www.wikifolio.com, August 2015 November 2015
55
Acorns (www.acorns.com) Micro-investment app Small amounts (spare money) are invested on a regularly basis in a selected portfolio 5 diversified portfolios according to investor’s risk profile Invested money can be withdrawn at any time and for no cost Main advantage: low-cost and easy to use Main disadvantage: low-expected return even for the aggressive portfolio strategy
Source: www.acorns.com, August 2015 November 2015
56
Research – Advise Content Research in bank is both used internally and externally to support the investment allocation decision in WM/AM
Notable FinTechs active in research
FinTechs innovate in the research sector by providing tools to analyze and interpret data, that were previously non-existing in the market FinTechs employ the latest technology and automate most of the research process by making use of computational power and artificial intelligence. Reports can even be provided on a continuous basis
Source: Credit Suisse, Venture Scanner November 2015
57
Sentifi (www.sentifi.com)
Online platform to monitor financial markets participants Sentifi uses automated detection of impactful events for listed companies Signals are generated from machine based text analysis of publicly available information Messages are then ranked according to financial importance
Source: www.sentifi.com, August 2015 November 2015
58
NY - London - HongKong...
November 2015
59
NYC FinTech Innovation Lab: Background Financial Services Firms
Venture Capital Firms
Launched in 2011
Partnership between the NYC Investment Fund, Accenture and leading Venture Capital and Financial Services Firms Goal: attract tech firms to NYC along with the employment opportunities they represent Focus is on startup and growth phase firms that have developed leading edge technology for financial services firms FinTech program now active in London and Hong Kong
November 2015
60
FinTech Innovation Lab Alumni
2011
2012
2013
2014 November 2015
61
FinTech Innovation Lab – Class of 2015 2015 FinTech Company
Mentors Bank of America Barclays Deutsche Bank Goldman Sachs UBS
Digital Asset Holdings, LLC is building next generation cryptographically secure settlement and ledger services. The Company is providing safe and efficient settlement of conventional and digital assets as well providing a digital ledger to create, issue, track and transfer mainstream financial assets.
• • • • •
Financial abuse of older adults is a growing epidemic, costing seniors billions of dollars annually - with trillions at risk. EverSafe is an innovative technology service focused on safeguarding the financial health of seniors and their families. Our software protects older adults from exploitation and identity theft by monitoring banking, investment, credit card and credit report transactions for erratic activity on a daily basis. Trusted advocates, with access to a consolidated view of financial information, can be designated to serve as an “extra set of eyes” in monitoring and resolving alerts.
• American Express • Capital One • Guardian Life
Max is an intelligent cash management solution that helps individual investors earn more on FDIC-‐insured bank deposits, automatically. Max’s patent-‐pending cash sweep technology monitors interest rates and automatically reallocates funds among a client's existing checking account and higher-‐yielding online savings accounts to maximize yield and FDIC insurance coverage while maintaining a desired checking account balance. Individual investors can access Max directly at MaxMyInterest.com. Max can also be integrated into existing wealth management platforms, so that banks, brokerage firms, registered investment advisors (RIAs) and multi-family offices can deliver this innovative cash management solution directly to their clients.
• • • • •
Ally Credit Suisse Morgan Stanley UBS Wells Fargo
PierceGTI is a security product company that provides instructions on how to increase security. Using global threat, artificial intelligence and local log events, PierceGTI creates customized reports and recommendations for IT professionals to increase their security. PierceGTI leverages unique privacy-protected crowdsourcing and our Internet-scale global knowledge-base to link together customers for unified threat knowledge and increased defense.
• • • •
Ally Bank of America Barclays Guardian Life
PYT Funds, Pay Your Tuition, is a trailblazing financial services firm that connects families to banks with a new solution to financing education and solving the problem known as the the "parent loan trap". We have pioneered a platform that combines online crowdfunding with bank funding to secure a private student loan without a cosigner. Our technology innovates the way we finance education for the future and provides a more responsible lending platform to the family and the bank.
• American Express • Credit Suisse • JPMorgan Chase
Social Alpha delivers actionable insights and decision support tools for traders, analysts and investment managers, who use our real-time predictive intelligence to increase profitable trades and reduce investment risk. We leverage advances in large-scale Machine Learning and Natural Language Processing for the real-time analysis of millions of online news and social media sources. Our services include interactive visualizations to monitor portfolios, real-time alerts on market-moving social media activity and low-latency feeds of social analytics.
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Citi Credit Suisse New York Life Wells Fargo
Ufora makes analyzing financial data at scale quick and easy by automating the engineering. Our Smart Compute platform scales any sophisticated algorithm to any size data automatically and instantaneously, allowing analysts to address real world complexity and answer their most important questions in seconds. Hedge funds, banks, insurers, and credit card companies use Ufora to price complex financial instruments, analyze and mitigate risk, predict and prevent fraud, and decrease the costs of regulatory compliance. Firms using Ufora see a dramatic increase in the productivity of their technical workforce.
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Capital One Citi Credit Suisse Goldman Sachs JPMorgan Chase Morgan Stanley
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Mentee Opportunities Research/Holt
Day/Transition Trading Algo Trading Digital Private Bank Portfolio Managers Prime Services or Prime Consulting
Social Alpha delivers actionable insights and decision support tools for traders, analysts and investment managers, who use our real-time predictive intelligence to increase profitable trades and reduce investment risk.
Mentors • Citi • Credit Suisse • New York Life • Wells Fargo
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Mentee Opportunities CCAR Calculations/ Stress Testing
VAR or Other Risk Calcs Linear/Non-Linear Quantitative Research Algo Trading Client Analytics, Retention and Engagement Surveillance and Suspicious Activity
Securitized Products
Fixed Income Research
Ufora makes analyzing financial data at scale quick and easy by automating the engineering. The Smart Compute platform scales any sophisticated algorithm to any size data automatically and instantaneously, allowing analysts to address real world complexity and answer their most important questions in seconds. Hedge funds, banks, insurers, and credit card companies use Ufora to price complex financial instruments, analyze and mitigate risk, predict and prevent fraud, and decrease the costs of regulatory compliance. Firms using Ufora see a dramatic increase in the productivity of their technical workforce.
Mentors • Capital One • Citi • Credit Suisse • Goldman Sachs • JPMorgan Chase • Morgan Stanley November 2015
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International FinTech hubs US Silicon Valley: General tech. environment, large startup scene, large home market, funding access. NY: Finance focus, home of the first FinTech lab, ‘full political’ support, large home market and access to funding. Europe London: Finance focus, ‘full political’ support and well marketed, access to funding. Berlin: General tech. in Europe, entrepreneurial environment – hip, cheap to start, funding ok, decent market size (Germany – biggest European market). Switzerland ?? Asia Singapore: Centralized initiative, full political support, as offshore hub for Asian clients and WM. HongKong: Centralized initiative, full political support, expensive location thus mostly subsidized by mentors or program owners, large potential home market (China).
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On track toward a Swiss Fintech Ecosystem Setting the scene: Growing entrepreneurial start up scene – Disrupters – Agile enablers – banks/insurers are in need Incubators: Various programs launched in Geneva or Zürich Swiss Voice: www.swissfinte.ch Swiss Corporates (mostly tech/telco, financials): – Initiatives launched in Switzerland and abroad Fintech challenges and innovation labs Dedicated funding structures (CS Next, Swisscom Ventures)
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Switzerland with typical Swiss problems - decentralized 1. Very academic: Innovation = education (university) and brick and mortar (building) - Only one part and slow to be built 2. Lack of ‘official support’ and flagship event to coordinate and market canton by canton approach 3. Lean regulatory process for FinTechs needed - Dedicated FINMA team as clear entry window and one stop shop 4. Clear business focus: Align to Swiss financial center strengths – WM, cyber security and insurance
5. Limited Swiss market size, Swiss FinTech’s in need of easy foreign market access while hub in CH - Regulatory adequacy is key 6. Great idea – sold poorly: Presentation and pitching DNA by entrepreneurs November 2015
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Recent Survey results – Switzerland mostly on track
Source: Swiss Finance Startups, Roland Berger: Swiss Fintech Study 2015 November 2015
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CS Digital Private Bank
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Q&A
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