In recent years startups have disrupted the landscape of some of the most traditional sectors: banking and financial services. Currently there are over 60 unicorns, which highlights the hype around the fintech sector. These companies have triggered a revolution in customer experience: we now open an account or get a loan in a matter of minutes, instead of weeks or months; exchange and send money internationally at low or no fees; mobile payments, etc. 2020 and the COVID pandemic has just speed up pace of this digitalization wave.
Stephan Schug founded wealthpilot in 2017, with the goal of untapping the full potential of wealth management to end customers, wealth managers and banks. The platform is based on a digital aggregation of customers’ financial information, providing individualised and personalised investment advice. More than 8,500 banks, insurance companies, broker pools and wealth advisors and their customers now work with wealthpilot. We had the pleasure of interviewing Stephan and discussing his views on the current state of startups and fintech.
Hi Stephan, thank you for joining us today. Could you explain the mission of wealthpilot, and what makes you stand out from the market?
We started this business because everyone should be able to manage their financial life and reach their personal financial goals. Thus, we solve the problem of a huge financially underserved population – the so-called mass affluent – by making exclusive wealth management services accessible for everyone.
We do that by bringing end users, wealth experts and innovative investment providers together on one white-label platform to optimize all end users financial assets. Our Software-as-a-Service platform automatically aggregates, analyzes and plans all data at the push of a button. Thus, wealthpilot helps increase the end users’ wealth, gives advisors the freedom for personal consultation and creates new sales channels for innovative financial products.
Since being founded in 2017, you’re able to grow fast and have over €40 billion of assets being managed on the platform. Which were the main challenges in the scaling-up process?
Actually, we are already at €80 billion assets on platform as of now. We added more than€30 billion of assets within the last 6 weeks. The main challenges in the beginning were to gain trust as a startup in a very traditional and conservative market.
What do the new investors bring to the table in terms of smart money and why did you choose them?
Seventure will support us in making exclusive wealth management accessible to a broad section of the population, both nationally and internationally. Seventure has a proven track record in creating pan-European champions, thus their experience will especially help us with our European expansion plans.
What is next for wealthpilot in terms of product roadmap and new product features offered?
We want to give the customer a financial home for his or her assets. To this new home, we add new planning and simulation features as well extensions of our mobile apps. Of course, continuous development of our data aggregation in depth and breadth, also for illiquid assets such as real estate or life-insurance, is at the center of our roadmap.
How do you look at the fintech landscape? Given the recent success of companies such as N26 or Revolut with B2B approaches, do you believe new unicorns are on the rise in Europe?
The FinTech landscape is huge and will definitely create new unicorns in the B2C as well as in the B2B area. Also, the WealthTech industry will produce unicorns as recently seen in the US. Especially the mass-affluent segment is a huge market opportunity as most of that population is wealthy, but financially underserved. This problem can just be solved by technology combined with scalable personal advice.
Do you think changes in regulations and stricter enforcement of anti-laundering practices will impact innovation and startups?
Regulations are important to keep the trust level high in the FinTech area. Those regulations have to be strictly enforced to actually make an impact. The startup community should be integrated in the elaboration process of new laws and regulations, especially as tech companies play an increasingly important role in the entire market.
How has COVID-19 affected the acceleration of digital transformation in the financial sector, and how have you been affected in this sense?
COVID-19 put more pressure on the digital transformation in every industry. Obviously, this is also true for wealth management. For wealthpilot, this digital transformation is a huge market driver as not only professional advisors but also big banks have accelerated their digital transformation plans in the area of wealth management.
Over the past year of crisis, we have also observed another trend. During times of economic and financial insecurity such as the COVID-19 pandemic, end customers tend to prefer having a professional financial coach at their side to support them with their financial planning – in many cases this coach is their trusted bank advisor.
So, the COVID-19 pandemic has both accelerated the trend towards digitalization as well as the trend towards an increased demand for bespoke, personal wealth advisory on a data-driven basis. wealthpilot’s hybrid approach to wealth management supports both of these trends, which is reflected in the development of some of our benchmark figures over the last year. Actions per login on the platform increased by 35% along with login time as a whole, while advisors were able to onboard 33% more end customers on the platform.
Given your personal path, which is the most important advice you have received in your entrepreneurial journey?
In terms of getting an idea of where to take your business, analyze markets and create value propositions by “reverse-storywriting”. This can be done by creating a hypothesis about a future market and then writing “backwards” to the present situation challenges in the market. It gives you a roadmap to follow from the current point in time towards proving or refuting your hypothesis, depending on what you aim to achieve.
As a final word, knowing what you know today about entrepreneurship, what would be your advice to new entrepreneurs in the fintech space?
Focus on a solid foundation of your business idea early on. Look for a huge market with growth potential, create a basic product/market fit and find a team, with which you can execute it. The better those basics are thought-out and prepared, the faster you are in executing your idea and generating traction.