Top Business-to-Business Wealth Tech Players

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If you’ve been following our series on wealth tech, you’ve seen our analysis of the industry as a whole, a review of the top trends, and an examination of B2C wealth tech players.

Our wealth tech coverage continues this week with a review of business-to-business (B2B) players in the wealth tech space. These are companies that cater directly to banks, advisors, or brokerages, instead of offering products or services directly to consumers. B2B wealth tech is a large category, so I’ve sub-divided it into four digestible groups and listed my top picks for each category. Since category sizes vary, the number of selections also varies.

Alternative investment services
These are platforms that help advisors connect clients with unconventional investment types, such as private equity, hedge funds, futures, real estate, etc.

Screen Shot 2017-01-19 at 11.44.57 AMEquityZen’s EZ Institutional lets advisors give clients access to a diverse asset class

Technology for advisors and brokerages
These are tools available via API, SDK, or web interface to help advisors compete with robo advisors by allowing them to invest with less bias, increase client communication, scale operations, find new clients, and more.

Screen Shot 2017-01-19 at 11.40.41 AMTrizic offers advisors their own digital tools to compete with robo advisors

Non-U.S. B2B investment and advisor technology
Similar to the above category, these companies offer tools for advisors outside of the U.S.

Screen Shot 2017-01-19 at 11.30.52 AMmeetInvest helps advisors invest like world-renowned market experts

News and Information Companies
These are online platforms, APIs, or SaaS offerings that provide advisors market information, show them trending news, or connect businesses with market data to power their own products.

Screen-Shot-2016-10-31-at-3.22.22-PMForwardLane’s dashboard acts like a private research analyst for advisors advisors, helping them stay current on new trends and funds

Polly Portfolio Unveils Bespoke Custom Investing Platform for Financial Advisers

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With Bespoke Custom Investing (BCI), Polly Portfolio offers financial advisers a platform that makes it easier to provide personalized financial management and investment plans. The technology gives advisers the tools for better engagement by using natural language processing to transform client concerns—on issues like investment philosophy and economic outlook—into customized investment advice.

Advisers can either use their own model portfolios as a base investment strategy or select one of Polly Portfolio’s models. They engage with their clients to determine tax planning, investment preferences and risk tolerance, economic outlook, and the status of any held-away assets (assets not actively managed nor affiliated with the adviser’s firm). After any additional adviser or client customizations are factored in, the BCI investment engine builds a personalized investment strategy with natural language explanations.

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The release of Bespoke Custom Investing comes as the company transitions toward a B2B model. As Polly Portfolio began working with wealth managers, it became increasingly clear that the path of least resistance for its technologies was to “decouple” its signature solutions—Bespoke Custom Investing and Sophograph (demonstrated at FinovateSpring 2016)—to better target the markets that would most benefit from each technology.

The initial challenge for Polly Portfolio was figuring out how to maintain the customization, natural language processing, and portfolio-building of BCI without plugging in to Sophograph. The answer was to pollyportfoliobci_image3leverage the model portfolios offered by the financial adviser. “Many advisers use very basic model portfolios,” says Tom McCosker, Polly Portfolio’s COO and CFO. “We built BCI to plug into model portfolios. Then customize around (their) model, using basic risk exposure, and then customize for taxes, headway assets, views on the economy, and so on.” The integration is API-driven, so there is no need for full stack integration.

BCI’s ability to increase and deepen customer engagement is another worthwhile feature of the platform. “Engagement calls are a trick for advisers,” McCosker points out. “What do you talk about on the investment side? You’re in a model portfolio, so that’s it.” By making it easy to translate client preferences into customized investing ideas that are explained in natural language, the platform can be a significant engagement solution for advisers, as well.

Founded in 2014 and headquartered in New York, Polly Portfolio demonstrated its technology at FinovateSpring 2016. This summer, the company launched a free, investment chatbot for Facebook Messenger, Polly Chat, that develops personalized trading and investment ideas through interaction with the user. Jasen Yang is founder and CEO.

Finovate Alumni News

On Finovate.com

  • Polly Portfolio Unveils Bespoke Custom Investing Platform for Financial Advisers”
  • “Top Direct-to-Consumer Wealth Tech Plays”

Around the web

  • CashStar announces digital gift card agreements with online marketplace OpenSky and Marcus Theatres.
  • Nasdaq.com profiles Moven, “the future of banking.”
  • Charlotte Business Journal names Passport among its Fast 50 award winners for its more than 475% revenue growth from 2013 to 2015.
  • Inc. lists Xero, Gusto, and PayPal among 8 business apps that will crush it in 2017.

This post will be updated throughout the day as news and developments emerge. You can also follow alumni news headlines on the Finovate Twitter account.

Top Trends in Wealthtech: From API-ization to Virtual Engagement

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Wealth management technology provider eMoney Advisor, pictured here at FinovateFall, was acquired by Fidelity Investments in 2015 for $250 million.

With 2017 just around the corner, what trends are likely to drive innovations in wealth management technology, aka wealth tech?

The biggest potential regulatory change is the Department of Labor rule that financial planners must act as fiduciaries. The Trump election victory, accompanied by Republican control over both houses of Congress, may make this rule irrelevant. But most in the wealth management industry are nevertheless making preparations in the event the rule (announced this past spring and to be rolled out next spring) is kept. One concern with regard to the fiduciary rule specifically related to wealth tech is how fiduciary responsibility would work with robo-advisories. Can an automated investment platform determine conflicts of interest between the planner and client? What technological tools will be needed to give robo-advisory platforms this capacity? Maintaining fiduciary responsibility with a robotic investment platform suggests two potential scenarios: increasing use of human advisers in combination with automated technology, and deploying sentiment analysis technologies to better interpret nonverbal communication between planners and clients. Interestingly, both of these solutions are connected to other trends in wealth management, such as virtual meetings/conferences.

Use of virtual meetings

Virtual meetings will help wealth managers respond to a variety of issues, including better engagement and multichannel/channel-of-choice engagement. Virtual meetings could even help managers deal with greater fiduciary responsibilities. The channels can include everything from the use of Skype calls and video conferencing to more elaborate virtual meeting platforms such as those from Finovate alums like SuiteBox (F16) and SaleMove (F16). Both PwC and Deloitte have noticed the trend. “Multichannel delivery will become a strategy for delivering advice to clients in the most convenient, most efficient way possible based on each client’s particular needs at particular moments,” said PwC, in a recent look at wealth management technology trends. Deloitte noted that “new combinations of digital and human-based channels” are not just for millennials, saying that some gen-Xers and boomers “want to engage in new ways” as well.

According to a study conducted by Investment News/Cambridge, only 4% of advisers who responded currently list video conferencing as one of their communication methods, but 32% expect to rely on it more within five years. Douglas Boneparth, partner at Life and Wealth Planning, told Investment News, “I am seeing advisers, especially younger advisers, adapt to a more virtual and technologically savvy way of doing business. Advisers are focused on the level of service we provide and being accessible in more ways … virtual meetings is a great example of that.”

API-driven platform-ization

The ability to integrate financial data using APIs (Application Programming Interfaces) has been a huge boon for finance in general and wealth tech in specific. API use and adoption within wealth tech is especially strong where brokerage services are involved, (e.g., order-management system APIs). At a fundamental level, APIs enable linking multiple apps (portfolio management, document management, pricing systems); eliminate manual data entry; and limit mistakes during data transfer and update.

Marion Asnes of Broadridge Financial Solutions emphasized this last point. “Platforms must aggregate performance data across various institutions, and then, integrate planning, portfolio accounting, trading, reporting, and communications functions,” Asnes wrote for Investment News. “A wealth manager would need to aggregate performance data from all the various accounts in one place and base recommendations on that complete picture.” Writing in Quovo, John Horneff presented APIs also as an opportunity for managers to differentiate themselves, “leveraging new, innovative technology to break away from the pack and provide unique offerings.”

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Stephane Dubois, CEO of Xignite, during his company’s demo at FinovateAsia 2016. Xignite serves more than one one trillion market data API calls a year.

Xignite (F16) founder and CEO Stephane Dubois says the most salient factors of robo-advisory are: “ETFs, Trading APIs, and Market Data APIs.” Dubois’ firm is an acknowledged leader in the latter. With clients that are a who’s who of wealth management innovators—think Betterment (F11); Motif Investing (F14); Personal Capital (F14); and TipRanks (F13)—Xignite launched its FintechRevolution API Ecosystem in 2015 in an effort to make financial APIs more available to startups.

Growing importance of platforms

Both digital storage and ensuring ready accessibility of data are two trends in wealth management that point to the growing importance of advisor platforms to help wealth managers to their work. This is clearly one area where technology is playing a major role, especially for those focusing on the “accessibility of data” issue. Quoted in Investment News, Overplays co-founder Abby Schneiderman said, “Having data all in one place is one more way advisers can serve their clients’ needs … . I think one thing advisers are looking for is singular places to house all of their client’s information: wishes, documents, investment accounts, etc. in one place.”

Innovations in wealth management and financial advice platforms enable better engagement. Innovative platforms can give advisers more “surface area” for conversation and engagement with their clients. A good example is Polly Portfolio (F16) that uses natural language technology to ask customers about their financial goals and economic outlook to personalize and, importantly, explain portfolio construction. Combined with API-delivery and the inclusion of functionality like video, innovations in platform design will be key to help managers and advisors take advantage of industry trends.

HNW clients and robo-advisory

As robo-advisory becomes both more sophisticated and more accepted, an increasing number of high net worth (HNW) individuals are taking the automated investment route for some part of their finances. Betterment’s Jon Stein says their largest customer has $10 million invested with the company. He adds that many HNW people are already investors, but are now upping their investment from 5% two years ago to 20% (Stein defines HNW as having assets above $500,000).

Catering to high net worth clients, according to some, involves both greater technological sophistication on the part of robo-advisors as well as more extensive customer service. Writing in the CBInsights Blog, the analysts noted that one criticism of robo-advisors is that the very wealthy might have “more complex investment needs and higher customer service expectations.”

Specifically, high net worth clients may require access to more complex investment vehicles, including non-equity investments, as well as more advanced rebalancing and tax harvesting than the average investor. Other services, such as helping HNW clients manage sizable amounts of cash a la MaxMyInterest (F14), would also help encourage more wealthy investors to allocate a portion of their assets to robo-advisors.

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Herbert Moore and Jennifer Chin of WiseBanyan during their FinDEVr Silicon Valley debut. WiseBanyan is an independent robo-advisor that caters to millennials.

“Small data”

One large trend wherever clients and customers are involved is the role of small data, the kind of basic client data—demographics, for example—that can be very informative for the financial planner or wealth manager. In terms of increasing engagement, providing more accurate and personalized financial guidance, a little information about a client’s personal circumstances can go a long way.

In addition to providing better service to customers, small data can be the key to making a wealth management or financial planning business more efficient. Knowing which revenues are coming from new versus existing clients, for example, can help managers get the right products and services to the right customers. This is another area where innovators have produced platforms and software to help analyze client data and provide insights, often leveraging visualization technologies.

Robo-advisories: build or buy?

For financial institutions looking to provide wealth management services via robo-advisor, the question is whether to build or buy. While each approach has advantages and disadvantages, many FIs and brokerage firms have already decided:

Examples of firms that have gone the “roll your own” route include Fidelity with its Fidelity Go; Schwab with its Schwab Intelligent Portfolios; Vanguard with its Vanguard Personal Advisors Services; and E-Trade with its E-Trade Adaptive Portfolio.

But acquisitions have been a way for FIs to get up and running with robo-advisory service in a hurry. Some of the more notable recent acquisitions include Legg Mason’s purchase of Financial Guard (F13); Invesco PowerShares acquisition of Jemstep (F13); and Blackrock’s taking on FutureAdvisor (F13).

Other FIs are splitting the difference and instead seek partnerships with robo-advisors. The recent agreement and investment between Citizens Bank and SigFig to help the former build out a robo-advisory platform is an example of this approach.

Changing nature of advice

The growing capacity of robo-advisors to help manage other aspects of personal finance supports a more expansive view of wealth management and financial planning. This includes everything from health care planning, insurance, even real estate, education and leisure. The ability of technology to aggregate financial information is a major catalyst here, giving managers the ability to provide guidance beyond traditional boundaries.

Much of what is driving the changing nature of advice has to do with those being advised. The myriad and interconnected financial concerns affecting millennials—from managing student loan debt to starting a family—mean that financial planning beyond how to invest in a 401(k) is increasingly relevant and necessary. At the other end of the spectrum, active older adults in the “longevity economy” have financial issues that differ from those of seniors a generation ago who often had pensions and other financial support later in life.

This is where companies like iQuantifi (F14)—a self-described “proud robo-advisor” and virtual financial advisor—come in, with a platform that provides planning and guidance over a wide variety of topics, including insurance. Millennials are being catered to by wealth tech firms like WiseBanyan (FD16) while near and recent retirees can look to a company like True Link (F14), which specializes in financial planning for seniors.

Fintech Trending: Germany Grows, Pokemon Goes, PayPal Partners

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Today we unveil our fintech trends column, a look at trending topics of the past week or two, compiled by the Finovate research team.


Trending highest: Pokemon Go

Our inaugural post leads with the Pokemon Go phenomenon which has fintech innovators rethinking their strategies around not just mobile, but the power of gamification, location-based marketing, and the diversity of data, as well.

Sberbank (F16) was clever enough to offer free accident insurance for distraction-prone Pokemon Go players. But the Russian-based bank has bigger plans to engage potential customers via the game, including bonuses for players who catch Pokemon in a Sberbank branch. Sberbank also plans to use lures to help drive traffic to its locations, an initiative already underway at CenterState Bank in Florida. Read our take on the technology, and its potential as a marketing tool for FIs.

It comes as no surprise that fintech’s foremost futurist, Brett King, makes the most far-reaching case in favor of a connection between Pokemon Go and fintech. Calling the game “a glimpse into how very different the world of banking, investing, and financial advice will be in 10 year’s time,” the Moven (F16) CEO and author of Augmented: Life in the Smart Lane tells The Financial Brand’s Jim Marous: “(Pokemon Go) illustrates why banking is no longer a place you go, but something you do—on a phone, in AR, and as a person lives their life.”

Other quality Pokemon posts:

  • Lessons Pokemon Go Can Teach the Banking Industry – The Financial Brand
  • Is Pokemon Go the Killer App for Location-Based Marketing – AdvertisingAge
  • Urban gamification: can Pokemon transform our public spaces – The Guardian
  • Pokemon Go Is Inspiring Small Retailers. So Has Augmented Reality Gone Mainstream? – AdWeek
  • Pokemon Go has reinvented the power of data – IT Pro Portal
  • Capture your business spend: no Pokeball needed – TradeShift blog


Other trending topics

Brexit a Boon for German Fintechs?
With the strong fundraising performance of Germany’s fintech startups in late June, and news this week that Peter Thiel took a $3.5 million stake in Cologne-based nextmarkets, London’s position as Europe’s fintech capital may be weakening. And Germany seems to be the likeliest beneficiary.

  • Brexit spurs London startups to investigate Berlin move – Reuters
  • ‘Over a hundred’ London startups have asked to relocate to Berlin since Brexit – International Business Times
  • Berlin bids to replace London as post-Brexit fintech capital – Financial Times

Nasdaq Fintech Index Goes Live
You know Wall Street loves you when they render your likeness in an index. This week, Nasdaq launched its Fintex Index which tracks the performance of 49 fintech companies including 17 Finovate/FinDEVr alums. The index of publicly traded fintechs excludes banks and is limited to companies that “mainly sell financial services,” are not brick-and-mortar based, and generate revenues from fees rather than interest.

A Week in the Blockchain
While in Florida, a judge ruled that Bitcoin isn’t money, the EU commission made a step fostering the cryptocurrency, proposing the creation of a central database that keeps a record of bitcoin users. With the new measure, the executive arm of the EU aims to prevent the use of the currency to fund terrorists.

Mastercard Accentuates the Digital
Mastercard (F14) enhanced Masterpass, allowing consumers to make in-store payments at 5 million brick-and-mortar stores. The company rebranded its logo with a lowercase ‘c’ to focus less on a physical card and more on a digital wallet. One week later the company purchased a majority stake in U.K.-based VocaLink for $1.14 billion, giving Mastercard a potentially larger role in the overall U.K. payments universe.

Pump Up the Visa Volume
Visa (F10) and PayPal (F12, FD16) partnered, putting to bed a long-standing conflict. PayPal will encourage users to make Visa their preferred payment method. And more importantly, PayPal will stop steering Visa cardholders to pay via ACH bank transfer, increasing the transaction volume sent to Visa and its card-issuing banks. In turn, Visa is adding PayPal to its Visa Digital Enablement Platform, allowing consumers to use PayPal mobile wallet at the physical POS at major retailers. PayPal has been trying to engage consumers with physical POS payments since 2012, when it first introduced its pay-by-phone-number at Home Depot.

More Fintech Companies Choose Chatbots
This ongoing trend saw new entrants with Polly Portfolio (F16) launching a chatbot, along with MyKAI and YouInvest. Additionally, text-based savings service Dyme (F15) launched the first prototype of its Facebook Messenger Bankbot.

We’re also keeping our eyes on:

  • Amazon partnered with Wells Fargo to offer a 0.50% discount on student loans for Amazon Prime members
  • Square adds same-day bank deposits for merchants. While relatively pricey, adding 1% of the transaction amount to the processing cost, it’s a simple way to improve cash flow for certain businesses.
  • Cambridge Savings Bank partnered with SigFig (F11) to become one of the first U.S. banks to offer a robo-adviser investment service.

Parentheticals after a company name refer to the year of their most recent Finovate or FinDEVr conference appearance (F = Finovate, FD = FinDEVr),

Polly Portfolio Launches Investment Chatbot for Facebook Messenger

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What do you do when you need a friend to geek out with about financial news and investment-portfolio decisions? Create a bot, of course! Polly Portfolio, wealth management technology platform for asset managers, launched an investment chatbot for Facebook Messenger this week. The free bot, named Polly Chat, engages the user in a conversation about recent financial news headlines and creates a financial profile and customized trade ideas based on the user’s responses.

PollyChatIn a blog post, the New York-based company said that it created Polly Chat because “it only makes sense to build a chat bot when you have something to chat about. We do.” The company went on to explain that large financial firms have teams of research analysts who are very knowledgeable about economic developments but lack the ability to communicate the news to clients in an interactive way. Polly Portfolio added, “Our investment chat bot is a new interface to deliver on the basic premise: that investors should—and can—have a say in investment decisions without doing all the work.”

Users can either build a customized investor-profile with a five-minute chat, or they can take the time to interact with questions about all 50+ news headlines. Here’s the link to get started.

Founded in 2014, Polly Portfolio’s CEO Jasen Yang (founder) and COO & CFO Tom McCosker debuted Polly Sophograph at FinovateSpring 2016. Sophograph incorporates client opinions into dynamic investment models which create a recorded, auditable conversation around investment research.

Finovate Alumni News

On Finovate.com

  • Polly Portfolio Launches Investment Chatbot for Facebook Messenger
  • Check out this week’s FinDEVr APIntelligence.
  • Zopa Taps Ronen Benchetrit for CTO
  • Sezzle Adds Former PayPal Executives as Advisers
  • Actiance Now Supports Compliance for Instagram

Around the web

  • Boku expands carrier billing service with new partnerships in Germany.
  • NCR and Wells Fargo partner to develop next-generation ATM technology.
  • Mizuho Financial Group to pilot Ripple for cross-border payments.
  • NICE Actimize teams up with Tableau Software to combine business intelligence with financial crime-compliance technology.
  • True Potential opens multi-asset portfolios to adviser market.
  • Lendio partners with Townsquare to promote its alternative small business financing solutions.
  • Misys relocates Texas office from Richardson to Plano to expand operations.
  • CardFlight reports that more than 64% of its merchants are now EMV-enabled, more than 3x the national average.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

FinovateSpring Sneak Peek: Polly Portfolio

PollyPortfolio_homepage_April2016

FS2016-wdateA look at the companies demoing live to 1,500+ fintech professionals on May 10 & 11. Register today.

Polly Portfolio provides technology for wealth and asset managers that empowers financial advisers and clients to utilize investment research exactly how they want.

Features:

  • Transform investment research from static and prescriptive to interactive and conversational
  • Incorporate client opinions into dynamic investment models
  • Experience low friction/high frequency digital interactions

Why it’s great
Polly Portfolio is passionate about making world-class investment research more accessible and more useful through interactivity.

Presenter: Jasen Yang, CEO and FounderPollyPortfolio_JasenYang Yang is a 16-year finance vet, last as a partner at a $13 billion alternative asset management firm. He left an MD/PhD in computational neuroscience to design financial products and wants to make up for that.
LinkedIn

Finovate Alumni News

On Finovate.com

  • “Cachet Financial Solutions to Power Mobile Account Opening for PAYTOO”
  • “First Data’s Clover Launches Ecommerce Solution”

On FinDEVr.com

  • Beyond the Bitcoin BlockChain: Coinalytics is Now Skry”

Around the web

  • Interactions partners with Arise Virtual Solutions to bring virtual assistant technology to customer care.
  • Aerospike releases version 3.8 of its database server.
  • TransferWise opens its remittance service to the U.S./Mexico regions.
  • Wealth Professional features Betterment and Wealthfront in a column on roboadvisers.
  • ThreatMetrix Updates Smart Analytics Platform.
  • “SITO Mobile Partners with Cardlytics to Power Mobile Ad Campaigns with Purchase Intelligence”
  • Bitbond joins SME Finance Forum.
  • Insuritas to power insurance agency solution for Inspire Federal Credit Union.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.