Technology is underrated in its ability to provide a personalised service to clients, according to fintech firm Scalable Capital’s co-founder and chief executive, Adam French.
Available to clients at all times and using data analytics, technology provides an easy method of finding out information about people and their financial behaviour and provide customisation “that we’ve never seen before”, Mr French told thewealthnet.
Banks with legacy systems may find it is difficult to implement new technology, but as Scalable Capital only officially launched in Germany in December 2015 and in the UK last July, the firm can “integrate more easily and move faster”. Individuals can onboard through Scalable’s app in 15 minutes, and the firm’s ‘project zero keystrokes’ policy means users can avoid manually entering any information, where possible.
Furthermore, the firm has been “built for flexibility” in terms of providing its services in multi-currencies, multi-languages and for different tax regimes, so is “prepared to move into different countries”. While Mr French noted that there are currently “no concrete plans”, the firm is looking at partnering with firms with many clients who can offer their services as part of their proposition, including banks, financial institutions and corporations.
In a time of political and financial uncertainty, Mr French noted the importance of classifying risk in a way that investors can comprehend. Scalable employ a scale running from 3 to 25 percent, representing the investor's’ “pain threshold”. Mr French said: “In 95 percent of cases investors won’t lose more than they’re comfortable with. The percentage also known as ‘Value-at-Risk’ which we are providing to end clients so they have a better understanding of what they might lose in a bad year. Everyone has their own risk tolerance, and breaching that leads to bad behaviour.”
The current climate has seen investors “asking more questions”, with the main issue in the market being “bond and equity overpricing” leading to clients becoming ‘wary’ of investing. Mr French stated: “I would like a scenario with some volatility. It’s hard to show the value of what we’re doing in an up year. We could show people why they should be using a risk-targeted asset allocation.”
The average investment made by clients at Scalable is currently above the minimum £10,000 mark, and Mr French highlighted that many investors “add quickly” soon after the initial deposit, which can be made through a simple transaction on the firm’s app. Scalable can analyse what percentage of wealth they have access to for each client, with the current average around 10 percent, which Mr French hopes to increase over time. He added: “All of our clients are growing in terms of monthly and one-offdeposits. On average, clients double deposits every six months.”
Scalable crossed the £100 million mark of assets under management in mid-December of 2016 and doubled assets to £200 million in mid-April, currently growing by £1 million a day. At present, it has over 5,000 clients who invest £40,000 on average. Yet despite the firm’s fast growth, Mr French concluded: “Even if we get to £1 billion we will have failed. We want to be the biggest platform for digital wealth management in Europe. That’s the dream.”