Annual Report 2017

Fund investment advice Innovative sales channel

Fund management company Union Investment has developed an electronic assistant for fund investments. Its aim in doing so was to provide the Volksbanken Raiffeisenbanken with an additional sales channel for investment products. There is strong interest from the banks. But face-to-face advice will continue to play an important role going forward.

Robo-advisors are one of the hottest trends on the fintech scene. These intelligent tools advise people on how to invest their money in investment funds. Union Investment, the fund management company in the cooperative financial network, has tapped into this trend by developing its own robo-advisor named MeinInvest. The decision to do so was made in 2016. A number of Volksbanken Raiffeisenbanken tested the investment tool in order to get some experience of how it works in practice.

The new technological possibilities were not the only reason for developing a robo-advisor. Another was the fact that branch-based banks are seeing a shift in customer requirements. Many customers now want to be able to obtain advice online. “When we identify this sort of market trend, we have to adapt our business model accordingly,” says Gabriel Placentra, head of the e-business and advisory solutions team at Union Investment. “And we have to enable the intermediary banks to update their business models in the same way.” This is precisely where a robo-advisor comes in, as it provides the banks with an additional sales channel that does not entail high costs.

“We liaised closely with the banks while we were developing the robo-advisor.”

Gabriel Placentra
Union Investment

Experience of online sales

Union Investment was already operating the online investment portal VisualVest when it began to develop the robo-advisor. “We therefore had experience of selling investment funds online,” reports Placentra. But rather than building on an existing tool, the fund management company wanted to create a new one that would meet the needs of sales partners. “We liaised closely with the banks on this.”

MeinInvest was successfully launched on the market as part of a pilot phase. During this period, a number of banks tested the new tool and gave their feedback to Union Investment. “The reactions were very positive,” says Helmut Batz, sales director in Union Investment’s Bavarian Regional Office. “Many banks want to integrate MeinInvest into their sales process in the second or third quarter of 2018.” MeinInvest is therefore now being rolled out to all banks in the cooperative financial network. The demand from the banks for MeinInvest is not simply attributable to customer interest and the opportunity to reduce sales costs. Another reason is MeinInvest’s fee model. When a customer uses the robo-advisor and subsequently invests money in a fund, the bank does not receive trail commission from the fund management company. Instead, the customer pays a service fee to the bank. “This model could prove advantageous in the future when stricter regulations on commission payments are introduced,” explains Batz.

“Many banks want to integrate MeinInvest into their sales process.”

Helmut Batz
Union Investment

Personal advice remains important

Batz believes that banks deploying the new robo-advisor should incorporate it into their overall strategy. “It is not enough to simply add it to an existing website.” The banks should consider in advance, for example, which customer groups they want to reach with the new tool. Advisors and employees in the customer dialog center can then showcase it to suitable customers. The robo-advisor is also an interesting option for banks that want to establish an online branch. “We’re discussing all these aspects with the banks at the moment,” reports Batz.

Batz is confident that the robo-advisor will not replace the conventional fund investment advice provided by bank employees. “MeinInvest complements the existing services.” In the future, customers will therefore be able to decide whether they want to be advised by a human or by a robot. Ultimately, investing will remain a matter of trust. And some customers will still want the option of a face-to-face discussion, thinks Batz. “A good advisor can help customers make the right decisions by listening to them and asking the right questions. This will continue to be important in the future.”