Allianz has taken an undisclosed minority stake in Italian digital wealth manager MoneyFarm as it seeks to keep track of the fintech sector.
MoneyFarm, founded in Milan in 2011, gives people access to low-cost wealth management services online. It is one of a number of so-called “robo advisors” — digital services to help people invest and manage their money.
Cofounder and chairman Paolo Galvani told Business Insider: “We started with the consideration that it’s incredibly difficult for someone with £5,000 to £10,000 to find some suitable and easy solution to invest their money. There’s still a lot of complexity for a variety of reasons.
“If you are just considering the distribution of products through a physical element, this implies a lot of cost which is paid for by the client himself. Technology allows you to disrupt this mechanism and deliver solutions that are extremely efficient at low cost. It’s a bit like what happened to the travel industry with low-cost airlines.”
Galvani says he was approached by Allianz at a recent conference, which is how the investment came about.
“For them, it is to understand the dynamics of a digital play,” Galvani told BI.
“Sometimes innovation for large institutions is tricky to generate. They can run a parallel approach where on the one side they have their own internal innovation but on the other side understand from a smaller player who is more dynamic. It’s a very good way to invest in research and development to understand how digital will affect financial services.”
Allianz, the Munich-headquartered insurance and wealth management giant, has been trying to increase its footprint in the fintech space to try and benefit from any relevant innovation and make sure its rivals do not get a technical edge.
The company recently set up an “Innovation Lab” in Asia and has established a company builder called Allianz X, with a brief of “identifying, building and globally scaling new business models in the InsurTech space.” Last week Allianz also bought a stake in Berlin-based fintech startup Simpesurance
Galvani told BI: “I found them very, very smart in the way they have approached this fintech and innovation space. There’s investment in the fintech on one side but also a deep operational analysis on how this could become a partnership.”
He added: “In the last few months we’ve had many conversations with other potential partners and players. Not necessarily investments. In the financial sector, the time has come for the large players to take more and more seriously what the startups are doing. When we started it was almost impossible to have a conversation with a large, traditional player. It’s a very interesting moment.”
Banks have been trying to tap into the innovation to make sure they are not overtaken by rivals who adopt the technology quicker.
Santander, HSBC, and BBVA have all set up venture capital funds to invest in promising fintech startups and help them keep their fingers on the pulse. Barclays, Lloyds, and Standard Chartered, meanwhile, have all sponsored fintech “accelerators” — mentorship programmes meant to help businesses grow, some of which also offer investment.
MoneyFarm launched in the UK at the start of the year and Galvani says: “We are very pleased. What is really encouraging is the reaction has been very good. It’s clear that the UK is very reactive in terms of digital. 60% of our clients are coming from mobile.”
The company currently has 80,000 customers across both Italy and the UK.
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