european wealth management technology vendors

#ItzOnWealthTech Ep. 88: A Digital Wealthtech Showdown — US vs Europe with Ralf Heim,

European geography has become almost irrelevant as FinTech markets have flattened out, enabling technology firms to more easily reach customers beyond national borders. Boosted by cloud software efficiency, specifically productivity tools, communication and open architecture, some aspects of FinTech in the US seem to be falling behind that of most of Europe, where regulation looks ahead, has sparked a surge of innovation in digital financial services, along with the backend infrastructure onto which these products are built and operated. That might seem counterintuitive, as regulation is often blamed for slowing innovation down, but instead, European regulators seem to have focused on reducing barriers to FinTech growth rather than clinging to the status quo and protecting incumbents.

Welcome to the WealthTech Today podcast, I’m your host, Craig Iskowitz, Founder and CEO of Ezra Group. We help wealth managers, asset managers, and WealthTech vendors make better business and technology decisions. This podcast features interviews, news, and analysis on the trends and best practices in wealth management technology.

As you might have guessed, this episode is part of our ongoing series focused on European WealthTech. We chose a company called Fincite, based in Germany, and we chose this firm because they have an end-to-end, all-in-one wealth management platform that’s gaining traction in the EU, and I wanted to speak to their CEO about how they started, the differences between the EU and US FinTech markets, as well as no code software development. We cover this and a whole lot more on this episode of the WealthTech Today podcast.

Click here and schedule a free Discovery Session to find out how Ezra Group can help your fintech firm grow revenue in the wealth management space.

Companies Mentioned:

Topics Mentioned:

  • US vs. European Fintech Markets
  • Low Code Software Development
  • Fincite Wealth Engines
  • Digital Wealth Planning
  • Customer Interaction Principles
  • Building Technology to Attract Advisors

Complete Episode Transcript:

Craig: I’m happy to introduce our guest for this episode is Ralf Heim co-founder and co-CEO of Fincite. Hey, Ralf welcome to the program.

Ralf: Hey, Craig happy to be here.

Craig: And Ralph where you are calling in from, or Zooming in from?

Ralf: Actually from Frankfurt, so we are located here with our company. And actually, today I see it’s the home office as you can imagine.

Craig: Everyone’s at home. We’re all in our homes, I actually my company has always been virtual my consulting firm. So nothing changed for us but big changes for a lot of companies, I’m sure changes for your company when everyone started working from home. To kick us off the episode he gave us a 30-second elevator pitch for Fincite?

Ralf: Yeah, happy to do that. Basically we are what’s called a composable investment software which means that our software asset managers, wealth managers, advisor firms, big banks are composing their processes around onboarding to portfolio generation to portfolio rebalancing, to order execution and to reporting, so basically end to end. And we have that made in a way that banks can configure it very much, or our customers can configure it very much and very fast.

Craig: That was a very brief, good 30-second overview, most people go longer than that. Your website is, because you’re based in Germany, and you have your software firm Fincite, F-I-N-C-I-T-E, for those of you following at home, and you also have a company called Fincite Ventures where you’re investing in companies, can you talk a little bit about that?

Ralf: Basically, it started similarly to the time of Fincite and we found that a lot of executives, or larger senior people from the industry, were leaving banks and founding companies. And this was the trend where we spoke to people and one by the other we said it’s a good idea and so meanwhile we have a portfolio of 11 companies, starting from a fixed income trading platform, commodities trading platform, digital asset management company, custodian aggregator, and what you already can see as a pattern it’s a lot along the value chain of investments and capital markets.

Craig: Indeed, and you have an interesting story about how you found my podcast from Germany, about who introduced you to my podcast.

Ralf: I stumbled upon it twice or three times before that and I heard from colleagues of Refinitiv, of Morningstar and which are partners of us, I do not actually know who it was but they said more or less if you want to learn about the markets in the US, registered investment advisors and how it’s structured here, which is different from Europe, please go and listen to Craig’s podcast and that’s how I found you, and since then I was listening to quite some episodes.

US vs. European Fintech Markets

Craig: Fantastic and big shout out to our friends at Refinitv and Morningstar. Thanks so much, keep keep referring us. So, you mentioned a great first topic that we wanted to talk about was the differences in Europe versus the US when it comes to tech companies. What are some of the differences that you’re seeing? You’ve got Fincite, which is a software company, how is it different when software companies, how they grew up and how the market has grown versus how the US FinTech companies work?european wealth management technology vendors

Ralf: There’s several fundamental differences, one of the first is that market infrastructures are very different. The US is defragmented, so that means in Europe, there isn’t a single market. You have France, totally different. Having totally different processes in investments and for example Germans or the UK is again totally different with the infrastructure there, and around that the custodian platforms, the distribution platforms the organizations of certain conditions almost always a bit different. And we learned that the hard way, because as we started the company in 2015, we envisioned a world in which you can connect all the custodians, all the deposits from all the portfolio’s cash accounts, you can connect real estate, you can produce completely digital advice on topics that because I came from the business intelligence sector and had a business intelligence firm running before it was totally nonsense that you didn’t get much advice or insights on your portfolio’s in the retail space.

Ralf: That was the beginning of the idea, and we learned over the past years from working with larger banks like Deutsche Bank, ABN and so on, in Europe every one is a bit different, and you have bigger players which consolidate for larger market share. So you might have smaller advisors grouped into distribution pools or sales organizations or custodians which are delivering the software to them. It’s a bit different as I imagine the US to be, with very autonomous registered investment advisors and so that’s why also software platforms of the past in Europe, could not scale as a white label solution across all countries, across all parts from retail to institutional and so on. So I think that’s another reason why in Europe we do not have that many large tech firms serving as medium sized companies, we only have larger tech firms serving the larger companies.

Craig: It’s interesting, I do a lot of reading on the EU market and it’s interesting how that’s so different when it comes to how firms grew and how the market reacts and a lot of its legal and regulatory, but do you think that’s going to change soon? Do you see more firms, starting up like yours that are targeting the mid sized clients?

Ralf: It’s not that many actually because I think the hurdles are quite high. So, you need to have, at first, really precise understanding of the market and the needs of it and this already, not that obvious because you have often the situation that each bank is different, each process is different, their advice, they have different product galaxies that advise on their different market data providers. They have different core banking systems to settle things. You need to be very much into it in order to start something new, and I think this will come now more and more over the next years, because first of all also regulation standardizes a lot. That’s a big trend, definitely. And the second thing we see is that also, the cloud movement and in Europe, you have large on premise installments still at larger companies and also in the mid market you still have a lot of on premise software. And so it starts now to move to standards and it starts to move to cloud and I think both of it will maybe empower new foundings, also in the next years, but in the recent years. There haven’t been too many really successful companies, starting up like you have in the US for example.

Low Code Software Development

Craig: Well speaking of successful companies, let’s talk about your company Fincite, and your composable banking I’m really interested in that phrase. We talked about that a bit before we started recording and I would call that low code app development, or even no code. Can you talk a bit about composable banking what really what it is and how some of the software you’ve built around that?Low Code Software Development 

Ralf: If you look at software you have different trends, you have something like a standardized monolithic platform which you had in the past, you roll it out in the same way, you deploy it on premise, you then change it for the local specifics of this company, and then you have the problem that you need to maintain it in a way that you cannot scale it really. Then there was a lot of API based approaches so more modularity, but actually still very developer centric. And what we see now and the term doesn’t come from me actually, I saw it on another site actually, and I liked it very much because it stands for a trend you see more and more that you can define workflows on a platform. So we always have business process modeling, we always had stuff in the software industry, but it becomes now more and more part of enterprise software for different industries. Imagine as a bank you can directly take your process and define it on a log code flow designer, so you can really say this question first and the second question next and so on. You can say, which kind of investment approach you want for which kind of investment galaxy, which interfaces to market data providers, you want to take and can basically define a lot of your value proposition, and your process from onboarding to reporting within clicks. And I think this is a world we are going to I think, it’s something where we are now more in the stage of bringing really valuable software alive in weeks instead of years. And one day we might be really in the world where we can define and change these kind of rollouts within days.

Fincite Wealth Engines

Craig: We’re seeing a lot of that come out in the US as well, firms that are building these tools or offer these tools out. And it’s great for creating workflows without programming, connecting applications together. Really interesting and a big trend. I want to talk a bit about the Fincite.CIOS platform, I’m interested in this. You’ve got a lot of tools that we have over here and a lot of firms are building similar tools. Can you talk a bit about this this suite, you have an aggregation engine, optimization engine, reporting and also build your own. Can you talk about how that the CIOS platform has evolved and how these different applications interact with each other?european wealth management technology vendors

Ralf: Yeah, perfect, I think we learned the hard way. We started a bit at the beginning, by going in a wrong direction. We thought we could define standards and banks would follow the standard, which was a wrong assumption. So CIOS basically uses engines on a lowest level. Imagine this is the API world, you can really say I want to have this kind of optimization approach this is how the risk profiling could work, and it’s all connected with API calls, and this way you can build your own very fast, but also we have the process layer on top and also meanwhile user experience platform on top, where this is the same degree or at least a similar degree of composability as well happening. So you can also define there a lot of things already within the environment. And this is actually perfectly fitting for the European market because as I said in the beginning it’s a way that larger enterprises are saying, but this is my process I need to have it this way. And this is my custodian, I need to have this custodian for regulatory reasons, for example, because my processes are matching I do not want to exchange that. In the brokerage I use the market data from Refinitiv, Morningstar, you name it. So I need to have the exact same one. And so when you are confronted with this requirements in the enterprise sector, you can either say, I always build solutions around that and make it an individual service, which is not scalable, or you try to. And that’s in software development often called proponents theory. So you try to move the needle up of standardization, by making things composable in a platform, and that’s what we actually did with the software and that’s what CIOS is about.

Invest In Others

Craig: That’s cool. So what are these different engines do? Looking at your list of services you have roboadvisor, you have portfolio health check advisor software. So how did these different tools fit together and how I would advise or use your software?

Ralf: Yeah, that’s a perfect question because everything you mentioned is actually running on the same engines because the investment process itself is a quite standardized process. You have some kind of onboarding you have some kind of questionnaire, which is leading to a risk profile, it can be an institutional space that you set further restrictions on investments, restrictions on asset classes, restrictions on ESG sustainability or restrictions on other other items as well. But you can also have a retail customer doing the same or wealth customer doing the same. So what we see is that this kind of flexibility comes from engines, but then you have the direct use case. For example, the software that a roboadvisor uses is to 95% the same, for example a wealth advisor uses because they follow exactly the same processes from onboarding to portfolio generation, to portfolio rebalancing or execution reporting, the value chain is the same, just a parameterization of the process, the product galaxies, or the optimization routes are different. But it’s actually all things you can do within parameterization, and which don’t need to have a complete different software all the time.

Digital Wealth Planning

Craig: Indeed. I always find it interesting how different vendors approach the problems we’re all dealing with the exact same processes. Of course, you have different regulations and different requirements and different investment types in Germany. I did some projects for some German banks and, I can’t remember the German word for bond pricing there’s a key that they need for a bond, some sort of long German word. I thought I knew German but then when I got there’s a whole other dictionary, all the words different, but all the things are the same in terms of you opening an account you’re doing the portfolio, you’re planning for retirement and such, so a lot of the base functionality is very similar. I’m interested in a case study called Evergreen, which is digital wealth planning, can you explain what that is?

european wealth management technology vendors

Ralf: Evergreen is a case study so it’s a customer. Great company, I refer everybody to look at it. It’s an asset management firm which actually is living very much the idea, we are also living because of what they did, they came from the institutional space to Founders Institute, located in Leipzig so not the first location you would have in mind when you found a company in Germany. But what they did is basically they are asset managers coming from having a total return approach. What this means is you have a target to return and around that you work with a risk budget. This approach comes from the institutional asset management space, and it’s something which is, for example, if you have a pension fund and you want to be very sure that you meet your returns with little risk. So it’s a different investment approach than you would have if you generated on risk budgeted. And what they did is basically is they were our customers when they worked as an asset manager at the bank, and they were also our customers again as they are working with retail customers for savers for one euro, because the same approach, total return is as well, very valid if you’re a private person that wants to plan his own retirement. And what Evergreen is actually using from us is exactly what you said. They use the workflow, like a financial planning, kind of interaction with the customer, where they define how much the customer needs to retire and then they are planning towards it with an asset management owned fund. So it’s basically partially a robo advisor partially also full scope asset manager.

Craig: I like the case study how it’s laid out and you’ve got some really nice looking screens they look very retail, like we have a lot of direct to consumer robo advisors or other investment firms, firms like Acorns and Stash and MoneyLion and they’re so consumer focused and their screens are really well designed and nicely laid out with great imagery, they have got their own way of showing their icons and iconography, and you’ve got that as well. So, with the financial planning software, is that something that they can customize, that clients can take your tools and build their own financial planning or is it really a core financial planning application that they can just sort of tweak around the edges?

Ralf: I think this this case of financial planning is something where we have a very basic model so if you really want to differentiate yourself with financial planning, you might still work upon your own let’s say parameterization. But the graphics are also the same if you have a wealth customer or if you have a target return model for an institutional or if you have retail customer savings. You want to have a kind of graph that shows you and guides you and is easy to use, and what you said is also perfect because also in institutional environments, we aim to have the same kind of clarity retail customers are used to, because we are no different. So of course there is a kind of institutional customer who uses super superior data and way more information density. That is maybe not the right one for using our software without building something on top but our approach is more that we go to institutional as well. Traditional customers see the same degree of clarity, the same degree of simplicity in their views on their reporting. And also there is great learning from the retail space because if you look at how you can manage interactions with retail customers, you learn how the often they are logging in how they are changing things, that are they looking at, and it can be the same on the institutional side. You look at what attributions will this investor look like, will he take out the 10 million plus check he’s written for me, because he’s not the same. This is the second time in a short period, looking at performance attributions against the benchmark, and it’s looking bad, so maybe I should proactively inform him. So, having this customer interaction principles you have in the retail space and also the institutional space is a great leverage you can have as a firm. And that’s something also why for us the process are similar the reporting, also to a degree is similar. You can learn from the retail space lot when you go to wealth or institutional space.

Customer Interaction Principles

Craig: You said something I just wrote a note down “customer interaction principles”, a lot of firms don’t don’t think that way. And when I’m talking about your screen, I know they’re advisor facing a lot of these, and we review a lot of software and some of them are so boring, and so dry. And it makes it very difficult to even use the software in my opinion, the way they do it they build it. But if you look at the end user, if the same company also has a client facing interface, it’s very different, it’s bright, it’s colorful, it’s got really good icons and easy to follow. But why don’t you build the advisor piece the same way? Why don’t advisors get the same good looking interface and something they can work with? So I like to what you’ve shown on here and it’s definitely helped me anyway.european wealth management technology vendors

Ralf: Thank you, I think you made a super important point because one thing we learned at the beginning, our customer, our applications were very much customer facing or institutional customer facing. But it changed over the years, also with a trend of hybrid that we have a lot of advisors on the platform. And what you learn with the advisors on the platform is that their pain was basically in the past that came somebody to you and said to you, this is my website I’m using like you might have the Morningstar website in the US more frequently or that somebody is looking on public data coming to you as an advisor and shows to you like, Craig, why am I not getting this from you? Why does this tell me I’m not beating the benchmark? Why do I just get from you the regulatory documents in Europe? Why did you just a PDF from you while I get this insights from them in the more real time way? And this was a perfect wake up call for everybody because this retail platforms came up, and the advisors were they need to be smarter than the customers in order to advise good you need to be smarter you need to have more insights, you need to know more about the portfolios, you need to know how the breakdowns are looking, you need to know how the locations are. And all this knowledge is something that the advisor need to have at hand and when interacting with customers. We usually have two views and usually the advisor has some extra views to be smarter than the investor, also because you should be able to handle more information. And that’s a very important part that you revise, their customer advisor interaction and definitely advisor needs to love the tool as well.

Craig: That’s something a lot of companies don’t think about, and something my consulting firm gets hired a lot for, is re-envisioning the interaction between advisors and clients or even advisors and other advisors or advisors and the broker dealer or bank that they work for. Because you tend to get stuck in a rut, over years or decades when some companies like there’s companies in Germany, which we worked for a long time ago, where there are multiple mergers of companies and you started getting layers and layers of applications and multiple systems and infrastructures that never go away, because they can’t get rid of them and there’s no incentive to do that, but it just starts slowing things down. So thinking about how to re-envision those those interactions. I think it’s something that a lot of firms could take advice from.

Ralf: What you see then is if you start this journey once right, what happens is then that you you notice that the silent sales organizations or whoever you talk to they really rely on the advisors goodwill, on the advisors motivation. So, and to some degree, we had conversations like the advisors, do not use a CRM. And we said yeah okay, maybe not handy enough. No, no, they do not see the benefits they want to keep the control. And you have this high interest conflict with advisors, especially in the color dating market that everybody wants to have control over his assets, and you need to be. This is something you need to overstep as a company, as a firm employing these advisors, you need to provide some this value or really good value otherwise they will not use your tools. And this is something which we’ve learned over the past three years especially that getting the advisors on board, making sure that they consolidate a customer’s assets on a platform that you really have a share of the whole view of value of the customer for example or that you really are clear on your investment advice documentations and you know that there’s no paper left somewhere in the desk you did not look at, which might have been copied by the customers and we saw all kinds of different stories, which resulted in a disconnect from the advisor into companies they’re working for.

Building Technology to Attract Advisors

Craig: That would be a problem, that disconnect and advisors don’t feel connected. I know a lot of advisors move around in the US, you’re are constantly hearing this team move from here to here this to move from there to there. So, there is a battle I was talking to one broker dealer and he said we’re all sort of competing for the same group of hybrid advisors, we just trade them back and forth. So there’s a constant battle and we get asked a lot how can we leapfrog our competition?european wealth management technology vendors

Ralf: Perfect thing and one KPI we once made as a fixed number but it really stuck in the head of the excavators was that the transition or conversion rate an advisor takes with him when he leaves. So imagine an advisor has has 100 million, 200 million AUM, and he is about to leave. So what do we expect he will take with him because the connection between him and the customer is deeper than the connection with your customer and your company. And one thing, and I found this very astonishing, starting in this industry that with this low NPS, Net Promoter Scores and all that, that one thing you want to make sure is that this conversion rate is low, because you want to make sure the customer is connected to your brand. You can do this with marketing or you can do this with a great tool.

Ralf: So you can have a tool where he gets the best reporting in the world, and he gets great insights on his overall financial wealth. I heard one customer once in an interview, we often do one on one sessions with selected customers, and I had one where a person simply told me, and it doesn’t sound very nice, but I can see in this platform how much richer I get each year. And that’s of value. Right. And if you if you train your mind on this kind of thing, then your advisor leaves, and you say, is a great guy I love this guy. But yeah, their systems are bad and do I really give up this transparency, this whole customer interaction I had with this company as well? And maybe I beg him to stay, right? You might have a totally different scenario. That’s why I think customer experience is key everywhere and advisor experience as well is key in investments.

Craig: I would agree 100%. Customer and advisor experiences are key and firms need to pay more attention to them. I wish more of my clients would pay more attention, but then if they did, I might be out of a job. So, I wanted to thank you I realize we’re kind of running out of time. This has been a really quick conversation. I’m glad you found us, Ralf. So where can people find out more about your company?

Ralf: I think we try to produce a lot of content so social media platforms are a good way Fincite has a count on LinkedIn, Twitter, a bit on YouTube but not too active at the moment. The website. Meanwhile, I found LinkedIn quite helpful because you can also see people there, simply address the people working in the team they produce content on LinkedIn as well so if you want to talk ESG will find the sustainable investments and find a person on our LinkedIn account who’s heavily, promoting the different topics there. So you can also reach out to the colleagues directly. So, that’s what I would recommend, yes.

Craig: Wonderful and for anyone listening, Ralf, your name is spelled Ralf Heim. Your Twitter your company’s Twitter is @Fincite2020. That’s your Twitter handle. 2020 is not a good brand!

Ralf: Yeah, you’re right.

Craig: Then your website is Pleasure to meet you. Thank you and talk to you soon.

Ralf: It was a big pleasure. Thank you. Craig.

Click here and schedule a free Discovery Session to find out how Ezra Group can help your fintech firm grow revenue in the wealth management space.



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at