Bank Vontobel Takes Over a Swiss Personal Finance Platform: Exclusive Interviewby Fintechnews Switzerland November 1, 2019
Gokong, a Swiss Personal Finance Platform, recently announced that Bank Vontobel is taking full control over the platform
We did an exclusive interview* with Gokong’s CEO about the exit and about the Swiss Personal Finance and the Financial Fitness market.
Fintech News Network (FNN): Why is it important that Bank Vontobel is taking now control?
Rahul Kaushik (RK): Let’s have a look around within the banking and financial services space. We see that current distribution which hadn’t been too much of an issue in the past is now in fact a big threat and challenge due to developments in the fintech and tech space (by which I mean the likes of Apple jumping into financial fitness). These new players are capturing significant mindshare away from the incumbents. In order for the incumbents to avoid becoming banking/financial product containers, they would need to step in and compete with the fintech’s and tech companies and start taking control of the distribution.
One, naturally, asks: build, buy or partner? Without getting into the complexities around the building if one looks at the partnering part, it is clear that it doesn’t fundamentally transform “distribution-ownership” it rather delays it. Eventually, transaction volumes of partner banks would scavenge transactional volume from the incumbents. Within the buying context, the valuations of fintechs are sky high which puts the ROI on such investments really far out into the future. Given the magnitude of volatility in this space, making top-heavy acquisitions seems adventurous at least to me.
Additionally, given any fintech use case, a base layer of innovation addressing convenience, availability, and insights is a necessary condition to fuel more innovation, e.g. institution agnostic data aggregation. Given all that if an institution has an opportunity to merge a startup that does on-device data aggregation, no other competitor in Switzerland does that, has built a reliable and consistent voice in this space at a fraction of a cost of an acquisition, then wouldn’t that be an obvious choice?
FNN: How Private Banking and Personal Finance fit together?
RK: Well I think they’re deeply intertwined. In the past one might have argued that the “personalization” in private banking would not have come through in some sort of a digital offering. But, a lot has changed and is changing. There is a tonne of innovation in this space and there are many fintechs rushing to disrupt this space. From a demographics perspective a significant amount of wealth is going to be transferred to a digital generation that likes to take charge and is not shy of tinkering with things themselves. Within that scope it becomes really clear that these “new” HNWI’s would also leverage these digital solutions to manage their finances, maybe not a bulk of it, but a certain volume would certainly migrate to digital solutions which are really leveraging the theme of personal finance.
FNN: What were your most important learning in the GOKONG journey?
RK: Financial fitness is the new way to the bank! The fintech space is very disruptive, every player in this market needs to continually innovate to serve the end-user. All the fintech’s (partner banks included), tech companies are all rushing into this space and taking away, bit by bit, mindshare and transactional volume away from the financial services sector. We believe that our bet on financial fitness was a good one because it is exactly the paradigm, i.e., financial planning/fitness/monitoring, that most of the disruptors are using to gain traction.
Within the Swiss context, I don’t think consumers are going to cull their existing banking or financial relationships; But, I do see a growth in transactional volume going away from the incumbents to the disruptors all within the context of financial fitness. What I’ve learned is that for any idea to succeed in this space it either needs to develop a base layer and/or develop a strong value proposition around financial fitness.
FNN: How do you see the Financial Fitness market in general?
RK: It is much larger than I had originally anticipated! The scope of what financial fitness makes possible for both the consumers and the incumbents is tremendous. This is about convenience, availability and insights. Within those three pillars there are tonnes of ideas one can build a startup around. And, each such startup can still position itself as an essential cog for the delivery of financial fitness. In all of this, it is clear to me that for the financial services sector to ride the next wave of growth in this market they would need to start leveraging the paradigm of financial fitness.
*Important Note: The answers are the opinions of Gokong’s Rahul Kaushik and not the one’s of Bank Vontobel.