At our recent Swiss WealthTech event in November, Delia Steiner, Country Manager, Switzerland, at aixigo, and Dr. Jan Amrit Poser, Chief Sustainable Investment Officer at radicant, discussed radicant’s proposition and how it will reach its target audience.
Increasing revenue in pretty much any mature market is only possible by increasing the reach of your product or service. Within wealth management, however, the issue has been that the cost of coming down the wealth scale has been prohibitive. But what if technology could solve that issue? What if there was the opportunity to appeal to the emerging wealthy on their terms?
radicant, a new bank backed by Basel-Country Cantonal Bank BLKB, is one good example. With sustainability at the core of its mission, it aims to appeal to a younger generation. By combining this with a digital-first proposition, the bank hopes to capture and retain this segment while its wealth grows and then keep them for the long term.
Dr. Jan Amrit Poser, Chief Sustainable Investment Officer at radicant, commented: “The people that are now coming of age and creating wealth are the millennials and Gen Z. They are digital natives, and they are also sustainability natives because they know they will be feeling the effects of climate change. radicant is a digital bank that has fully aligned itself with the 17 UN Sustainable Development Goals (SDGs); this is not just about aligning the investments but also the banking services and how we conduct our business. How can a bank serve these generations and help them to grow their wealth was the question that we, therefore, asked ourselves.”
Indeed, radicant’s goal is to be recognised as a life companion and a movement for a sustainable world. Its mission is not just to sell a series of sustainable products, but to build a collaborative community and gain trust through transparency. For example, radicant has a proprietary sustainability rating based on the SDGs for each and every company in your managed portfolio. Those metrics are available in real-time via an app, putting into effect the digital-first approach. If you purchase a fund from your broker, you do not get this level of transparency - this fosters trust.
Thus, the two-pronged approach of sustainability and digital service delivery has been well-thought-out in relation to the target market. How will radicant work to attract its attention?
Achieving this relies heavily on reaching the target market in the first place and meeting target customers at a time and a place where the offering is likely to appeal. Vertical and horizontal integration can both help.
Two approaches that can support this focus on the core strength are horizontal integration – offering services in collaboration with other players in the wealth management industry – and vertical integration, where you embed your services into entirely different sectors. Vertical integration intends to reach the target market at their time and place of need, such as offering loans when buying cars or real estate, offering pensions through an HR department, and the like.
Vertical integration is more disruptive and complex and requires a lot of openness. Still, players are starting to opt for new approaches now that ecosystems and collaboration are widely accepted and gaining traction.
Poser commented: “The digital and sustainability natives are the target, so you need to meet them where they are. We know they are digital natives, and we know they like a sense of community, so a starting point has been to create a social media community to gain visibility and inspire discussions about sustainable development, investments and lifestyle. It is about being relevant and timely and getting attention with content they want and need. Insights like where to invest for a better world create movement and interest, and from there converts them.”
Delia Steiner, Country Manager, Switzerland, at aixigo, believed that traditional banks have to keep up with other industries to capture interest and trust. “For me, distribution and client acquisition are fundamentally based on trust. In today’s world, that is gained differently than in previous generations. The angle of technology and whether a proposition fits in with someone’s digital habits and the way they live their life is not the home turf of trad wealth managers, and they need to look around, see where their audience is and go meet them there.”
Being able to have a fresh tech stack and take an ecosystem approach, be open to working with other vendors and welcome the opportunity to collaborate is key for banks like radicant. “For that whole to work elsewhere, though, all the composite parts also need to be able to scale a business and work with any legacy systems, where required, to embed our proposition,” said Poser.
“We have been very fast moving and gained our license, but of course, it is a tough thing to do, and if you do not have the value proposition, this is a crowded space, and there is no room for everyone. The most important step is to do what we say we will do and create a sustainable investment movement with online tools. By working with other technology partners and having the tools to do sustainable wealth planning, we can reach this new segment,” said Poser.
This article is a write-up from The Wealth Mosaic’s Swiss WealthTech Live Event 2022 to launch the Swiss WealthTech Landscape Report 2022. You can access the full report here.
