“Whatever happens, it’s a win-win for consumers”
Expert article for the Fintech & Insurtech Special of Netzwoche from 6 November 2019
Robo-advisors are booming in the USA, although they have yet to establish themselves properly in Switzerland. Daniel Peter, the co-founder and CEO of Viac, tells us why such automated advisory services could flourish in this country as well.
Why are robo-advisors less popular in Switzerland than in the USA, for example? Why are the Swiss sceptical about automated advice?
Daniel Peter: From our perspective, there is no fundamental scepticism about robo-advisors in Switzerland. It’s probably more a case of the USA being one of those countries where take-up of equities is exceptionally high and robo-advisors are therefore far more widespread. With the Robinhood trading platform, “zero cost” solutions are also readily available on the market in the USA, lending such approaches further attraction. Other differences between solutions in the USA and what’s available on the Swiss market include lower barriers to entry, and deals whereby the first USD 10,000 are managed free of charge. The minimum investment in the USA is generally just USD 500 or less, while the threshold in Switzerland is usually CHF 5,000 or more. Here, Viac represents a clear alternative when compared to the rest of the Swiss market: the minimum stake is a mere CHF 1 and you can have up to CHF 2,000 managed for free if you recommend the solution to others. We’ve attracted some 15,000 active customers in less than two years, so you can’t really claim the Swiss are fundamentally sceptical about digital investment platforms.
How can robo-advisory services in Switzerland hold their own against foreign competition?
Price is often mentioned as the key differentiator but that’s not enough on its own. In the age of the smartphone, people also expect a positive customer journey as a matter of course. We feel we can also carve out a niche for ourselves with excellent customer service – for example, being quick and easy to reach, and speaking the local language are key considerations here. Customers really appreciate that. There are pros and cons in the wider context as well, however; political stability and respect for the rule of law are real upsides in Switzerland, for example, but the downsides include a lack of European market access and inadequate harmonisation of interfaces.
Where does it go from here for Viac?
We have already more than surpassed the goals we set ourselves over two years ago. This takes a certain weight off our shoulders and leaves us more leeway for new and innovative ideas. We are primarily focusing on the pensions market at the moment but Viac is set to become more than just a pensions platform in the very near future. We are working on a number of exciting ideas but we don’t want to give too much away at this stage.
How does the future look for robo-advisory services in Switzerland?
We expect a range of start ups to drop out of the market, as they are not achieving success quickly enough and the fintech investment boom has probably peaked. You’ve got to make money at some point. The pressure will come from the established banks – indeed, Credit Suisse has announced a digital platform just recently. Whatever happens, it’s win-win for consumers, who stand to benefit from digital products that are more affordable and more attractive.