The emerging ecosystem of financial services technology companies is boosting recruitment in the Spanish financial sector for the first time in almost ten years, while the harsh process of traditional banking destruction of employment remains open.
Spain ranks as the sixth largest country in the world in terms of start-ups specialising in financial services. There are approximately 300 fintech and 90 insurtech companies that offer their services in Spain.
The average Spanish financial consumer has a lot to gain from the appearance of these players. The predominant situation of traditional entities added to the scarcity of independent distribution – far from the situation of IFAs in the UK – has led to an offer of high commissions, closed architecture and left many middle-class investors under advised or unable to obtain portfolio management services.
Robo-advisors, favoured by this situation and in the wave of the favourable European regulation MIFID II, that pushes for more transparency and lower costs, are breaking through in the Spanish market.
Moreover, savings of Spaniards are moving from deposits to Investment funds because of the low interest rates of the European Central Bank (ECB) and the depreciation of the value of housing, and just 8% of families invest in funds – the lowest percentage of the five large European countries. The market has reached the figure of 300 billion euros in 2018 and is growing at an annual rate of 25% in the last 5 years. In addition, the notorious unsustainability of the Spanish public retirement system will lead to an important growth of private savings schemes.
A final consideration: six out of ten Spaniards consider themselves as early adopters and 93% of the population consider important to have financial knowledge. Nevertheless, only 15% know what a fintech is and only 12% know at least one robo-advisor.
In summary, we believe the Spanish market has an enormous growth potential for robo-advisors in the coming years and Finanbest wants to become a key player in the market. There is no other platform that offers the best-in-class approach in each step of the process and at the lowest cost. On the other hand, we want to consolidate ourselves as the preferred platform for B2B2C distribution (white label) agreements for small and medium-sized entities. In a second phase, we will replicate our business model in Latam.
Most obvious exit for investors in this market comes from the purchase of the company as an operating entity by a larger financial institution (we already have some offers in the table), valued by assets under management (2% to 2.5% valuation) or per customer, between 2,000 to 10,000 euros each. There have been numerous operations in the US in the last years and various successful exits in Europe only in the last 12 months: Escalable (BlackRock), Gambit (BNP Paribas), Pritle (BinckBank), Wealthfy (Aviva), among others. Pritle was bought for €12.5m with €65m AUM.
You can find out more about Finanbest by visiting the pitch page today.
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