The investment world has always been something of a closed shop for the few who were knowledgeable enough or wealthy enough to pay for a fund manager.
Three barriers to entry stand out: investment knowledge, cost and access.
Exchange traded funds
Exchange traded funds or ETFs created a new way to invest that made the global markets more accessible to more people.
ETFs are basically types of securities that normally closely track the performance of a financial index, the American S&P 500 and Eurostoxx 50 are examples. ETFs are traded on the stock exchange just like shares in a single company and hold assets such as shares, commodities or bonds.
ETFs typically have higher daily liquidity – meaning they can easily be converted to cash – and lower costs than mutual funds, making them attractive for investors.
Our BaaS partner, Aion Bank, acquired leading wealth management platform, ETFmatic in 2021, and it has been offering ETF investment services to its retail members via ETFmatic since their launch.
Investment-as-a-Service (IaaS)
Through this partnership, we are able to offer Investment-as-a-Service (IaaS), giving access to global portfolios and expertise from ETFmatic alongside the provisions from Aion Bank for security, legal and regulatory requirements.
Our mission is to make wealth management available to a much wider range of companies, and therefore, democratising access to the global markets to many more potential investors.
What are payment rails? Read all about demystifying payment rails.
How does it work?
ETFmatic developed its solution to be as easy and accessible as possible. First, they developed a simple, fully digital investment questionnaire to determine an investor’s risk appetite.
Portfolios, built by their investment experts, are presented that match the user’s risk profile.
Additionally, portfolios are constantly controlled and rebalanced through ETFmatic’s proprietary platform in order to stay aligned with the investor’s risk, which means their technology does the heavy lifting so users don’t need to.
For a first-time or novice investor, this is a very easy way to get access to the global markets without needing in-depth knowledge or the money to pay for a fund manager.
Portfolios include global providers like BlackRock and Vanguard; thematic portfolios, focusing on ESG, energy, technology, or a blend; bespoke portfolios specifically created for individual clients; and a premium proposition consisting of adaptive portfolios for more advanced investors.
The API-based, turnkey IaaS solution enables partners to seamlessly integrate investment services into their ecosystem.
IaaS driving new fintech innovation
Vodeno and Aion Bank/ETFmatic recently partnered with German fintech, UnitPlus, to launch the world’s first ETF investment product with a seamlessly integrated payment function. This product makes it possible to access investments and also ‘pay with your portfolio’ via the UnitPlus debit card.
This presents an exciting case study for the real-world application of IaaS solutions. This is the first time ETF portfolios are being integrated in the international payment space, and this gives UnitPlus users access to a very convenient investment solution with money available to use anytime, making it tailored to their investing and spending needs.
UnitPlus had a unique idea, and through BaaS, they were able to make it a reality – ETF investment services provided by ETFmatic and cards, payment, credit, KYC and compliance powered by Aion/Vodeno.
Why IaaS is the future
At a time when global inflation is topping heights not seen for 40 or 50 years, keeping one’s money in a low-interest bearing savings account loses value. People are looking for smart ways to grow their money during this period of financial instability.
Banks and fintechs are looking for ‘sticky’ products that can drive adoption and engagement. Embedded investments provide a compelling reason to engage with end users, and it builds on top of the current relationship to talk about what clients want to achieve in the future.
IaaS democratises access to investing, and makes it the newest part of the embedded finance revolution – today, any business can offer an integrated investment product to their customers, helping them do more with their money.
