UBS

LONDON — How can big banks keep up with nimble fintech startups trying to eat their lunch? One strategy is to act like them — if you can't beat 'em, join 'em.

"What we tried to do with SmartWealth is to be like a fintech, to go at that pace but within a large organisation," UBS' Shane Williams told Business Insider during a recent interview. "It's trying to get the best of both worlds."

Williams is the co-head of UBS' recently launched online wealth manager, SmartWealth, which lets people gain access to the Swiss bank's investment expertise with as little as £15,000 ($18,915) to invest. The previous investment threshold was £2 million.

Williams told BI: "We went from me and my manager saying 'let's do it,' and then we built out the team, hiring people either internally or externally, everything from data scientists to marketing. All in the same place, on 3 Finsbury Avenue. Everyone is co-located on one floor. It's like a little startup and quite self-contained."

Williams and his team even had to pitch for investment internally in the same way as a startup would have to approach a venture capital fund. The team first pitched the bank's internal innovation board for "seed funding" — a little startup cash to show the project was viable — before pitching the executive committee for "Series A" funding, the first major cash injection to get it off the ground. Williams says: "We had to prove that we knew what we were doing."

'It's not just one person sat in a backroom'

The platform took a year to build — lightning quick by the standards of a big bank — and today SmartWealth is a team of 80 people in London. On the day we meet in late November SmartWealth has just opened its first real customer accounts.

The service is one of a number of so-called "robo advisors" that are springing up across the globe, offering people low-cost investment services online. Analysts at Bernstein said in a note earlier this year that there's "a strong case to be made that assets run by such strategies will increase significantly," citing transparency, ease of use, and the marketing potential of the "robo" label.

However, despite the name of the sector, SmartWealth is one of the few "robo advisors" that actually doles out advice — most competitors, such as MoneyFarm or Nutmeg, are discretionary services that manage clients' money for them.

Williams says: "To do that [offer advice] we need to assess your financial situation, what you can afford to lose, and also your financial personality, how you react if you do have losses or gains for that matter. From those two things, we decide you should be in one of five strategies. They're manifested as funds. We give a suitability letter as well."

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UBSCustomers get access to UBS' CIO (chief investment officer) notes as well as the funds. The funds themselves are also core to UBS.

Williams says: "It's not just one person sat in a backroom working out asset allocation. There are 200 people looking at macroeconomics, 24-hours a day, working out what's the best, and constantly changing those allocations based on what's happening in the world. That is a very human element."

What makes it a "robo," rather than simply an online portal to access UBS' investment products, is the on-boarding process. A chatbot interface takes people through the sign-up process, measuring their risk tolerance and financial capability. This then informs the advice UBS gives. The whole thing can take as little as 10 minutes, Williams says.