Fintech

Are you truly innovating or just smelling the money?

Are you truly innovating or just smelling the money? An interview with Swanest. Main image: studiostoks, Shutterstock.com
Written by Shaun Weston

Shaun Weston catches up with Swanest CEO Silvan Schumacher for an update on funding, and the future of innovation-driven investing platforms.

Today is the day investing platform Swanest announces that Belgian early-stage investor Philippe Gillion has invested €750,000 in the company. I couldn’t be more pleased about this news, as I enjoyed an enlightening conversation with Swanest CEO Silvan Schumacher earlier this year.

Swanest is still officially in beta, yet recently received regulatory approval from the FCA. I asked Silvan about the latest funding and how Swanest has evolved over the past year.

What’s the background behind the funding, Silvan?

Well, as you know, Swanest was founded in late 2014 with the intention to bring a robo-advisor to the European market. You may think that it took us far too long to raise money in order to do what others are already doing, and we would fully agree that the world doesn’t need another robo-advisor. Especially not at the moment, when banks are starting to jump on the hype.

Two years ago, we saw this coming. We knew the market would become bloody. And if everyone is offering the same, then the war moves towards fees, which is a very nasty place to be.

Another big problem that robo-advisors face at the moment are very high acquisition costs. This is especially worrisome, because the revenues these services generate per customer are actually quite tiny. You’re likely to spend much more on a music streaming platform, a dating app or a newspaper subscription than your investment service.

For us, it didn’t mean that we needed to optimise the business model. Rather, it was a strong indicator that the product itself may not be what people really want. This is why we started the long journey of customer understanding. We tested different value propositions, gathered lots of feedback and talked to our users. Joining the NEST’up accelerator also helped us to fully explore and embrace this customer-centric approach to innovation.

We now believe in building a much stronger product for a certain type of self-directed investor. And because we’ve done our homework on the marketing side, we’ve succeeded in raising some money.

Silvan Schumacher, Nicolas Bindels, Cyril Lequeux and Youri Tolstoy.

Silvan Schumacher, Nicolas Bindels, Cyril Lequeux and Youri Tolstoy.

So, where do things stand at the moment?

Most importantly, we have received our regulatory approval. This is a big milestone and allows us to move closer to enabling investments through the platform.

We also invested a lot in the development of the product. We’re currently evolving Swanest according to all of the insights we gathered. On top of this, we’re rebuilding the entire back-end of the service, which will allow us to keep innovating much faster than anyone else in the future.

Current robo-advisors have a very limited vision. In the case of Swanest, you can think of us as “a fountain of ideas”. It’s a very colourful fountain, though! Each of the founders has great ideas and ways of thinking. We challenge each other, and finding common ground makes us sometimes a bit slower, but it’s a very creative process that makes us much stronger in the long-run. In the end, we build an investment service that we would want ourselves, and there’s just so much to innovate. We will do it – step by step, inch by inch.

Lastly, we’re moving forward on the marketing side of things. Even if you have a great product, the world doesn’t automatically know about it. We thought hard about how to bring Swanest closer to investors when they need us, and away from traditional push-driven strategies.

How does Swanest relate to the bigger fintech picture?

Swanest is based on values and built around the customer. This is what a fintech startup should be about. However, the reality looks a bit different. Most importantly, there are lots of fintech startups serving large financial institutions, which make up the majority of fintechs in Europe. Mostly, their purpose is to increase efficiency and to lower costs in order to make an institution more profitable. Or to put it differently, they make the dinosaur look better and run faster, but its purpose remains being built to hunt for more food.

In fact, we’re well connected to banks, and quite a few wanted to work with us. Their offers were very attractive, too! However, we realised that institutions don’t regard values and customers as highly as we do. Nevertheless, we also understood that it’s really not that easy for them. Many of them are trapped in legacy cultures that don’t allow them to think outside of the box, even though some individuals actually want that.

Then you have the consumer-focused fintech companies. Also in there, you find a lot of traditional finance people that smell the money and jump into the trend to hunt for more.

Finally, you remain with a few true innovators. We will prove to the world that Swanest belongs in this group, and invite all the rebels out there to think differently with us.

READ NEXT: Interview with Silvan Schumacher of Swanest (podcast)

Main image: studiostoks, Shutterstock.com

About the author

Shaun Weston

Shaun Weston is chief editor of BankNXT and a creative content provider specializing in digital projects, marketing and social media, and is based in London with software company Backbase. He has worked with businesses that focus on editorial strategy for online or print, consumer or B2B, and his work includes The Economist, SAS, Oracle, Future Publishing, FoodBev.com and Backbase.

Leave a Comment