Hitherto, Vontobel wasn't at the forefront of the digital revolution in the financial services industry. Now, the bank is the first to launch an instrument guiding the purchase of structured products.
The atmosphere at Vontobel's offices in Zurich's banking district on Monday was almost festive. Investment banking boss Roger Studer presented the «deritrade SmartGuide» to the media, a tool that he expects will revolutionize the trade with structured products.
The «deritrade SmartGuide» is – put simply – a decision-making instrument. It is based on data provided by Vontobel's trading platform «deritrade» and delivers customers (client advisers, independent wealth managers) additional information on the basis of customer behavior. As for instance on the Amazon website, the system indicates comparable products to the one chosen by the client.
Platform with Four Functionalities
«deritrade SmartGuide» has four basis functionalities: similarity (comparable products), popularity (often traded basic values, regional preferences), performance (relative yield and proof of performance) and community (user advertising). The user determines the value of each parameter independently, according to Markus Pfister, in charge of the development at Vontobel.
The system went live in Vontobel's target markets of Switzerland, Europe and Asia. It is a milestone because it combines a huge financial community. The «deritrade-platform» represents not just Vontobel as issuing bank but also Deutsche Bank, J.P. Morgan, Morgan Stanley, Société Générale, UBS and Zuercher Kantonalbank. The platform thus covers 85 percent of the market.
Advantageous for Small Banks
Vontobel also has cooperation agreements with 34 banks and 300 external wealth managers, which trade structured products. Small and medium-sized banks profit from the fact that they can buy the products to the same conditions as the bigger institutes, which otherwise profit from the bigger volumes, as Gerhard Meier (pictured below), head of «deritrade» said.
In Asia, the bank is still looking to expand as it hasn't yet established itself in the way it has in Switzerland. It is looking for further issuers for the platform.
For Use Round the Clock
One of the greatest challenges for «deritrade SmartGuide» was to make it function around the clock to allow customers in Asia, the Middle East and Europe to work with the platform during their respective opening hours.
In the medium term, Vontobel plans to make the instrument available to the customers themselves, Roger Studer said. Advise by the bank thus wouldn't become dispensable, but better. The bank also considers extending the 'smart- and crowd-data approach' applied to structured products to entire portfolios. That way, Vontobel would truly set new standards in the field of Robo Advisers.
