Article first appeared in ESGFintech100’s Report
additiv had an unlikely beginning for a FinTech company. It initially launched in 1998 in the sports marketing, media and publishing space. It then added marketing and lead management automation and analytics services for its clients, which became very popular. These new data analytics skills, coupled with several campaigns within the finance sector, led additiv on a path to becoming a FinTech.
Michael Stemmle, the founder and CEO of additiv, said,
“Our extensive experience has been invaluable to our success but we really only started operating as a FinTech from around 2011. It was then that additiv became a pioneer, together with bank clients, to launch a wealth robo solution, as well as the first consumer lending online offering, budget and planning for private clients.”
Fast forward to 2017 and additiv entered its ‘growth phase’. This was where the company’s strategic beliefs were established. Stemmle stated that around this time cloud and data analytics were becoming more widespread and there was a de-and reconstruction of the value chain with zero marginal cost. With its experience in analytics and the successful launch of its wealth solutions, additiv saw a gap in the market for ‘everything-as-a-service’, which inspired additiv to establish itself as a pioneer in Banking-as-a-Service (BaaS).
“From 2020, additiv has been recognised as a leading WealthTech; providing one of the most advanced orchestrated finance platforms,”
“We enable regulated parties to offer their services via all channels to their clients and to financial and non-financial brands to embed finance into their digital client journeys. And now, with Impact Adviser, our clients can offer ESG related tools and services on top of their traditional wealth portfolio.”
Solving the market gap
One of additiv’s core solutions is Impact Advisor, which enables companies to offer digital investment products and services to generate measurable, beneficial social and environmental impacts, alongside financial return.
This tool allows users to tailor their portfolio to meet their values and desire to incorporate the United Nation’s (UN) Sustainable Development Goals into their investment strategies. Not only this, Impact Advisor supports carbon footprint offsetting. Users select a scheme and can invest a portion of their portfolio returns.
For example, clients can pick from various impact projects, such as healthy soils, clean water and quality education. Investor preferences are recorded and they are supplied with content based on their financial and impact goals. Clients are also able to track financial performance, sustainable impact, and offset an investment’s carbon footprint.
“For financial institutions (FIs), additiv provides client applications to manage ESG, impact and UN Sustainable Development Goals (SDG) related investing in partnership with a range of ESG related FinTech partners, including Clarity AI. Delivered via SaaS, FIs offer their own regulated investment products – through advisor-assisted personalized advice, self-service access, or a hybrid of the two.”
additiv offers both financial and non-financial companies with access to the same ESG and impact related services through its BaaS platform. These are integrated into existing journeys or can be used as a standalone product. Furthermore, the platform connects brands with our ecosystem partners, including our five ESG related FinTech partners, to deliver the end-to-end customer journey and fulfilment.
How additiv supports ESG in wealth management
additiv has come a long way since its beginnings in 1998. Part of its success can be attributed to its ability to adapt and spot trends. It is why it comes as no surprise that the company has also moved into ESG.
The ESG sector is having a huge influence in most sectors. Within wealth management, global assets under management reached $2.7trn in 2021, according to data from Morningstar Direct. There are a lot of opportunities. However, the move to the sector is not always driven by the growth potential.
“In the words of the British entrepreneur, Richard Branson, “There is no planet B. We have to take care of the one we have. The future of the planet hinges on the success of global sustainability and it’s our responsibility as a corporate to do everything we can to support this, and all UN Sustainable Development Goals (SDG).”
With the mindset of being positive change, additiv is currently expanding its current range of embedded finance and WealthTech solutions, including savings and wealth management ESG-related products.
“These products are essential – there is no doubt that within the next five years every wealth management service provider will need to offer ESG related solutions.”
One of the ways additiv is helping wealth managers is with the misallocation between a user’s sustainability view and investment allocation. Its Impact Advisor solution aligns the offered portfolio with the client preferences in terms of themes, exclusions and the UN SDGs.
Another challenge it is solving is helping to eliminate the footprint of invested capital. Stemmle added:
“Regardless of the ESG rating, a client portfolio has a footprint and Impact Advisor allows for contributions to NGO’s climate impact projects to offset carbon emissions.”
Differentiating itself from the market
With the rising importance of ESG, there is likely to be a rise in solutions entering the market. This rise is already happening. According to FinTech Global’s data, funding into ESG FinTech companies is expected to double in 2022. After just the first six months of 2022, a total of $657m was invested through 27 deals. This is compared to the $1.1bn that was raised in the whole of 2021. It is also significantly higher than 2020, where $256m was raised through 27 deals.
With so many companies entering the market, it is important to stand out. Stemmle said:
“We believe that we are unique in offering embedded finance to support Wealth Management-as-a-Service (WmaaS). Conversations in the market and our research indicates that no other vendor is supporting this market need.”
Additionally, its products are built on a uniquely intelligent SaaS cloud-native platform, which is called DFS. This is an omni-channel platform built to underpin digital age banking architecture. It serves as an orchestration layer that sits between client interaction channels and the core banking system. It is designed to allow users to access their wealth management platform from anywhere and anytime. Stemmle added:
“Our solutions have been designed with agility and efficiency in mind, enabling our customers to realise the value of digitalization quickly. On average we are able to ensure that we can roll out a new IT platform to our customers within 6 months (from scratch). Given how fundamental a digital wealth management platform is to realizing the benefits of digitalization, this speed of delivery is key.”
He added that once the platform is available, the ability to continually launch and enhance wealth management solutions is essential. Clients are able to launch new solutions within three months, on average. Stemmle added:
“Our clients realize benefits including on average an NPS registered 26 point improvement in disparity between promoters and distractors, a 25% new customer acquisition rate and 75% of total customer AUM in e-asset management.”
Eyes on the future
additiv has had a strong 2022. It recently signed a strategic partnership with ATRAM Trust Corporation, which is the largest independent asset and wealth manager in the Philippines. Through the deal, ATRAM will leverage additiv’s DFS solution to launch smart, engaging and personalized wealth and investment services.
Another significant milestone the company has achieved this year was receiving silver status from the internationally recognized sustainability ratings provider, EcoVadis.The company was ranked in the top 25% of 85,000 companies.
additiv is not just resting on its laurels and has big things planned for the future. The company is looking to release more broader, enhanced features and value propositions for the sustainable finance space. It is also looking to release enhanced embedded wealth platform propositions.
“These solutions will continue to support independent financial advisors (IFAs) wealth and asset managers but also utilised by a multitude of consumer brands who will be embedding wealth management into their offering, including life and health insurers, traditional retail, challenger and neobanks, employee well-being providers and consumer platforms.”
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