BNP Paribas Asset Management is testing out its robo-advisory platform in Indonesia, with plans to roll out the service in other Asian markets this year.
“We are potentially looking at all markets where we have distribution, but we want to first bring it to a single market to see the adaptability of that […] so Indonesia has been chosen as the one,” says Rakesh Vengayil, deputy CEO of BNPP AM.
BNPP AM has been working with a couple of distributors in the Indonesian market to test the platform’s adaptability to Asian markets, and the response so far has been very good, Vengayil says.
“We have tested the [Indonesian] market, speaking to a couple of distributors and also giving them a sense of what it can offer vis a vis some of the local solutions they may already have and really demonstrating the sophistication of the product,” he adds.
BNPP AM acquired a majority stake in Gambit Financial Solutions in 2017 with the aim of making it the asset manager’s preferred robo-advisory partner for BNPP AM’s retail and wealth management networks.
Gambit is a Belgian financial technology company launched in 2007 by scientists at HEC-University of Liege, and it provides software-driven customer profiling, portfolio optimisation and risk management services to private banks, retail banks and financial advisors.
The French fund house had considered both acquiring a digital platform and developing one internally, says Vengayil, but in the end it decided to invest in Gambit’s existing product.
Since the acquisition, the French asset manager has been focused on rolling out the robo-advisor using a direct-to-consumer model to its group network and private wealth management network in Europe, with demand from both retail and private investors. BNPP AM declined to comment on how Gambit operations in Europe are contributing to the overall revenues for the asset manager.
However, its approach in Asia will be more distributor driven, using a business-to-business model.
“We are not really looking at going directly to the end investor, it’s not a [business-to-consumer] model that we are looking at – we will roll it out in partnership with our distributors in Asia,” says Vengayil.
The introduction of Gambit allows BNPP AM to enhance customer expertise from both a distributor and an end-customer perspective by offering local solutions to investors through partner distributors, he adds.
This means decisions like client segment prioritisation, and available products and services offered through Gambit will be calibrated based on who the distributor is and what their priorities are in that market. They can then plug in Gambit on the back end and design their own branding on the front end.
For BNPP AM’s partner distributors, they have the option of using Birdee, Gambit’s white-labelled B2C solution that offers end investors a fully automated advisory service, or Squiree, which is a B2B solution that supports the investment advisor when dealing with a client.
Working with distributors using a B2B model makes sense in Asia because consumers in the region want their assets managed by a reputable financial institution, which is usually their bank, says Alex Ypsilanti, CEO and co-founder of Hong Kong-based robo-advisor Quantifeed.
Many companies in the robo-advice space also prefer to sell to banks and brokers that already have large distribution channels, says Ypsilanti.
“When a robo-advisor chooses the direct-to-consumer route, it is competing with financial institutions, making it extremely difficult and expensive to acquire customers away from these incumbents,” he adds.
BNPP AM is currently assessing which markets to prioritise for Gambit in Asia Pacific, though it declined to name any specific markets under consideration.
The French manager is aiming to leverage Gambit’s capabilities onto its two core segments in Asia, including the cross-border distribution channels in markets like Hong Kong, Singapore, Taiwan, Japan and Australia, as well as local markets like Indonesia, India, China and South Korea, where it manufactures locally through local distributors to local clients, Vengayil says.
That assessment is expected to be completed later this year and Vegayil expects the platform to have a “local presence in Asia” in 2019.
Indonesia robo scene
Testing Gambit in Indonesia is not the first technology-focused foray by BNPP AM into that market, and the fund firm is looking to build on its earlier experiences.
In October 2016, it became the first asset manager to offer mutual funds through Dompetku, an e-wallet mobile application developed by Indonesian telecommunication operator Indosat Ooredoo.
BNPP AM’s Vengayil told Ignites Asia in October 2017 that the asset manager was latching onto Indosat Ooredoo’s established e-wallet infrastructure to access clients in a market where penetration is a huge challenge, and that the platform could serve as a template to launch similar platforms in markets with comparable infrastructure.
The firm is not the only player with robo ambitions in Indonesia. Local fintech start-up Tanamduit launched a digital platform distributing mutual funds in 2018, and in December, Sydney-based micro-investment savings platform Raiz Invest received approval for a mutual fund selling agent licence. Hong Kong-based B2B robo-advisor Quantifeed told Ignites Asia in June that it was planning to expand into Indonesia as well.