Robowealth’s Thai Expansion Continues Apace, Driven by Need and Propelled by WFH
Robowealth is one of Asia’s more interesting and already entrenched digital disruptors, providing retail and mass affluent customers with robo-advisory asset allocation recommendations plus automated investment execution. Robowealth is targeting not only retail and mass affluent customers, but also high net-worth customers by providing the best-in-class wealth solution with high touch services. Robowealth operates as a mutual fund brokerage securities company and an investment advisory securities company under Thailand’s SEC licensing, offering both the B2C and B2B models, in other words, direct to private clients and also direct to intermediaries. Hubbis has the opportunity in early January to again meet with CEO Chonladet Khemarattana, who updated us on Robowealth’s progress during the year of lockdown. He reported that much had been achieved in 2020, especially as the digital solution needs he and his founder partners had identified have been seen more clearly in the stark light of the pandemic. And he explained that much more could be achieved, offering some lofty business and financial goals for 2021.
The democratisation of Thailand’s wealth management market is central to Robowealth’s vision, that is Robowealth aims to build a stable financial ecosystem under the concept of “Empower Future Financial Ecosystem” through the Business to Consumer (B2C) and Business to Business (B2B) schemes. Robowealth strongly believe that this ecosystem will ultimately help all stakeholders to achieve their investment goals efficiently. As Thailand’s population ages and pressures mount for greater savings and retirement provisioning, investment inclusion remains relatively low, meaning that more and more people are ill-prepared financially for retirement and for living longer. And the pandemic has further hindered progress in this regard, as the government there has been forced to protect the nation’s health by shutting so many segments of the economy, including the dominant tourism industry, thereby leaving many people there struggling and often dipping into precious savings.
Branding and segmentation
Robowealth sees itself as a vital part of that democratisation of private wealth, albeit amidst the unexpected arrival of the pandemic. The firm operates via several brands, with Robowealth as the corporate brand and also the operational brand for high tech and high touch B2B investment solutions, with the firm offering ‘Robo-as-a-service’ for both incumbents and start-ups. Meanwhile, the firm’s ‘INDEGO’, ‘odini’ and ‘Robo-for-Advisors’ brands are for B2C and B2B2C, with INDEGO brand targeting high-net-worth clients, odini the B2C brand for the mass market, and Robo-for-Advisors brand targeting financial advisors who need wealth management platform to serve clients more efficiently and clients who need a hybrid service of utilizing both robo-advisor and traditional face-to-face investment advisors.
The firm’s model is therefore to work both directly with the higher net worth client segment in Thailand – those with investible funds of more than USD300,000 - as well as working in partnership with leading financial players in Thailand who are feeling their way into leveraging these platforms to expand and to better service their own customer bases, from retail/mass affluent upwards to their own HNW investors, and who need to expertise available from Robowealth to introduce or expand their digital investment offerings.
Chonladet first identifies two key trends evolving in Thailand. The first, he explains, is that the pandemic had accelerated the demand for digital solutions. “With no face-to-face meetings between advisors and clients, they can use Zoom or other media of course, but they cannot obtain the signature of the clients to approve transactions, leaving everyone exposed. Accordingly, there is a strong demand for systems that offer RMs and private bankers the ability to transact mutual funds for the investor, with approvals via mobile. However, for retail customers, the transaction confirmation via mobile on any subscription and redemption orders are not a convenience, especially when rebalancing mutual funds for each asset class in portfolio. That is the number one trend we are seeing here. And that, for example, is why we have been so keen to roll out a hybrid robo-advisor tablet/iPad application to help RMs access the automated portfolio for clients without transact mutual funds via phone call confirmation.”
The acceleration of robo-advisory
Here he also clarifies that robo-advisory is actually a subset of what the group offers, and certainly not the entire offering. “Robo advisory is all about speeding up and making more efficient the customer criteria and suitability analysis, and then advancing through to the requisite and relevant asset allocation, based on a recommended set of funds. Then the software allows for automatic investing for the client, with new money then added later if the client sets it up like that, and the appropriate re-balancing takes place automatically. Applications that provide advice, but not execution for the client are not, in my view, real robo-advisors.”
It is also worth noting that that Robowealth first obtained the relevant SEC license in 2017 and successfully operate as a robo-advisor for Thai mutual funds ‘odini’ in 6th of June 2018, including pure digital account opening without a face-to-face protocol. Thus, Robowealth has become the first robo-advisor in Thailand.
Getting the right traction
Although many robo-advisors are still perhaps not doing as well as they or their backers had hoped in many markets, Chonladet is more optimistic for Thailand. “Our mission is to convey that our combination of both strategic and tactical asset allocation allows us to outperform the benchmark, meaning that we offer more stable returns than traditional providers,” he comments. “We are also going down both the B2C and B2B routes, as we know that both avenues are important to our success. The B2B offering is providing our technology to other financial institutions, and we have already secured many deals with other banks, securities firms, asset management companies, and FinTech start-ups.”
He explains that the company quickly put in place agreements with leading financial institutions, and thereby built a friendly ecosystem and goodwill for B2B partnerships with both incumbents and FinTech start-ups. “Accordingly, there is a ready infrastructure to support our Robo-advisor, Robo-as-a-service, and Robo-for-advisors, such as with mutual fund investment platform ‘FundConnext’, a subsidiary of the Stock Exchange of Thailand, and an e-wallet platform ‘Advanced Magic Card’s wallet’, an affiliate of Advanced Infor Services Plc. And the result is that we have gained recognition from regulators and stakeholders as a leader not only in the robo-advisory field, but also in the mutual fund investment field.”
Navigating the recovery
The second trend, he reports, is what he terms the ‘K-shaped’ recovery – when the economy recovers unevenly causing the wider gap between winners and losers - anticipated for Thailand, faced by which there is a growing need to diversify investments carefully in terms of selecting not only the right region, but also the right sector and asset class. For example, to the US, Europe, Japan and, of course, China, or perhaps selected other Asian markets.
“And aligned with this,” he explains, “there is sector-driven investing into tech, healthcare, logistics and key areas that are benefitting from these circuit breakers and that are relatively strong performers. Greater thematic investment is part of this second key trend we see, and which needs to be addressed by the digital solutions out there, including Robowealth. This is also relevant across all segments, from retail to HNW investors.”
Four pointers to the future
Chonladet offers his update based on four key elements. The first is to review progress to date on current projects, the second the priorities for 2021, the third the effort to build new business and the fourth target numbers to aim for in the year ahead, especially as the Series B funding will take place this year.
Chonladet reports that 2020 was tough early on, but Robowealth manages to launch two major services, an app, FinVest, in cooperation with Kasikornbank, one of the biggest banks in Thailand, and also with Lu International which is a subsidiary of China's leading technology-empowered personal financial services platform ‘Lufax’ – having Ping An as a major shareholder. “FinVest,” he reports, “became the first curated mutual fund investment app in Thailand, which was a major achievement.”
The second launch was another mutual fund service app ‘AscendWealth’ under True Money Application, which is a subsidiary of Ascend Money - a regional FinTech firm under CP Group with Ant Financial as partner. TrueMoney is e-wallet, e-payment and international remittance application.
“For Ascend,” he explains, “it was not actually us launching the new app but integrating our mutual fund services into the existing e-wallet app in the name of the TrueMoney wallet. TrueMoney wallet is actually the biggest wallet provider in Thailand, having about 15 million customers.
Accordingly, the idea is that Ascend Wealth offers mutual fund investment to the mass market, while FinVest is aimed at a higher market segment, and will, for example, in the first half of this year offer direct investment into the offshore funds.”
2020 also saw Chonladet and partners successfully complete the restructuring of the Robowealth group, creating the mutual fund brokerage securities as the first entity and then the investment advisory securities as the second entity, both of them operating under the supervision of Thai SEC. The third entity is a software house named Codefin Co, Ltd. that has successfully to date rolled out product development for banks, securities firms, asset management companies as well as for the Stock Exchange of Thailand.
Priorities for 2021
As to priorities for 2021, Chonladet wants to strengthen brand awareness and build out the B2C brands, which are currently Odini and FinVest. “It is vital for us to focus on more brand management and corporate PR, following the completion of our Series A core funding last year from Kasikornbank’s VC arm at 8.8% of Robowealth Mutual Fund Brokerage in Nov. 2020,” he reports.
“This year, we plan to raise Series B funding, and that means more corporate PR effort is required before and after that,” he reports. “We also want to leverage more on our infrastructure to find more B2B partners and deals, so we are talking with several more banks and several other big companies in retail business, in short, any business lines where we can leverage our products and strengths.”
As to new business, his third key topic, Mr. Chonladet hopes not only to launch a ‘Robo-for-Advisors’ which is a hybrid robo-advisor on table, but also to use the robo-advisor alongside the Thai provident fund regime, which is a defined-contribution scheme, similar to the 401(K) in the US. “We hope to have the government support this in terms of tax benefits if the employees invest via the robo-advisory and app,” he explains. “Under the provident scheme, the employers have an obligation to provide some investment top-up for those employees who do invest in these pension schemes. If we can achieve that, it is the ‘Blue Ocean’ for us, as right now there are no mobile apps, no robo-advisory available for the provident fund market. Additionally, we are not only aim for the provident fund scheme, but also look into other tax benefits funds such as Super Saving Fund (SSF) and Retirement Mutual Fund (RMF) regime. This could be a new financial planning tools that consolidated all segregated portfolios to a single optimal portfolio for Thai people!”
The firm's third new business line centres on the opportunity to provide a more robust micro-investment infrastructure in Thailand. “We can consider this like 'Acorns' in the US, but in Thailand, we will focus more on the infrastructure level rather than on a B2C level.” The idea is to enhance existing Robowealth's Open API to automatically generate a tiny amount of investment anytime customers pay for goods or services. The API module can support both Robowealth's and partner's applications, Chonladet reports. This initiative can effectively help increase the number of new investors.
The fourth new business area is digital assets and cryptocurrencies. “We might have to consider offering this under another branding, but the idea is to offer a robo-advisory solution to manage a portfolio of digital assets and cryptocurrencies automatically.
In short, his four key priorities at the start of 2021 are launching the hybrid robo-advisor or advisor 2.0 on iPad or Android, building more scale in order to serve more clients for the current B2B2C branding, and to expand to new business such as the provident fund, micro-investment, and expand robo-advisory to digital assets.
The numbers game
All of these initiatives going to plan, he reports, should translate into an anticipated total AUM by December 2021 equivalent to USD1 billion this year for the B2C business.
Chonladet also offers some other insights, for example into the central role of partnerships for Robowealth. He explains that partnerships are vital lifeblood for the firm. These generally evolve over a series of meetings, leading to a mission statement, then the elaboration of the project, workflows, timelines and the total plan for execution.
Chonladet has a core mission to boost partnerships with financial intermediaries or indeed other partners that can help expand the firm’s business, for example, telecoms and retail businesses with a major retail customer base. “Partnerships with banks, insurers, other financial institutions or other key businesses helps leverage our B2C brands and target different segments of the wealth market here,” he reports. “And we are thereby also able to incorporate and introduce new features for financial planning so that we are helping the end customers with their multiple goals, whether those include house purchases, education for their children, retirement planning and so forth.”
He explains that the B2B offering plays into an environment in which the banks want to be ahead of the game in capturing the mass market. “Robo-advisory is a natural and very easy channel through which to serve their clients,” he says. “And for that, they have two choices - they can develop their own in-house, which is time-consuming and expensive, or they can work with us, and we can adapt our offering to each of these clients and work on revenue-sharing arrangements. We always make sure we adopt the correct positioning for each partner in order to avoid cannibalisation, as well as to ensure all necessary regulatory requirements are met throughout. And most importantly, we aim to get to market within six months, as time is of the essence for all parties.”
Some advantages of lockdown
As an aside, he remarks that the pandemic has limited the ability of foreign vendors to compete locally, offering Robowealth a window to own more of the B2B market without intensified competition. “It is clearly much harder for foreign software houses to work with the local banks or financial institutions in the time of Covid-19. That has been a plus for us, to be honest,” he says.
Chonladet concludes the discussion by reiterating how digital adoption in Thailand was already high and has surged again since the pandemic. “The rationale for digital solutions in the investment world is as strong as it was before the crisis hit,” he says, “but mobile adoption has further accelerated. Every bank and brokerage now see this picture, and that is why they want to take up more digital wealth solutions. That is a very positive environment for us in which to market and to operate.”
Getting Personal with Chonladet Khemarattana
Born in Chonburi, roughly 80 kilometres south-east of Bangkok, he later studied for his Bachelor of Economics at the prestigious Thammasat University in Bangkok. After graduation with a first-class honours degree, his first job was at the Bangkok Bank, followed by a stint at the Siam Cement Group (SCG) in the business development department.
“At the time, I wanted to go abroad to an Ivy League institution, and of course, to do so, it is much easier if you obtain the scholarship from the SCG,” he recalls. “However, at that time, I realised in discussions with my senior colleagues who acquired the MBA from top universities that I was more suited to the world of investments, technology, and so forth. Instead of applying for the SCG scholarship, I decided to move to a software house with less than 100 staff. That was a pivotal moment for me.”
He then went back to Thammasat to complete his Master of Science in Finance as a top student, after which he hopped around many securities companies for the next decade, learning more and more about the world of finance and understanding ever more about the potential for digital disruption in the industry.
“I had seen the trends in the developed markets that customer needs would evolve rapidly and capital markets would be digitally transformed. Therefore, I resigned from the brokerage firm's managing director position and founded FinTech start-ups in algorithmic trading and robo-advisory fields. That was another pivotal moment of my life.
He explains that to start the ball rolling, the start-up must have a solid business model with an excellent partnership strategy. “And that is how I leveraged my network of contacts to identify key business partners in both financial institutions and real sectors. The idea of creating a sustainable FinTech ecosystem has always been my core purpose since the early years as a start-up founder. Thanks to all partners and stakeholders, now we are on the right track to foster the successful B2C and B2B wealth tech solutions.”
Chonladet is so busy with his work and meetings that his focus is entirely on capital markets and the FinTech industry. During the weekends, he is also serving as an adjunct lecturer at Thai leading universities. Due to this commitment, he has been chosen as one of the “TOP 10 Most Influential People in FinTech” by the Thai FinTech Association (TFTA).
He passionately supports the UN's Sustainable Development Goals, especially in reducing inequalities. “My ultimate goal is to help reduce the economic inequality in Thai society as it faces one of the world's worst wealth distribution. Together, we need to provide every Thai convenient, user-friendly, and reliable investment channels. The service provider could be my company, my partner, or even any other company. It does not matter who gains the market share if Thai people can access efficient investment channels. There should be no competitor in helping people do so.”
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