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Kapilendo claims to make financial innovation tangible for the customer and to build a bridge between the traditional and digital financial world. It stands to reason that they also offer asset management digitally and thus via robo advice. As part of a large series of interviews with various robo advisors, we spoke to Björn Siegismund, who explained his USPs and gave an insight into the post-coronavirus market.
The interview with Kapilendo at a glance:
Hello Mr. Siegismund, how would you describe Kapilendo’s scope of services in no more than two sentences?
As a digital bank for SMEs, Kapilendo offers medium-sized customers capital market measures, such as token-based bond and digital share placements as well as investment solutions in digital wealth management, a robo advice service and alternative investment strategies in addition to traditional loans and subordinated financing. As of May 2020, Kapilendo’s range of services will expand to include business accounts and Visa debit cards.
What is Kapilendo’s investment philosophy?
Three principles shape our investment philosophy: 1) managing risks through sound portfolio composition, 2) seizing and broadly diversifying global opportunities, and 3) implementing them cost-effectively through ETFs. We put these principles into practice by applying the renowned all-weather approach, which generates attractive returns with low fluctuations.
Which target groups does Kapilendo address with its product range, and how many AuM and customers do you have in each segment?
Our Wertspeicher (value retention) portfolio is aimed at investors who wish to keep their assets at a stable value and are looking for an alternative to call deposits. The Allwetter (all-weather) portfolio is suitable for investors who wish to build up their assets on the basis of one of the most successful investment strategies while keeping fluctuations low.
How much do private customers with an investment volume of EUR 10,000 have to pay for Kapilendo’s services, and how do you compete with other robo advisors and traditional asset managers?
The total fee for the Allwetter portfolio is 0.92% per year, which at EUR 10,000 amounts to just EUR 7.67 per month. Compared to other robo advisors, this places us among the lower priced providers. In addition, we provide our customers with a very comprehensive investment cockpit free of charge, where they can add additional asset classes and obtain a complete overview of their assets.
What investment strategy do you pursue and how do you manage risk?
We already have a wealth of experience in asset management and have personally experienced what works and what doesn’t in everyday risk management. Our first and foremost priority is therefore to start with careful portfolio composition: each market phase has asset classes that perform particularly well at that particular moment and those that do not perform well later on. We compile the portfolios in a manner that ensures a balanced distribution of risks and opportunities for each market phase. This allows us to master crises well without having to switch hectically back and forth.
As a result, this strategy has produced long-term returns similar to those of shares, but at only one-third of the risk. Especially high-frequency buying and selling based on risk-controlled approaches, such as value-at-risk, usually results in disproportionately high losses during crises. Another reason why we have maintained our approach is because it has once again lived up to its promises.
Meanwhile, there is a multitude of providers for robo advisory, B2B and B2C. How does Kapilendo differentiate itself, i.e. what exactly is your USP?
Kapilendo’s asset management services distinguish themselves from those of other providers in four main aspects:
1) A particularly robust investment strategy, as proven by the latest robo real money test
2) There is an option for a sustainable investment
3) Transparent solutions that are optimally aligned with the investment goals of asset preservation and asset growth
4) Personal contact and comprehensive digital services if required
What is your (marketing) strategy to gain new customers? What role do partnerships play?
Thanks to the wide range of offerings within the Kapilendo Group, which extends far beyond the securities portfolio, we already use various channels and partnerships to address customers. We mainly enter into partnerships with providers who share our understanding regarding quality and innovation or whose services complement ours and vice versa.
Which business area do you believe holds the greatest growth potential? What areas do you want to focus on in the future or add to your business?
We particularly see two developments in the future: for one thing, customers today demand a holistic service approach that goes beyond the ETF investment. Investment does not have to be a pure fund investment. Private loans, digital securities and equity investments can already be used today to make useful additions, even with small amounts.
For another thing, companies and private individuals attach more and more importance to liquidity investments due to the penalty interest and the risk of bank insolvency. For this purpose, we have developed capital market-related investment solutions that are digitally integrated into our 360° financial cockpit for companies.
Let us now turn to the challenges of the coronavirus crisis…
How has the coronavirus crisis affected your business so far? What are your biggest challenges right now?
The coronavirus crisis has led to great uncertainty among many customers. One challenge was to hold one-on-one conversations with as many customers as possible and to discuss possible effects on their portfolio and reasonable next steps. Even though we had some very intense weeks, these talks have brought many positive results.
How has the coronavirus crisis affected your customers’ return? How would you rate yourself compared to your competitors?
Our strategies have also suffered losses in this unique crisis. However, these were very limited in comparison to our competitors and the severe stock market losses. This is also proven by our 1st place ranking in the current real money test. We are the only robo advisor that has been able to outperform the benchmark in terms of costs. Over a period of one year, our customers are in the black.
What medium to long-term risks do you expect the coronavirus pandemic to pose for you and the robo advisory market in general?
We are concerned to see that many competitors have failed in the crisis. This may reflect badly on the industry. It is more important than ever that savers abandon non-interest-bearing call deposits and start looking for cost-effective and convenient investment solutions.
What opportunities could arise from the crisis?
On the one hand, I believe that we will see a shakeout of robo providers, and that quality and stability will prevail. On the other hand, customers of banks and advisors, for example, will recognize the importance of keeping an eye on investment costs in these times.
We have one last question for you …
What have you always wanted to state in an interview, but have never been asked?
My most important advice on finance for myself: never put all your eggs in one basket and do not try to wait for a best moment to take the first step … because we never know the moment until it’s over.
In uncertain times it is more important than ever that financial services providers remain good partners for their customers and present themselves as part of the solution. You can find further information on here.
What current challenges await other robo advisors?
You can find an overview of all interviews here: