Fintech
Individual graded term paper
Project Whale Killer
greenWarren
Frankfurt School of Finance & Management
Course lectured by
Anonym
Assignment submitted by
Anonym
Frankfurt, January 2021
, Table of Contents
1 Introduction & Literature Review .............................................................................. 3
2 Methodology ................................................................................................................. 4
3 Market Data, Analysis & Discussion of Research Results .......................................... 4
3.1 The market ......................................................................................................................... 4
3.2 ESG awareness .................................................................................................................. 5
3.3 Competition ....................................................................................................................... 6
3.4 The three problems in society ............................................................................................. 6
4 Business Model ............................................................................................................. 7
4.1 Our Value .......................................................................................................................... 7
4.2 Key Partners ...................................................................................................................... 8
4.3 Distribution Channels ......................................................................................................... 8
4.4 Cost Structure .................................................................................................................... 8
4.5 Revenue Streams................................................................................................................ 9
4.6 Customer Segmentation & Relationship ............................................................................. 9
5 Execution plan, Key Activities and Resources & Discussion of Limitations ........... 10
6 Conclusion .................................................................................................................. 11
7 Appendizes ................................................................................................................. 12
8 References .................................................................................................................. 19
, 1 Introduction & Literature Review
“Banking is necessary, Banks are not” said Microsoft founder Bill Gates in 1994 underlining
the threat traditional banks and wealth manager face. Three waves of digital transformation
have affected the market by the emergence of a new era of business models changing
people’s everyday life and partially replacing traditional businesses (Jung et al., 2017). The
uprising digitalization with disruptive innovations like robo-advisors and mobile payments
force banks to adapt as they could lose market share in their traditional fields of business
(Kashyap, 2016).
Automated investments are perceived as a great chance due to lower fees, comfort and better
performance. That is why robo-advisor’s assets under management (AuM) developed into a
multi-billion and soon a multi-trillion-dollar market (Appendix 1).
In contrast, others still have doubts. Therefore, one leading robo-advisor was accused of
forcing customers “into a one-size-fits-all rebalancing algorithm” (Marotta, 2015).
Robo-advisors have the potential to change the financial system, especially when they start
replacing humans and making active fund managers obsolete (Tokic, 2018). Consequently,
many incumbents are forced to introduce their own robo-advisor, e.g. Charles Schwab.
Today, the landscape of mobile payments has become more complex as new players entered
the market such as Google, PayPal and Facebook aiming to replace cash, cards and other
payment forms (Merbecks & Bruck, 2012).
The increasing change and pressure on banks lead to the question: are banks still able to stay
in the game? Research from Dab et al. (2017) shows, banks in China and India are already
losing influence to emerging Fintechs.
But what have banks done wrong for such a development? – they have shuttered the general
trust.
First, they charge high fees of about 1.5% - 3%, but still perform inadequate. European active
fund managers were outperformed by the S&P 500 over short-and long periods of time. S&P
Global pointed out: “In 2019, 81% of euro-denominated U.S. equity funds underperformed
their benchmark. Over the 10-year period, this rate increased to over 98%”1.
greenWarren charges less and performs even better.
But most importantly, people think banks do not act in their best interest. N262 found out
only 27% of people would ask their bank for advice when they have financial concerns.
Shockingly, that number drops to only 13% in Germany. In Italy 25% think their bank only
cares about making money from them which is underlined by unexpected charges or hidden
fees approx. 67% of people have already faced. For example, 38% had to deal with ATM fees
while 40% faced overdraft fees. Less than 50% of US and Europe customers can explain
what an overdraft actually is.
1
SPIVA Europe Scorecard, 2019, S&P Global
2
N26, 16 June 2020, The Big Banking Chat: what are the biggest frustrations with banking?
Individual graded term paper
Project Whale Killer
greenWarren
Frankfurt School of Finance & Management
Course lectured by
Anonym
Assignment submitted by
Anonym
Frankfurt, January 2021
, Table of Contents
1 Introduction & Literature Review .............................................................................. 3
2 Methodology ................................................................................................................. 4
3 Market Data, Analysis & Discussion of Research Results .......................................... 4
3.1 The market ......................................................................................................................... 4
3.2 ESG awareness .................................................................................................................. 5
3.3 Competition ....................................................................................................................... 6
3.4 The three problems in society ............................................................................................. 6
4 Business Model ............................................................................................................. 7
4.1 Our Value .......................................................................................................................... 7
4.2 Key Partners ...................................................................................................................... 8
4.3 Distribution Channels ......................................................................................................... 8
4.4 Cost Structure .................................................................................................................... 8
4.5 Revenue Streams................................................................................................................ 9
4.6 Customer Segmentation & Relationship ............................................................................. 9
5 Execution plan, Key Activities and Resources & Discussion of Limitations ........... 10
6 Conclusion .................................................................................................................. 11
7 Appendizes ................................................................................................................. 12
8 References .................................................................................................................. 19
, 1 Introduction & Literature Review
“Banking is necessary, Banks are not” said Microsoft founder Bill Gates in 1994 underlining
the threat traditional banks and wealth manager face. Three waves of digital transformation
have affected the market by the emergence of a new era of business models changing
people’s everyday life and partially replacing traditional businesses (Jung et al., 2017). The
uprising digitalization with disruptive innovations like robo-advisors and mobile payments
force banks to adapt as they could lose market share in their traditional fields of business
(Kashyap, 2016).
Automated investments are perceived as a great chance due to lower fees, comfort and better
performance. That is why robo-advisor’s assets under management (AuM) developed into a
multi-billion and soon a multi-trillion-dollar market (Appendix 1).
In contrast, others still have doubts. Therefore, one leading robo-advisor was accused of
forcing customers “into a one-size-fits-all rebalancing algorithm” (Marotta, 2015).
Robo-advisors have the potential to change the financial system, especially when they start
replacing humans and making active fund managers obsolete (Tokic, 2018). Consequently,
many incumbents are forced to introduce their own robo-advisor, e.g. Charles Schwab.
Today, the landscape of mobile payments has become more complex as new players entered
the market such as Google, PayPal and Facebook aiming to replace cash, cards and other
payment forms (Merbecks & Bruck, 2012).
The increasing change and pressure on banks lead to the question: are banks still able to stay
in the game? Research from Dab et al. (2017) shows, banks in China and India are already
losing influence to emerging Fintechs.
But what have banks done wrong for such a development? – they have shuttered the general
trust.
First, they charge high fees of about 1.5% - 3%, but still perform inadequate. European active
fund managers were outperformed by the S&P 500 over short-and long periods of time. S&P
Global pointed out: “In 2019, 81% of euro-denominated U.S. equity funds underperformed
their benchmark. Over the 10-year period, this rate increased to over 98%”1.
greenWarren charges less and performs even better.
But most importantly, people think banks do not act in their best interest. N262 found out
only 27% of people would ask their bank for advice when they have financial concerns.
Shockingly, that number drops to only 13% in Germany. In Italy 25% think their bank only
cares about making money from them which is underlined by unexpected charges or hidden
fees approx. 67% of people have already faced. For example, 38% had to deal with ATM fees
while 40% faced overdraft fees. Less than 50% of US and Europe customers can explain
what an overdraft actually is.
1
SPIVA Europe Scorecard, 2019, S&P Global
2
N26, 16 June 2020, The Big Banking Chat: what are the biggest frustrations with banking?
