Swiss Fintech Evolute has recovered from its crisis. With a new CEO at the helm and a new partner, the firm aims to move into the business with wealth-management platforms.

Evolute is back on track: having appointed Myriam Reinle, an e-commerce-expert, as its new CEO, the Zurich-based firm is now taking another next step forward: the provider of software for wealth managers has signed a strategic partnership agreement with BDO, the bookkeeping and accounting firm.

The deal entails BDO enhancing the digital service platform for independent wealth managers with functionalities, for which Evolute is designing the software, the statement said. The platform will include all the services needed by the industry – compliance, risk, controlling and taxes (BDO) and portfolio management (Evolute).

Recovering From a Tough Setback

The deal with BDO is an important step along the way of the new strategy for the fintech that was founded in 2016. A strategy that Reinle will aim to follow through.

Evolute's recent history was relatively subdued after the going together with Swisscomply, the compliance and regulation specialist had been cancelled. Evolute founder Michael Hartweg was forced to go looking for new capital and partners. In March 2019, he generated new cash of some 10 million Swiss francs, from Partners Group founder Urs Wietlisbach and ex-UBS boss Marcel Ospel.

Patrick Barnert, who had been appointed to the board and who had managed a successful exit with fintech Qumram, took it upon himself to put a new strategy and management in place.

Goal: Platform Provider

In 2020, Evolute is a smaller organization, with 38 members of staff. It is focusing more on the product development and innovation based in the Ukraine than on the distribution. The portfolio management system of Evolute in future will be the door opener for the core business. Or, as CEO Reinle put it in an interview with finews.com: «Evolute is moving from being a software provider to a platform provider. Our strategy is to provide convenience to clients with our platform services, a value added that helps generate a profit.»

Put another way: Evolute has 25 clients and sales of 1.3 million francs. The fintech is quite far away from breaking even.

The Price for Software Is Very Small

Reaching break even with the old strategy seems tough enough. The market for software for independent wealth managers is tough and more than a dozen established providers and with new competitors trying to force their way into the business – a business that incidentally is shrinking because of regulatory reasons.

Also, margin generated by the wealth management business are fairly limited. «Independent wealth managers will pay 1 to 2 basis points of the assets under management for a software solution. That is simply not enough to make ends meet on a sustainable basis,» said Reinle.

Making Clients and Producers Join Hands

Instead of looking on as the price for software tends to zero, Evolute now plans to develop other business options – and to offer software for free instead, in the medium term. «We are convinced that software for wealth managers will become a commodity,» Reinle said. She knows the platform business from her time at Homegate, Car4You and Lendico, a crowd lender.

The strategy she devised includes the developement of an open ecosystem in which wealth managers, clients and product providers meet on the Evolute platform. The company aims to analyze client data of wealth managers, detect the needs and make offers of new products – anonymously, as Reinle confirmed.

Not a Distribution Channel

«It is not our aim to be an extended distribution arm of a product provider,» she said. Clients need to find partners and services which generate a value added for them.

The timeframe is clear: mobile versions for clients have been launched on an app, a market place will go live in the summer and it plans to come with a software version that allow wealth managers to onboard within one hour later in the year.