The U.S. fund giant is applying for a banking license in Germany, finews.com has learned. The move is part of a bid to sell its low-cost, diversified investments directly to continental European retail investors via robo adviser.
The largest mutual fund firm in the U.S. plans to launch its robo adviser in Germany and is in the process of applying for a banking license in order to do so, a source familiar with the matter told finews.com. Vanguard confirmed it is preparing a direct-to-consumer offering, but didn’t comment on whether this included applying for a banking license.
«We firmly believe that our cost-effective and broadly diversified investment approach will appeal to German investors,» a Vanguard spokesman said. The U.S. firm will have stiff competition: roughly 20 robo advisers have already hit the German retail investor market, estimated to be worth more than 5 billion euros.
Hiring Efforts
Traditional firms like Deutsche Bank, or start-ups like Quirion and Liqid, which recently hit 1 billion euros ($1.2 billion) in client money, and Blackrock-based Scalable Capital, which manages more than 2 billion euros and partners with Barclays, all want a piece of the market. Some, like Moneyfarm, have already left again. Few start-ups have attempted a banking license.
Vanguard at one point considered offering its robo adviser in the Swiss market, where it is a leading provider to institutional investors and also sells exchange-traded funds to retail investors, but appears to have mothballed those plans.
Instead, last year it hired both Andreas Bittner, the co-founder of Germany's Solarisbank, as well as Jesper Wahrendorf, who ran fintech Ratepay for nine years, to help set up and manage the German offering. «At this point, however, it is too early to comment on the start date or details of the offer,» a company spokesman said.
Two-Tiered Robo
The U.S. firm launched a hybrid algorithmic and human offering – called Personal Advisor Services – in the U.S. in 2015, and in the U.K. two years later. The initial investment for the service, which now manages $170 billion, starts at $50,000.
Relatively late compared to rivals like Schwab, Vanguard last year launched a fully robo offering called digital advisor. This mirrors other U.S. players which have set two tiers for their robo adviser: a partly human-advisor service at a higher price, and a lower-cost, fully-automated one.
Chinese Milestone
German blog «Finance Forward» (in German) first reported Vanguard’s German robo plans last year but did not report the banking license. Bafin, Germany’s financial regulator, didn’t comment. Vanguard’s European bid is part of a wider international push: it just hit a one-million-user milestone with a robo adviser in China, BangNiTou, that it operates together with Ant Group.
Vanguard dropped plans for its own Chinese mutual fund license in favor of BangNiTou. Its push into Germany is reminiscent of a similar retail bid by Goldman Sachs, which launched its digital retail bank, Marcus, in the U.K. in 2018 and is reportedly thinking of launching in Germany next.
