When Mifid II suddenly becomes a competitive advantage

Dr. Harald Brock (Managing Director, investify TECH) and Andreas Falger (Director and Division Manager Private Banking, IBB AG) show in Private Banking Magazin how regulatory challenges can be turned into competitive advantages.

Internationales Bankhaus Bodensee (IBB) from Friedrichshafen has been breaking new ground for some time. In private banking, it has begun its realignment in 2019 and has tackled the project of asset management digitally and innovatively on the topic of regulation. Here, asset management is at the centre of the entire positioning as a forward-looking model. IBB is thus one of the first institutions to follow the Federal Association of German Banks (BdB), which is calling for significantly more innovation and digitalisation to ensure competitiveness.

For the bank, which had outsourced its asset management service from 2018, the reconstruction and the return of decision-making authority to IBB was a key course setting for the further development of private banking as a business area within IBB. An experienced portfolio management team was recruited for the bank on Lake Constance to set up and implement asset management. This is a clear signal from IBB that it wants to push growth in a targeted manner. The goal is to reach the one billion euro mark in entrusted client assets. Currently, IBB’s assets under management amount to about 700 million euros.

In the evaluation process of the possible implementation options, the IBB managers quickly came to the conclusion that the effort of a completely internal reconstruction would have been too great due to the given regulatory requirements. Under these circumstances, the market launch would have taken far too long.

The bank wanted to implement a new, future-oriented idea through the special entrepreneurial character that radiates into the bank through the main owner and to take a somewhat different path. The big picture underlying both the operational portfolio design of asset management and the technological implementation was, on the one hand, future-oriented digitalisation, but on the other hand also down-to-earthness and making things as pleasant as possible for the customer.

Opportunities through tech and reg platforms

Instead of complaining for years about the disproportionate nature of the European Mifid regulation, which would burden smaller institutions in particular and force them to cut costs, IBB searched intensively for forward-looking solutions and suitable implementation partners in the market.

They found what they were looking for with the technology and regulatory service provider Investify Tech, which convinced the bank with its one-stop approach. The special feature: Investify not only enables a comprehensive digitalisation of private banking, with which all sales and settlement processes can be carried out conveniently from home or in the branches.

The provider’s special regulatory platform is particularly useful. It makes it possible to significantly minimise the regulatory burden in the bank. Thanks to the platform strategy, “small but mighty” is no longer a disadvantage in the securities business. The costs for the set-up remain affordable, as the required services can be selected from a modular system. The ongoing costs for the topics of software as a service and outsourcing are also oriented to the size of the respective asset manager. This means that the regulatory (cost) burdens due to Mifid, Mifir et cetera are proportionally lower through a uniform platform and thus manageable for every house, even smaller ones. In addition, the use of a proven platform significantly minimises project risks and shortens the lead time (time-to-market).

Read the full article and learn how IBB AG was able to focus on its core competencies by extensively outsourcing regulatory tasks.