Digital transformation, Van Lanschot and robo-advisory
Have you ever been in contact with private bankers? Probably not, because you need a minimum investment of at least 500.000 euro’s to acquire the services of a private banker in the Netherlands. What if there is a cheaper alternative, which invests your money for you, real-time and with a optimal result according to portfolio theory? This technology already exists and it is called robo-advisory, a fully automated investment tool. In our digital transformation, we discovered the possibilities of robo-advisory and applied the concept to the oldest private banker in the Netherlands, Van Lanschot N.V.
As mentioned before, Van Lanschot is the oldest and one of the largest private banks in the Netherlands. Currently, Van Lanschot is comprised of two different organizations with the same executive board and board of directors. The first company, Kempen & Co, focuses on Asset Management and Merchant Banking. Van Lanschot, the company of focus within our assignment, provides the services of private banking. Private banking is the core activity provided by Van Lanschot and has generated the most revenue of all the core activities of Van Lanschot NV with 263,3 million euro’s in 2014. Within private banking, Van Lanschot recently launched a new platform to better suit the needs of the younger customers. This online platform is called Evi. Evi is the online wealth management platform of Van Lanschot. With Van Lanschot’s traditional wealth management, a personal private banker is appointed to the client. In the case of Evi the private banker is replaced by the online platform. We further examined the Evi and its IT-applications and reviewed the business model of Van Lanschot. In the next part, we focused on our technology, robo-advisory.
In the last decade, an innovative IT-enabled service has been slowly adapted in the wealth management industry. It integrates and automates both investment advice and investment management by making clever use of client and investment information and algorithms. The technology is named robo-advisory and emerging start-ups, often called robo-advisors, are challenging the traditional wealth management business model. Robo-advisors provide a fully digitalised wealth management experience. When customers sign up for a robo-advisor, they fill in a short questionnaire to determine their risk preference, goals and income. The robo-advisor then automatically generates an investment portfolio proposal. Robo-advisory has several features that make it a very interesting alternative to traditional wealth management for the customer. Robo-advisory decreases the cost of wealth management, increases transparency and gives a more personalized experience. Furthermore, we investigated several market implications for robo-advisory.
At last, we critically reviewed the compatibility of robo-advisory and Van Lanschot, based on strategically alignment and feasibility. We also give an implementation option for Van Lanschot, such as outsourcing or insourcing. In the end, we recommend the management of Van Lanschot N.V to implement the proposed robo-advisory technique into the business model of Van Lanschot.and and implement robo-advisory within the Evi Van Lanschot brand as an extension. Evi is currently well positioned within the Dutch market and the digital nature of robo-advisory combines well with Evi’s brand values. As an implementation strategy, we conclude that robo-advisory development should be outsourced; yet strategic control over the intellectual property should be maintained.