How Julius Baer and vestr successfully built a platform to digitise AMCs

In 2018, Julius Baer wanted a solution to improve the handling of Actively Managed Certificates (AMCs). The Swiss bank realised they needed a more efficient process, as relying on large spreadsheets made it hard to standardise and manage certificates. 

Julius Baer searched the market for an existing software solution but found that no "off the shelf" product met their requirements. As a result, Julius Baer faced a unique innovation challenge: 

• They could choose to develop the solution in-house, but the resources and time required for an in-house solution would have been considerable.
• Julius Baer's internal team was fully committed to the day-to-day running of business and had no resources to address the issue. 

Julius Baer decided to collaborate and partner with vestr, a graduate of the Tenity incubation program, to solve their challenge. With Julius Baer as a client, vestr was able to develop a product that digitises AMCs and makes it possible to run them efficiently and quickly. The solution supports a global market that is estimated to exceed $1 trillion in assets under management.

The partnership between the two companies is a great example of a corporate innovation as a result of a corporate and startup working together.

In this case study, we’ll go through:

1. The results of the Julius Baer and vestr collaboration
2. How did the partnership take place?
3. What can we learn from this collaboration?

‍Note: If you want to learn more about how you can find collaborative startups partners in the Tenity ecosystem, reach out to our team.

The results of the Julius Baer and vestr collaboration

vestr successfully built a platform to manage AMCs

When vestr first joined the Tenity incubation program, the platform was not fully developed and at the time the company consisted of the three co-founders.

Fast forward to today, and vestr is a digital platform that connects issuers, asset managers and service providers in one platform, and helps companies move away from spreadsheets, phone calls and emails to a more digital process and platform.

The partnership with Julius Baer resulted in the first collaboration that focused on changing how AMCs are managed. 

Nowadays, vestr has developed and enhanced the platform even further with new features and a better user experience, which means that in 2023 vestr clients can:

• Send their AMCs anonymously to companies that can provide an ESG rating.
• Use many different types of fee structures that can integrate with their platform.
• Generate sophisticated reports with multiple language options, different formatting and company branding.  
• Support different currencies as well as cryptocurrencies.

vestr has become a key player in the AMC market

Since 2018, vestr has seen impressive growth of platform, with strong market penetration and expansion to multiple countries including Singapore, Europe, Africa and America. They have a growing client base and are currently working with a wide range of clients including issuers, SPV providers, asset managers and brokers.

Also, vestr: 

• Has over 1,000 professional asset managers as users
• Secured CHF 10mn in financing
• Has entered the American and African market
• Has a trading volume of over USD 1 billion 
• Have a 40+ international team including ex-employees from Google, Avaloq, Accenture and ETH.

Julius Baer was able to get the solution they needed in a much shorter timeframe

For Julius Baer, the collaboration with vestr allowed them to get the solution they needed within a short timeframe and at a lower cost than in-house development. 

If Julius Baer had decided to develop the solution in-house, they would have had to hire a large team to build and maintain the software. This means spending on salaries, recruitment, and ongoing expenses. 

By collaborating with vestr, Julius Baer had access to a team with highly specialised knowledge and were able to access a ready-to-use, market-tested product without having to wait for a long internal development cycle. With vestr being an early-stage startup, they had made AMCs their niche and exclusively focused on that particular use case.

How did the partnership take place?

1. Meeting via Tenity’s startup incubator programme

In 2017, vestr took part of the Tenity fintech incubation program. Once the startup joins our network, we offer coaching and support to help them accelerate their growth and ready them for any potential collaborations with our corporate partners. 

Through the incubation program, vestr received:

1. Exposure to a large innovation ecosystem including industry experts, investors and corporates.
2. Access to a network of over 200+ fintech mentors.
3. Intense coaching with masterclasses on product development, marketing and sales.
4. Opportunity to attend fintech events and conferences.
5. Access to a co-working space in key fintech hubs.

‍Learn more about our incubation program: Tenity startup programs

Julius Baer is also a Tenity partner and has been part of our ecosystem since 2015. As part of our corporate partnership, we introduce corporates to startups and help them learn about the startup ecosystem, collaborate with the right companies as well as offer opportunities for investment.

Vestr and Julius Baer started to collaborate on a solution during Tenity’s program. And the rest is history!

In an interview on the collaboration with vestr, Nic Dreckmann, Chief Operating Officer & Head Intermediaries and Luigi Vignola, Head Markets at Julius Baer, talked about the benefits of the Tenity ecosystem and how they as a corporate use Tenity to seek out collaborations: 

“It gives us the opportunity to put the challenges we face in our companies to the fintech ecosystem – everyone from academia, universities, students, already existing small companies – and to ask them to come up with ideas. Once an idea has been selected, we turn it into a prototype.”

2. The opportunity: use AMCs to support bankers

Julius Baer explains that they were seeing more bankers setting up their own shops in Asia, with some opening with over 100 clients and over USD 100 million. With this level of investment, AMCs are a very cost effective solution that allows intermediaries to execute an investment strategy across client portfolios. That’s because AMCs are a lot more flexible and less expensive alternatives to investment funds.

But AMCs are usually managed on excel spreadsheets, which are hard to standardise and are not dynamic enough. Julius Baer couldn’t find any “off the shelf” SaaS solution that would help them manage AMCs.

By collaborating with vestr, clients can use the Julius Baer issuing program to issue an AMC without having to set up a legal entity in a specific jurisdiction or appoint a specific administrator.

In the interview, Nic also says: 

“The tool also reduces the size of assets required to justify launching an AMC. In the old world, you needed USD 10 million – 15 million to issue an AMC, depending on the strategy. With the new platform, it makes sense to launch an AMC with as little as USD 5 million.”

3. Why not build internally?

Julius Baer decided it would not make sense to develop a solution to digitise AMCs internally for a couple of reasons:

1. The cost of internal development would be too high

In order to build an internal solution, Julius Baer would have to find and hire a team that would build a solution. Most likely it would have to be a large person team, which would mean spending resources on hiring and training.

2. It would take too long

Julius Baer needed this type of solution now, not in 5 years. But they knew it would take some time to just get the right team together. The current Julius Baer team is very focused on the day to day processes, so it doesn’t make sense to take resources away from that to build this.

4. The solution: the vestr platform

Once the two parties were introduced to each other, they used deep dive brainstorming sessions to understand what it would take to build the product. With Julius Baer’s deep financial market knowledge and vestr’s lean team, the two were able to put together a product that would successfully digitise AMCs in the right way.

At the core of vestr’s technology solution is an event sourcing engine, which can keep track of the smallest product adjustments in a way that the state of the system can be recovered quickly. This allows users, auditors and regulators confidence that they can analyse the interactions of the platform very precisely.

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Investment managers can also do rebalancing and download reports directly on the platform. Vestr’s APIs can also be connected to issuers’ downstream systems and brokers to enable a seamless experience and minimal efforts.

The partnership helped give the product credibility, and it also helped show that the product had real practical value, helping increase the adoption. 

In Q1 of 2018, vestr signed a contract with Julius Baer and the MVP went live in Q4 of 2018. In 2021, the Proof of Concept (PoC) launched in Singapore. In 2023, the companies are still working together and vestr has since raised CHF 10 million.

The collaboration has led to innovative ways to develop AMCs. Firstly, you can now use AMCs with smaller portfolios. In the past, you would typically need at least $10 million to make setting up an AMC worthwhile. But with the new platform, it now makes sense to launch an AMC with as little as $5 million. This lower requirement allows more intermediaries to participate in the AMC market and offers flexibility for smaller investment strategies.

The platform also saves you a lot of time compared to the old spreadsheet-based process. You can monitor in real-time the performance of products enabling you to quickly respond to changes in the markets. Also you can rebalance the certificates in just a few clicks. 

As Julius Baer comments:

“The partnership with vestr to offer digital services around active management in Singapore, aims to improve transparency, flexibility and time-to-market. we believe that this innovative platform will accelerate our services and AMC activities, making it more efficient and intuitive.” Rajesh Manwani, Head of Markets and Wealth Management Solutions, Asia Pacific, Bank Julius Baer, commented.

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What can we learn from this collaboration?

As a corporate, you need extensive access to innovative startups

Corporate innovation doesn’t work in a siloed environment. It works best when different companies and individuals collaborate together.

The Tenity ecosystem allows companies like Julius Baer to be part of an innovation ecosystem. With that, Julius Baer can access a large pool of early-stage fintech companies which they can network and collaborate with. Here is what Julius Baer had to say about the ecosystem: 

“It’s a bit of a laboratory for us. We can throw in questions and see if somebody can come up with a smart solution without using too much of our own resources”

Being able to access a network of at least 300+ startups instead of a small portfolio of around 20 to 30 means corporates are a lot more likely to find a suitable partner, and it’s why our entire ethos is based on the law of large numbers.  

It’s important to keep an open mind

Innovation via startup collaboration requires a specific type of mindset: one where both parties have an open mind and are keen to try out new types of technology. 

As a corporate, that means you need to make sure your internal team understands what it entails and can drive real innovation. For example, it’s incredibly important to involve key decision makers from the start to ensure your corporate innovation program delivers real results.

As Senad Celebic from Julius Baer says:

“When working with startups, it is important to be open in terms of the way of collaboration. Just an example: When selecting a “regular” service provider, usually buyers know what they want in terms of requirements and so is the procurement process designed. 

A startup like vestr at the start of the collaboration, did not have a product, the solution has been co-created in the course of the project. The regular procurement process would not have worked with such an approach.”

It helps to work with experts who have done this already

Julius Baer wanted to move quickly. If the bank went down the internal development path, it might have taken years to develop the right solution.

At Tenity, we were born from corporate innovation. We were initially a spin-off of SIX (the Swiss Stock Exchange) and are now independent. Our background means that we live and breathe corporate innovation and can guide corporates and startups to collaboration.

By working with Tenity, Julius Baer was able to take part in an innovative project that delivered real results and solved a real problem. 

Julius Baer & vestr case study: a collaboration supported by Tenity

The case study is an example of innovation as the result of a corporate and startup working together. 

This particular collaboration was able to succeed because Julius Baer had an open minded approach to working with vestr. Together they have revolutionised the management of AMCs and the AMC market globally. 

‍If you want to know more about Tenity’s innovation ecosystem and how we could help you, reach out to our team.