Finax plans for 2021

Wow, that was a hell of a year. 2020 will go down in our history in ALL-CAPS. I am extremely happy that Finax managed to navigate through this crisis on an A+ level. We have outperformed all plans in spite of the pandemic and untouched, we are coming closer to fulfilling our long-term vision.

Finax results and comparisons with our plans are summarized in Rado’s blog Outstanding results of Finax in 2020. That’s why my article will be focused primarily on our plans in 2021. However, I can’t but mention the statistical indicator of our 2020 results that gave me the most satisfaction.

Finax caught up to the biggest players in 2020

Four concrete walls of bank branches and their reputation still remain a sufficient guarantee for many Slovaks to entrust them with their life-long savings. Unfortunately, more than 40 billion Euros in cash in bank accounts loses a significant value due to inflation in the long term.

Majority of Slovak banks offer investment solutions of their own investment management companies. The sales in these instutions are evaluated by a single important indicator: net deposits. That’s the total value of deposits subtracted by the total value of withdrawals.

Considering this important indicator, Finax caught up to the biggest players on the market such as Tatra Asset Management or Eurizon, the management company of VUB bank.

Net sales of Finax in 2020 were 53.4 million Euros, only about 3 million Euros shy of the „Big 3“. And consider this – have you ever seen any billboards, TV or radio ads, or thousands of branch employees who would sell our investment solutions?

Finax caught up to the biggest market leaders with a fraction of the banks‘ marketing budget. We rolled up our sleeves and put in a great team effort – hereby, I am paying tribute to the whole team.

Our portfolios and their performance was one of the keys to our success. Performance comparison of Finax portfolios with funds of other managers will be published over the course of next week. We can tell you that even in this case, Finax was successful.

Our 2021 goals are even more ambitious:

• 200 mil. Euros AUM – more than 250% year-over-year increase,
• 30 000 active clients – close to 220% increase.

2021 – the year of vertical expansion

Many clients have seen or heard in the media that near the end of 2020 Finax was given, as the first entity in Slovakia, a permission to access information on current accounts pursuant to European PSD2 Directive. This license gives us the opportunity to gain access to the client’s bank transactional data – of course under strict security measures and with the client’s consent.

Why do we need it?

There is a lot of mobile apps that help families with their personal finance management (PFM). They help families navigate the ins and outs of their spending habits and help them create budgets for various expense categories (e.g. monthly budget for groceries).

Such an app might help people save on average up to 15% of their income. Thanks to our PFM app your wealth will appreacite even faster.

We know that there is a large group of people in Slovakia who are not saving any money because they simply don’t have the option. They live paycheck-to-paycheck. As Warren Buffett says: „Only when the tide goes out do you discover who’s been swimming naked“ – and the tide went out with the pandemic. People who had no emergency fund and lost their source of income suffered the most.

With this product we would like to expand and reach the segment of potential clients which we have failed to approach thus far. There is still a long road ahead of us, the same as with Intelligent investing. First we need to help people get out of their financial difficulties, show them the way to increase their savings and only then teach them how to invest their money.

You might think that your bank offers a similar tool – that’s a misconception. Our app will take into account the needs of your whole family in many areas. Let me give you a couple of examples:

• we will merge your and your partner’s account into a single overview – banks don’t offer this service,
• all bank transactions will be automatically synced with your bank and categorized, so you don’t need to lift a finger,
• are you a family with two kids? Compare your expenses with other families with the same profile and find out which areas to improve,
• the app will actively advise you on the steps you should take in order to save even more money.

Our app will offer far more features but we need to keep some aces up our sleeves. This app is the beginning of our vertical expansion in the field of financial management. It’s no longer only about investing the amount you have managed to save; we are going to help our clients with a proactive approach to create funds with the intention to invest them.

I believe that thanks to this product we will be able to deliver a much better quality of service to our clients and Finax will become an even more popular platform in the field of personal finance.

We will solve the demand for short-term investments

People say that a good investment is like watching grass grow. In order for the investment to bear fruit and the risk to be as low as possible – it must be long-term.

However, we also feel the high demand of our clients for short-term solutions. Clients don’t want to keep their short-term savings in bank accounts anymore because they lose value due to inflation. 

What would you say if we had a product for you that is extremely stable with minimal risk and its return would cover the inflation?

That’s exactly what we are working on. It will be based on low fees. The target will be a return of 2% p.a. and we would like to keep the maximum downturn under 3%. Of course, nowadays there is no way to get a return covering the inflation completely risk-free but we believe that a temporary downturn of 3% should be acceptable for any good investor.

Take a look yourself, do you like this kind of development over the last 20 years?

We are changing the way people look at insurance costs

We have been argumenting against unit-linked life insurance for many years now. It is hands down the worst financial product in Slovakia. Unfortunately, even common life insurance seemed too expensive and in many ways complicated (e.g. mandatory physical check-ups).

We were thinking: „We have solved online investing, we have to be able to solve online insurance intelligently as well.“ That’s why I am glad that after long years of searching we have found a partner who will provide life insurance for a fraction of the price compared to the regular insurance prices in Slovakia.

Finax will introduce this kind of insurance for its clients in the first quarter of 2021. It will be a small life insurance revolution.

Final words of appreciation

I don’t need to tell you that 2020 was a tough year. However, you trusted us to take care of your savings. This way, I would like to say thank you to all our clients. When I look into the future – the year 2021, I feel hopeful. There are brighter days ahead.

More than three years ago, Finax came up with a brand new technology category. Now we want to expand beyond the scope of investing, in order to satisfy your everyday financial needs. We will try to make each new product as simple and as efficient as possible, in order to continue building profound and meaningful relationship with our customers.

There is a plenty of work ahead of us and you can be sure that Finax is getting ready for a big year. We are all full of enthusiasm when working on widening our product range and listening to your ideas – how to improve our services and innovate so you can lead better lives.