Financial Services Technologies

Transcription

1 CORPORATE PRESENTATION FinTech Group AG June 2018 Financial Services Technologies We got IT

2 FinTech Group operationals at a glance* Employees Offices Number of Customers Willich Dusseldorf Neuss Andernach Frankfurt a.m. (HQ) Berlin Zwickau Kulmbach Vienna B2C B2B Customer Cash Deposits Securities under Custody Number of exchanges and OTC-partners Approx >200k > m 10.3 bn 64 Executed Trades Executed Trade Volume Credit Book (collateralized) Average Interest Rate (Loan Book) TIER-1 Capital Return on Equity p.a. (before Tax) * As of m 38 bn 186 m 4.3% p.a. 41 m 22% 2

3 FinTech Group - Executive Committee Steffen Jentsch Stephan Simmang Dr. Benon Janos Frank Niehage Muhamad Chahrour Bernd Würfel Niklas Helmreich Co-Head IT MD FinTech Group Bank Co-Head IT Head B2B MD FinTech Group Bank CEO FinTech Group CEO FinTech Group Bank CFO FinTech Group MD FinTech Group Bank Deputy CEO FinTech Group Bank Head B2C MD FinTech Group Bank ALL EXCO MEMBERS ARE PART OF THE 4 YEAR OPTION PLAN 3

4 FinTech Group - track record and mid-term ambition Acquisition of service provider XCOM/biw to control cost structure and set-up tech inhouse expertise Implemented high class management team and subsequent restructuring actions Sold CeFDex to Commerzbank to reduce risk structure (strategic partnership) 22.7 Restructuring of group operations and implementation of IFRS Reporting Boost of organic growth of existing B2C business Implement technology based lending and redeveloping treasury with the potential to generate an additional EUR 10+ million Improved B2C product portfolio with Morgan Stanley ETP partnership Reorganization of group structure and new segmentation into Fin and Tech units Increased investor relations activities Implementing B2B strategy: the standard banking platform for private and specialized banks 16.8 >120,0 >40,0 >24 o Continue strong growth of number of settled transactions o Leverage own used value chain by providing unutilized resources to third party B2B clients o Use liquidity from cash deposits to grow the fully collateralized loan book o Up-listing to Prime Standard of Frankfurt Stock Exchange o Further strategic acquisitions & partnerships >150.0 >50.0 EUR million Net Sales >30.0 EBITDA Net Profit a 2015a 2016a 2017p 2018e Mid-term ambition 4

5 B2C - business model of flatex and ViTrade (c75% REVENUE CONTRIBUTION, ~35% EBIT MARGIN) Fastest growing online brokerage business in Germany and Austria, >200k retail clients doing >9m transactions with notional amount of >EUR 65bn p.a. Market share of >25% in Germany and >50% in Austria in terms of online brokerage transactions (total est. # of transactions: 50-55m in Germany, 2-3m in Austria) Most trading-active client pool in the brokerage market (FinTech clients: avg trades p.a. vs. market: avg trades p.a.) Unlimited trading possibilities with a flat pricing model of EUR 5.90 per transaction - regardless of type of asset (stocks, bonds, ETPs, ETFs etc.) and transaction amount Top notch product offering with open architecture allows offering of Morgan Stanley, Goldman Sachs, Commerzbank, Deutsche Bank, Citi, BNP and other products 5

6 B2C - our competitive edge Self-developed core banking system (FTG:CBS) with outstanding expertise in transaction banking and fully fledge bank with automatized settlement and clearing processes Competitive technology edge due to self-developed, highly scalable security ordering/settlement infrastructure ensures sustainable cost leadership with cost per trade (CPT) of currently EUR 1.45 Economies of scale: each additional trade reduces cost per trade settlement - doubling the # of transactions reduces CPT by >40% Dedicated brokerage offering with focused marketing strategy minimizes operating expenses (cost per client acquisition EUR 100 CPA vs. EUR at competitors) Trading platform only - no research, recommendation or intelligence - avoiding regulatory administration and costs 6

7 B2C - development of brokerage KPIs A GROWING NUMBER OF BROKERAGE CUSTOMERS (IN K) NUMBER OF RETAIL TRANSACTIONS (IN M) 270,0 13,0 240,0 10,8 205,5 175,4 9,2 Source: FinTech Group 134,4 149,6 Source: FinTech Group 5,8 7,1 7,7 FY 2014 FY 2015 FY 2016 FY 2017E FY 2018E Mid Term FY 2014 FY 2015 FY 2016 FY 2017E FY 2018E Mid Term 7

8 B2C - volatility is key driver of transactions and revenues Volatility has reawakened after reaching 20-year record low in 2017 with significant upside potential - resulting in two consecutive record months Jan and Feb 2018 (+40% transactions compared to same period 2017) with strong revenue effect HIGH CORRELATION BETWEEN MARKET VOLATILITY AND CLIENTS ACTIVITY WITH STRONG UPSIDE POTENTIAL Brexit Trump election Increase in volatility led to record transaction number of >2m in Jan/Feb 2018 (+40% compared to Jan/Feb 2017) Jan+Feb Source: FinTech Group Trades per client R = VDAX 8

9 B2C - case study: Morgan Stanley ETP German ETP market size notional of around EUR 70bn pa - FinTech Group with >15% distribution stake In the past: product issuing banks kept 90% of the revenue pool - 10% to product distributor Exclusive Agreement with MS delivers higher revenue stake (50:50) than with other ETP partners (Commerzbank, Deutsche Bank) Already 30,000 flatex-select products issued by Morgan Stanley that clients can trade at no cost AuM component contributes to FinTech Group revenues even if non-flatex clients trade MS products BANKS ISSUE ETPs OFFERED AT FLATEX TRADED BY CLIENTS Market standard in the past: Partnership: 90 : 10 split 50 : 50 split Revenue generation for issuing bank through: Inherent interest component Bid-ask spread REVENUE POOL 9

10 B2B - fully modular self-developed core banking platform (c30% REVENUE CONTRIBUTION, ~20% EBIT MARGIN) Layers within the FTG:CBS banking platform Technology Sales Platform OADO Online branch Entax-BO-Client HTML Objektive-c (ios) Mobile App CRM / Sales Trading FE Java (Android) REST / SOAP Production Platform Regulatory & Steering Platform Support Platform Account/Depot Srv. APIs Securities Payment Service Cards Deposit Transaction Service Credit Facilitation Master Data Accounting Controlling Tax Compliance Regulat. Reporting (Abacus) ABACUS Ticketing InfoZone / WM Mgmt. Reporting DWH / BI Risk / Liq. Mgmt APIs Batchdata Shared Services Service Portal Archive HA Wildfly Java, Go C++ SAP ASE Wildfly Java C++ SAP ASE PostgreSQL Oracle ASCII, XLS / SFTP FIX / EBICS /SWIFT 10

11 B2B - shared services: banking processes and platform (c25% REVENUE CONTRIBUTION, ~20% EBIT MARGIN) POSITION FINTECH GROUP S BANKING PLATFORM AS THE STANDARD PLATFORM FOR PRIVATE AND SPECIALIZED BANKS 11

12 B2B - key white label products and processes LEVERAGING PROPRIETARY 100% IN-HOUSE BANKING VALUE CHAIN (CORE BANKING SYSTEM AND INFRASTRUCTURE) TRANSACTION AND MARKET MAKER SYSTEMS Example: developing and running OTC trading systems L.O.X. Example: SETTLEMENT AND CUSTODY SERVICES security account and custody services for stock option administration Example: RETAIL BANKING INFRASTRUCTURE full provision of white label banking services for deposit raising and administration Products: Trading system Market maker system Trading platforms Market and price data supply Products: Custody services Payment platform SEPA platform incl. mandate management Online banking Secure transactions Products: Retail deposits Lending infrastructure Brokerage accounts Customer services Regulatory Reporting 12

13 B2B - client excerpt and case studies Unique combination of technology and banking know-how enables our clients to build top-class financial products and services Key partner FinTech Group was chosen to set-up the technological infrastructure for digital online retail banks in Germany and Austria including providing several respective regulatory banking processes FinTech Group AG developed, maintains and runs LOX, the ETP OTC system for Deutsche Bank AG and Commerzbank AG - 3bn price feeds and 50k transactions - per day. FinTech Group Bank AG were chosen by Equatex - one of the leading European stock option plan administrators with >3bn EUR AuC to provide banking and custody services; opening 250k accounts in 4 weeks. FinTech Group AG is the central IT service provider for the Federal Association of German Banks, providing key technology platform to run the German Deposit Guarantee Scheme. 13

14 The ecosystem unique combination of independent business models B2B Customer lifetime: 5-10 years Highly predictable revenue streams Increase interaction with and offering to clients Leverage self-developed infrastructure Manifest customer relationship Reduce costs per unit B2C High margin business Transaction driven business CAPEX driven GROWTH Increase profitability and cash flow Broad customer base Access to new products and services Continuous development of technology and platform 14

15 Growth strategy - how to meet the mid-term ambition Revenues: EUR 150m - EBITDA: EUR 50m - Net Profit: EUR 30m CONTINUE STRONG GROWTH OF NUMBER OF SETTLED TRANSACTIONS WHY: increasing number of transactions drives revenues but also reduces costs per settlement (achieve economies of scale) HOW: Continuous growth in domestic flatex markets Geographical expansion to new markets (B2C) Allow non-flatex customers to enjoy flatex products (new product: TradeNow) Increase number of settled transactions for third parties (B2B) Number of settled transactions (in million) LEVERAGE SELF-DEVELOPED PLATFORM BY PROVIDING IT TO B2B CLIENTS WHY: revenues from providing own platform to B2B clients are long-term and predictable cash flows (predictable recurring revenues) HOW: Standardize B2B product portfolio to allow synergies Provide current customers with additional/new products Acquire each and every year 4-6 new B2B clients Keep R&D on a sustainable and innovative level Revenues from B2B projects (in million) USE FREE LIQUIDITY TO GROW THE FULLY COLLATERALIZED CREDIT BOOK WHY: making use of the zero-cost cash deposits allows for additional income on almost zero-risk base (utilizing the by-product) HOW: Increase credit volume with own flatex clients Provide credit products to non-fintech clients (flex-insurance credit) Set-Up of credit products for B2B2C clients (Equatex flex credit) Maintain a fully collateralized approach Size of collateralized credit book (in million) E B2C current markets B2C new markets B2B mid term 2017E existing clients new clients mid term 2017E flatex flex Insurance credit Equatex credit other mid term 15

16 Growth strategy - B2C B2C - Online Brokerage ORGANIC GROWTH STRATEGY GROWTH STRATEGY BY ACQUISITON Continue organic growth in Germany and Austria and manifest market leadership in terms of client activity and product offering Emphasize focus on becoming the leading European online brokerage business by penetrating new countries Leverage partnership with ETP partner to share penetration and marketing expenses Spread out all over Europe and build the largest pan-european online brokerage business which is big-bank independent using our EU-Passport Search for takeover opportunities in Europe with the following parameters: Higher cost per transaction leveraging our processes and systems to generate higher profit Higher cost per client acquisition apply our marketing strategies to generate higher profit Inefficient product partnerships offer our best-class and broadest product portfolio to generate higher profits Weakly managed under increasing regulatory requirements implement our experienced management team to generate added value Currently operating Potential markets 16

17 Growth strategy - B2B B2B - White Label Banking/IT Services ORGANIC GROWTH STRATEGY Establish FTG:CBS as the standard platform for private and specialized banks and become Europe s leading transaction processor by offering self-developed platform to B2B clients Continue focus on transaction settlement and offering settlement as a service to private and specialized banks Current global ROE of 8-10%, ROE of banks in < 4% banks have pressure to reduce costs and to outsource inefficient back office structures and processes Make use of current market and regulatory (ongoing consolidation of banking technology provider affecting more than 300 banks) as well as political environment (Brexit) to attract new B2B clients Targeted contract lifetime of 5-7 years with a contract lifetime value of EUR 5-10 million, with >90% recurring revenues 17

18 Growth strategy - credit book Setting-up a credit portfolio, diversified over risk, maturity and duration (>95% fully collateralized) Aimed mid term portfolio size of EUR average interest rate of 4% Successful introduction of flatex flex credit line (technically a 100% collateralized overdraft facility with max 25% LTV on securities held by client) EUR 100m+ credit lines drawn after 12 months Addressing new market participants (B2B2C clients as well as insurance customers) with flex credit B2C COLLATERALIZED LOANS EUR 4.5% = EUR +16MN P.A. ALTERNATIVE CREDIT BOOK EUR 3.5% = EUR +5MN P.A mid term ambition 18

19 Growth strategy the hidden treasury reserve Customers maintain currently more than EUR 1bn with FinTech Group Bank AG (overnight trading money), thereof around EUR 800m is managed in a treasury portfolio Current management set up treasury strategy, despite low (negative) interest environment in Europe treasury portfolio is profitable and highly diversified (sovereign, municipal bonds and corporate bonds), yielding around 0.2% interest FinTech Group has never paid interest rates on customer deposits to customers Hidden reserve: increase in interest rate environment will have enormous impact on P&L: 1% increase +EUR 8 million interest income HIDDEN RESERVE: P&L IMPACT DUE TO CHANGE OF INTEREST ENVIRONMENT.. 30 Cash Deposits as of Incremental EBT % 1.0% 0.5% Customer deposits 19

20 Annex

21 FinTech Group our business model ONLINE BROKERAGE WHITE LABEL BANKING SERVICES CREDIT & TREASURY Germany & Austria Banking Transaction Portfolio Products >200k retail clients ~12m security transactions Broad product portfolio (including stocks, bonds, ETPs, ETFs, mutual funds) 100% of value chain in-house (technology, banking, regulatory) Core banking system White Label Banking Services (account opening and admin., call center etc.) Reporting systems (client, regulatory etc.) Trading system Market maker system Trading platforms Market and price data supply EUR 800m cash deposits of clients EUR 200m fully collateralized loan 4% NIM Aimed portfolio size by EOY17: EUR 250m Significant hidden reserve in treasury portfolio: today: EUR 0.0% = EUR 0m NII potential (increase in interest environment): EUR 1.0% = EUR 8m NII Revenue contribution 65-70% 20 25% 8 10% EBIT margin ~ 35% ~ 20% ~ 100% Peer group 21

22 FinTech Group AG - our stock Shares outstanding: 17,510,876 STOCKPRICE DEVELOPMENT LTM Options outstanding: max. 1.6m Market capitalization: EUR 600m (as of ) Listed: Scale, Börse Frankfurt Share Price (EUR) Jan 2018 PT EUR Berenberg May 2018 PT EUR Commerzbank ISIN: Bloomberg: DE000FTG1111 FTK GR Equity May 2018 PT EUR M.M. Warburg May 2018 PT EUR Hauck & Aufhäuser Stock covered by

23 FinTech Group AG - corporate structure Tech-Entity 100% FTG Finanz GmbH 100% Fin-Entity 23

24 FinTech Group AG - shareholder structure GFBK (Entity of flatex founder Bernd Förtsch) 26,68% Bernd Förtsch and APEIRON major shareholder of heliad 42,61% 12,84% 0,70% 4,00% 0,86% 1,26% 3,80% 1,65% 2,80% 2,80% Other and free float (Holding <0.5%) 24

25 FinTech Group AG - key milestones Company founded in Langen L.O.X. OTC certificate platform developed (limit order system connects DB/Coba flow to 22 pan-european brokers) Full BPO IT provider for bankenverband ever since Full white label Retail Bank operations begins (full BPO) 2001 Development and full BPO provider for pan-european expansion (core banks system FTG:CBS:R1 is born) 2015 Migration of mwb fairtrade from caceis to FinTech Group Bank for order routing and securities settlement (1.4m trades / yr) Best German online broker goes live Large Austrian bank selects FinTech Group as full BPO for Austrian and German digital expansion 25

26 Contact details Frank Niehage CEO FinTech Group AG Rotfeder-Ring Frankfurt, Germany Muhamad Chahrour CFO FinTech Group AG Rotfeder-Ring Frankfurt, Germany