corporate presentation - flatex€¦ · corporate presentation fintech group ag | march 2018...
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CORPORATE PRESENTATIONFinTech Group AG | March 2018
Financial Services TechnologiesWe got IT
Employees Offices Number of
Customers
Customer Cash
Deposits
Securities under
Custody
Number of exchanges
and OTC-partners
Approx. 450 8 € 929 m € 10.3 bn 64
FinTech Group – at a glance*
2THE FINTECH GROUP
Executed
Trades
Executed
Trade Volume
Credit Book
(collateralized)
Average Interest Rate
(Loan Book)
TIER-1
Capital
Return on Equity p.a.
(before Tax)
5.5 m € 38 bn € 186 m 4.3% p.a. € 41 m 22%
* As of 30.06.2017
>200k
B2C
>100
B2BBerlin
Zwickau
Willich
Andernach
Frankfurt a.M. (HQ)
Kulmbach
Dusseldorf
Vienna
14
16
18
20
22
24
26
28
30
32
07
.09
.20
17
07
.10
.20
17
06
.11
.20
17
06
.12
.20
17
05
.01
.20
18
04
.02
.20
18
06
.03
.20
18
Dec 2017
PT EUR 30.00
Commerzbank
Share Price (EUR)
Dec 2017
PT EUR 36.00
M.M. Warburg
Dec 2017
PT EUR 37.50
Hauck & Aufhäuser
Jan 2018
PT EUR 40.00
Berenberg
STOCKPRICE DEVELOPMENT LAST 6M
FinTech Group AG - our stock
3THE FINTECH GROUP
Shares outstanding: 17,510,876
Options outstanding: max. 1.6m
Market capitalization: EUR 550m (as of 12.03.18)
Listed: Scale, Börse Frankfurt
ISIN: DE000FTG1111
Bloomberg: FTK GR Equity
Stock covered by
FinTech Group AG - corporate structure
4THE FINTECH GROUP
FTG Finanz GmbH (100%)
100% 100%
100%
CO
RP
OR
AT
E S
TR
UC
TU
RE
TO
DA
Y
100%
Tech-Entity
Fin-EntityAS
OF
Q1
20
18
Merger in Q1/2018
FinTech Group AG - Executive Committee
5THE FINTECH GROUP
Steffen Jentsch Stephan Simmang Dr. Benon Janos Frank Niehage Muhamad Chahrour Bernd Würfel Niklas Helmreich
Co-Head ITMD FinTech Group Bank
Co-Head IT Head B2BMD FinTech Group Bank
CEO FinTech GroupCEO FinTech Group Bank
CFO FinTech GroupVice Chairman FinTech Group Bank
Deputy CEO FinTechGroup Bank
Head B2CMD FinTech Group Bank
ALL EXCO MEMBERS ARE PART OF THE 4 YEAR OPTION PLAN
22.7
75.2
95.0>100.0
>120,0
>150.0
-8.0
19.7
30.6 >32.0
>40,0
>50.0
-7.7 -2.2
12.316.8
>24>30.0
2016a 2017e 2018e Mid-term ambition
Net Sales
EBITDA
Net Profit
FinTech Group - track record and mid-term ambition
6THE FINTECH GROUP
Acquisition of service provider XCOM/biw to control cost structure and set-up tech in-house expertise
Implemented high class management team and subsequent restructuring actions
Sold CeFDex to Commerzbank to reduce risk structure (strategic partnership)
Restructuring of group operations and implementation of IFRS Reporting
Boost of organic growth of existing B2C business
EUR milliono 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
2014a 2015a
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
B2C - business model of flatex and ViTrade
7THE FINTECH GROUP
(c70% REVENUE CONTRIBUTION, ~45% 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.
Most trading-active clients in the market (FinTech clients: avg. 40 - 50 trades p.a. vs. market: avg. 8-12 trades 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)
Guaranteed flat pricing model of EUR 5.90 for more than 11 years - regardless of type of asset(stocks, bonds, ETPs, ETFs etc.), transaction amount and exchange
Market leading ETP offering with Morgan Stanley partnership, open architecture offering: Commerzbank, Deutsche Bank, Citi, BNP
A GROWING NUMBER OF BROKERAGE CUSTOMERS (IN K)
134,4
149,6
175,4
205,5
240,0
270,0
FY 2014 FY 2015 FY 2016 FY 2017E FY 2018E Mid Term
NUMBER OF RETAIL TRANSACTIONS (IN M)
5,8
7,1
7,7
9,2
10,8
13,0
FY 2014 FY 2015 FY 2016 FY 2017E FY 2018E Mid Term
B2C - development of brokerage KPIs
8THE FINTECH GROUPSo
urc
e: F
inTe
ch G
rou
p
Sou
rce:
Fin
Tech
Gro
up
B2C - our competitive edge
9THE FINTECH GROUP
Key drivers for successful brokerage business: cost per trade settlement (CPT), cost per client acquisition (CPA) and outstanding product offering
Competitive technology edge due to self-developed, highly scalable security ordering/settlement infrastructure ensures sustainable cost leadership with CPT of EUR 1.45
Each additional trade reduces cost per trade settlement - doubling the # of transactions reduces CPT by >40% to less than EUR 0.80 per settlement
Quality of clients matters more than quantity - focused marketing strategy attracts the right clients (>25 trades p.a.) with only EUR 100 CPA vs. EUR 300-500 at competitors
Top notch product partners offering ETFs and ETPs - exclusive joint venture with Morgan Stanley (see case study)
B2C – Case Study: Morgan Stanley ETP
10THE FINTECH GROUP
BANKS…
PAST:90 : 10
split
TODAY:50 : 50
split
REVENUE POOL
…TRADED BY CLIENTS
Revenue generation forissuing bank through:
• Inherent interestcomponent
• Bid-ask spread
…OFFERED AT FLATEX……ISSUE ETPs…
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
B2B - shared services: banking processes and platform
11THE FINTECH GROUP
(c30% REVENUE CONTRIBUTION, ~20% EBIT MARGIN)
POSITION FINTECH GROUP’S BANKING PLATFORM AS THE STANDARD PLATFORM FOR PRIVATE AND SPECIALIZED BANKS
APIs
APIs
12THE FINTECH GROUP
B2B - fully modular core banking platform
OADO
Account/Depot Srv.
ProductionPlatform
Regulatory & SteeringPlatform
Support Platform
SalesPlatform
Layers within the FTG:CBS banking platform Technology
HTML
Objektive-c (iOS)
Java (Android)
REST / SOAP
Entax-BO-ClientOnline branch
Mobile App
Securities Payment Service Cards
HA
Wildfly
Java, Go
C++
SAP ASEDeposit Transaction Service Credit Facilitation Master Data
Wildfly
Java
C++
SAP ASE
ABACUSTicketing Service PortalBatchdata
ArchiveShared Services
PostgreSQL
Oracle
ASCII, XLS / SFTP
FIX / EBICS /SWIFT
CRM / Sales Trading FE
InfoZone / WM
Accounting Controlling Tax Compliance
Regulat. Reporting Mgmt. Reporting DWH / BI Risk / Liq. Mgmt
TRANSACTION AND MARKET MAKER SYSTEMS
Example:
developing and running OTC trading systems L.O.X.
Products:
Trading system
Market maker system
Trading platforms
Market and price data supply
13THE FINTECH GROUP
SETTLEMENT AND CUSTODY SERVICES
Example:
security account and custody services for stock option administration
Products:
Custody services
Payment platform
SEPA platform incl. mandate management
Online banking
Secure transactions
RETAIL BANKING INFRASTRUCTURE
Example:
full provision of white label banking services for deposit raising and administration
Products:
Retail deposits
Lending infrastructure
Brokerage accounts
Customer services
Regulatory Reporting
LEVERAGING PROPRIETARY 100% IN-HOUSE BANKING VALUE CHAIN (CORE BANKING SYSTEM AND INFRASTRUCTURE)
B2B - key white label products and processes
B2B - client excerpt and case studies
14THE FINTECH GROUP
Unique combination of technology and banking know-how enables our clients to build top-class financial products and services
Key partner
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 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 is the central IT service provider for the Federal Association of German Banks, providing key technology platform to run the German Deposit Guarantee Scheme.
The ecosystem - unique combination of independent business models…
15
B2C - Brokerage
High margin business
Volatile business model
Heavily depending on capital markets and customer behavior
Less predictive revenue streams
OPEX driven
B2B - White label banking & IT services
Stable long term contracts
Very low volatility
Lower margin than B2C business
Highly predictable revenue streams
CAPEX driven
THE FINTECH GROUP
The ecosystem – …creates inherent growth potential
16THE FINTECH GROUP
Access to new partner
Increase transactions
Expand product portfolio Increase
profitability
GROWTH
B2B B2CReduce costs
Leveragesynergies
Improve customer value "customer
journey"
Revenues: EUR 150m - EBITDA: EUR 50m - Net Profit: EUR 30m
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
LEVERAGE OWN USED B2C VALUE CHAIN BY PROVIDING IT TO THIRD PARTY B2B CLIENTS
WHY:revenues from providing own platform to B2B clients are long-term and predictable cash flows(pay the bills with stable income)
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
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)
Growth strategy - how to meet the mid-term ambition
17THE FINTECH GROUP
124
44 24
2017E B2C
current markets
B2C
new markets
B2B mid term
253
10 38
2017E existing
clients
new
clients
mid term
20050
100100
50 500
2017E flatex
flex
Insurance
credit
Equatex
credit
other mid term
Revenues from B2B projects (in € million)Number of settled transactions (in million) Size of collateralized credit book (in € million)
Growth strategy - B2C
18THE FINTECH GROUP
ORGANIC GROWTH STRATEGY
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
GROWTH STRATEGY BY ACQUISITON
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
B2C - Online Brokerage
Currently operating Potential markets
Growth strategy - B2B
19THE FINTECH GROUP
B2B - White Label Banking/IT Services
ORGANIC GROWTH STRATEGY
Clear strategy to become Europe’s leading transaction processor by offering own-used value chain to third parties
Continue focus on transaction settlement and offering settlement as a service to private and specialist banks
Current global ROE of banks @ 8-10%, ROE of banks in Germany @ < 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
Each new mandate will contribute at least a contract lifetime revenue of EUR 5-10 million
Growth strategy - credit book
20THE FINTECH GROUP
0
250
500
31.12.2016 30.06.2017 31.12.2017 30.06.2018mid termambition
Setting-up a credit portfolio, diversified over risk, maturity and duration (>95% fully collateralized)
Aimed mid term portfolio size of EUR 500m @ 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
Highly collateralized factoring portfolio of currently ~EUR 50m, first-class debtors with top credit ratings such as ALDI, LIDL
B2C COLLATERALIZED LOANS EUR 350MN @ 4.5% = EUR +16MN P.A. ALTERNATIVE CREDIT BOOK EUR 150MN @ 3.5% = EUR +5MN P.A.
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 10 million EBT
Growth strategy – the hidden treasury reserve
21THE FINTECH GROUP
0.5%
1.0%
1.5%
0
10
20
30
800 900 1000 1100 1200 1300 1400 1500
Incr
em
en
tal
EB
T
Customer deposits
HIDDEN RESERVE: P&L IMPACT DUE TO CHANGE OF INTEREST ENVIRONMENT..
Cash Deposits as of 30.06.2017
27,96%
14,40%
6,60%
4,00%
2,80%2,70%
1,65%
1,26%
0,90%
0,86%
36,88%
GFBK (Entity of flatex founder Bernd Förtsch)
Other and free float (Holding <0.5%)
The FinTech Group AG - shareholder structure
22THE FINTECH GROUP
Annex
24THE FINTECH GROUP
Our business model at a glance
ONLINE BROKERAGE
Germany & Austria
230k retail clients
> 9m security transactions
Broad product portfolio (includingstocks, bonds, ETPs, ETFs, variousfunds)
100% of value chain in-house (technology, banking, regulatory)
65 – 70%
~ 45%
Revenue contribution
Products
Peer group
EBITmargin
CREDIT & TREASURY
Portfolio
EUR 1bn deposits of clients
EUR 180m loan book @ 4% NIM
Aimed portfolio size by EOY17: EUR 250m
Substantial hidden reserve in treasury portfolio
today: EUR 1bn @ 0.2% = EUR 2m NII
potentail (increase in interest environment): EUR 1bn @ 1.2% = EUR 12m NII
5 – 10%
~ 100%
WHITE LABEL BANKING SERVICES
Banking
Core banking system
White Label Banking Services (account opening and admin., call center etc.)
Reporting systems (client, regulatory etc.)
Transaction
Trading system
Market maker system
Trading platforms
Market and price data supply
20 – 25%
~ 20%
25THE FINTECH GROUP
History of FinTech Group – Key Milestones
1988
Company founded in Langen
2001Development and full BPO provider for pan-European expansion (core banks system FTG:CBS:R1 is born)
2006
Best German online broker goes live
Full white label Retail Bank operations begins (full BPO)
L.O.X. OTC certificate platform developed (limit order system connects DB/Coba flow to 22 pan-European brokers)
Migration of mwb fairtrade from caceis to FinTech Group Bank for order routing and securities settlement (1.4m trades / yr)
Austrian bank selects FinTech Group as full BPO for digital expansion
1997
Full BPO IT provider for bankenverband ever since
2009
2015
2017
2010
Frank Niehage
CEO
FinTech Group AG
Rotfeder-Ring 5-7
60327 Frankfurt, Germany
www.fintechgroup.com
Muhamad Chahrour
CFO
FinTech Group AG
Rotfeder-Ring 5-7
60327 Frankfurt, Germany
www.fintechgroup.com
Contact details