In today’s episode of the “Start-up of the Week,” International Finance will discuss Berlin-based Upvest. Since its formation in 2017, Upvest has been empowering other fintech and financial institutions to provide their end-users with seamless, reliable, and secure access to the full range of investment opportunities.
The WealthTech Venture has developed its in-house “Investment API” that can be scaled flexibly and modularly. This allows the start-up’s B2B clients to plug and play an investment offering without being forced to develop their own brokerage and custody infrastructure.
Knowing The Venture In Detail
Backed by investors like ABN-AMRO and BlackRock, the start-up hit the headlines in September 2024, as its partnership with German neoback N26 resulted in the introduction of Stocks and ETFs, enabling millions of end users across Europe to invest seamlessly within the N26 app. Leveraging Upvest’s Investment API further, N26 introduced its investment products at a record-breaking speed, initially in Austria, followed by Germany, Ireland, the Netherlands, France, and Spain.
With a rapidly growing interest in investing from end users across Europe, N26 was looking for a reliable and scalable investment infrastructure that would enable them to introduce new functionalities in multiple markets quickly. That’s where Upvest stepped in.
N26 partnered with Upvest to offer fractional investments in ETFs and stocks across their target markets, in order to give their end users “the ability to go beyond managing their day-to-day finances [and] build future wealth and financial well-being, directly within the N26 app.”
From integration to go-live, N26 introduced fractional investments to their end users first in Austria in six months, followed by a swift rollout in Germany, Ireland, the Netherlands, France, and Spain.
In addition to speed and ease of integration, Upvest’s API allowed N26 to offer a sophisticated product to customers across Europe at a low cost, which allowed the neobank’s management, in return, to pass the savings on to its customers directly with rates that are better than its competitors.
In August 2024, Upvest stitched a partnership with Deutsche Bank to enhance its product offering, including end-user cash management, virtual IBANs, and foreign exchange. With Deutsche Bank as its banking partner, Upvest is now offering its clients seamless and automated processing of payment transactions, also in foreign currencies.
Here Is The Product Line-Up
Upvest’s flagship product has been its “Investment API,” through which fintechs and wealthtechs can create innovative and tailored investment experiences for their customers. The products can be built at a breakneck speed, embedding fractions, portfolios, savings plans or roundups into the offers.
Through Upvest’s digital solutions, people can invest with as little as one euro by embedding fractional investments (terminology explaining investments in stocks, bonds, and other securities) into their portfolios. They can place fractional orders in real time, while the start-up handles the complexities in the background.
The industry partners providing frictional investment-related products get the proprietary trading licence from Upvest, as the start-up also handles the regulatory complexity for the companies, apart from ensuring flexibility to help the industry players build inclusive, user-friendly applications for all types of investors.
Through Upvest’s assistance, the client ventures can also configure savings plans to suit your users’ needs. While the customers specify their investment amounts and frequencies, the start-up makes the plans easy to manage, with its “Investment API” automating cash payments and instant investments.
This function combines and bundles investment products into the fintechs’ savings plans, freely and easily, while promoting “Recurring Investments” (Making investing a habit for people and letting them build wealth continuously), apart from attracting more users with saving plans starting at one euro.
Via Upvest, the industry partners can use roundups to let their users invest while they spend, through micro-investing. By offering these innovative, embedded investment experiences, the wealth management industry players can engage their users in their everyday lives and create loyalty with their brands. The start-up’s “Investment API” again comes in handy, when it comes to executing roundup orders and updating users’ accounts in real time.
Portfolio Service: A Game-Changer
In February 2024, Upvest brought its “API-Based Portfolio Engine” to life, to help a very important cause: simple investing in a dedicated portfolio, amid neobanks, neobrokers, and trading apps offering endless ETFs and stocks to choose from. The goal is to choose from pre-selected portfolio options (based on risk appetite) and invest for a long-term goal, such as retirement, buying a car or just putting the customers’ money to work without being an investment expert.
“The unit cost to produce these portfolio services is often one limiting factor for providers that want to reach end users at scale. Traditional infrastructure providers try to keep up with the complex demands of today’s end-user needs. Nowadays retail investors prioritise personalisation, real-time data insights, and a digital-first experience. Meeting those needs by creating even a simple portfolio or allocation of assets involves high levels of complexity, time, and costs. Upvest’s portfolio engine is designed to address those challenges for providers. It’s the go-to solution for any fintech, wealth manager, or traditional bank looking to offer modern and easily customisable portfolios,” the start-up explained its product in these words.
Current banking infrastructure offers only limited functionality based on costly manual processes. For example, rebalancing a portfolio often leads to a full order pause for multiple days. Another time delay often stems from non-scalable processes. Order execution on an asset-by-asset basis often gets done with manual order placement through various mediums. Some larger ticket sizes can take up to a week for full execution.
“At the same point of time, businesses need to navigate a vast set of different systems from multiple partners to deliver full customer value. Bridging these technological silos with manual, expensive, and error-prone processes is the reality for many companies. In such a setup, full automation is hard to achieve. Scaling products and services increases production costs even further. The lack of transparency further adds to the issue. With outdated systems lacking the ability to provide real-time insights, investment service providers are challenged to gain access to instant data availability. This limitation negatively affects the user experience and inhibits the ability to swiftly respond to market changes and enhance trust and operational efficiency,” Upvest commented.
Upvest’s plug-and-play portfolio engine has emerged as a solution to all of the above problems as it offers an API-based and fully integrated portfolio infrastructure. It enables unique and scalable investment experiences for both Upvest’s clients and their end users. The portfolio engine lets its users access every aspect of their investments via a seamless API. Using the tool, financial industry players can empower their customers to create portfolios, place orders, and set up rebalancing strategies and portfolio savings plans in just a few clicks.
Upvest’s API-first approach helps its partners automate the monitoring of all processes related to their portfolio management. All information gets exposed through webhooks which enable real-time access and full transparency in tracking the execution of orders, completion of rebalancing, and real-time performance insights.
Upvest’s built-in fractions engine enables end users to build and tailor their portfolios based on their investment needs and risk appetite. Anyone can create unique portfolios and mix and match ETFs, stocks, ETPs, and soon Bitcoin or cryptos.
The Tool Has Been A Huge Success
Upvest’s asynchronous and event-driven portfolio-architecture has enabled the start-up and its industry partners to handle massive workloads effortlessly and in parallel.
“That way we ensure that even during peak demand periods, the rebalancing operations are running smoothly and accurately. By aggregating and executing orders as block orders, we ensure execution quality,” the venture remarked, as it continued, “With Upvest’s rebalancing engine, you can set up automated strategies based on time (e.g. once a year), specific thresholds (e.g. percentage deviation of a position from the defined target allocation), and (customisable) asset classifications. You can also trigger an immediate rebalancing of any user investment at all times via a simple API request. Once a rebalancing is initiated in the system – either through an automated strategy or a one-off request – the engine handles the entire order management process from start to finish. This removes the need for any complex calculations on your end.”
Raisin, one of Europe’s leading fintechs, will soon leverage the portfolio engine to efficiently handle all aspects of its users’ portfolio investments, starting from buying and selling to triggering mass rebalancing and executing savings plans.
Upvest’s partner Ginmon, which was ranked as Germany’s “#1 Robo-Advisor” by Capital Magazin, also became the first partner to go live with the portfolio engine, automating many key backend processes while migrating to a reliable, scalable, and secure infrastructure.