China Everbright taps German firm to offer robo-advice
Chinese financial conglomerate China Everbight has teamed with German robo-adviser Ginmon. Ginmon, which has now opened an office in China, generally provides customers on its robo-advice platform access to model portfolios constructed using exchange-traded funds. Asset allocation and portfolio construction is automated for users of the platform. While a number of Chinese banks have introduced robo-advice capabilities, there are still regulatory hurdles and scaling obstacles to overcome for new entrants to the marketplace.

Neither firm has provided details of products or services they plan to offer to Chinese clients.

Ginmon is a fintech company based in Frankfurt, Germany. Its robo-advisory technology automates asset allocation and construction of portfolios using ETFs. The company stresses on its website that it invests only in physical-replication ETFs. It has previously worked with DAB BNP Paribas Bank in Munich.

The company opened a Shanghai office in order to target Chinese business.

Beijing-based China Everbright chose Ginmon as the partner for their investment solutions based on “high level of investor protection and attractive investment solutions”, said Lingwu Xia, director of internet finance at China Everbright, in a statement. The two institutions will cooperate “through various channels”.

China Everbright Group is a financial conglomerate offering banking service, asset management, and securities trading. It owns an investment arm, China Everbright Limited in Hong Kong. The Hong Kong unit, listed on the local bourse, provides asset and wealth management services. As of the end of 2016, China Everbright Limited managed HK$10.8bn ($1.4bn) of assets.

By entering China’s robo-advisory space, China Everbright will face several incumbents. China Merchants Bank, launched a robo-advisor service in December 2016 called Machinegene Investment, or Mojie. The lender’s app has gathered RMB3bn of assets in a few months’ time.

In May 2016, Creditease launched its service Tuomi RA. Another firm, robo-advisor Xuanji, plans to go global with a foreign partnership and expansion beyond Asia.

Although the robo-advisory discussions have became more active, difficulties remain in the region due to regulatory fragmentation, lack of scale and investors’ preference for human contact. Nonetheless, China’s domestic retail investor base presents an enormous opportunity for robo-advisory services.