MILAN, March 4 (Reuters) - Italian digital bank and money manager Fineco said on Wednesday it would use artificial intelligence to expand its client base and cut costs under a strategy through 2029,
Italy's Fineco vows to step up growth with AI, German expansion
Fineco's Strategic Growth Initiatives and Market Expansion
By Valentina Za
MILAN, March 4 (Reuters) - Italian digital bank and savings manager Fineco on Wednesday pledged to sharply grow the pace at which it gathers new money by using artificial intelligence and targeting the German market.
Business Model and Technology Focus
Once part of bank UniCredit, Fineco has a business model centred around proprietary technology and a low-cost offer of brokerage and investment services. It employs almost one fifth of staff in tech-related roles.
Industry Challenges and Competitive Landscape
Fineco outlined a multi-year strategy at a time when the savings management industry is grappling with the spread of low-fee products and AI-driven disruption - exacerbating competition for younger customers as the wealth of baby-boomers changes hands.
"The pressure on margins is there nobody can deny that," CEO Alessandro Foti told analysts. "But for us the growth trajectory is a combination of margins and volumes."
Growth Projections and Financial Targets
Fineco guided for an average low-double-digit yearly increase in net inflows and new clients between 2025 and 2029, up from 6% in the 2021-2025 period.
It also forecast low-double-digit growth in earnings per share.
Expansion into Germany and Pan-European Platform
The target does not include any potential benefits from plans to expand its brokerage services by early 2027 through the launch of a pan-European investment platform, starting from Germany.
German Market Opportunity
"In Germany the majority of clients' assets are still in the hands of really inefficient banks. Even the fastest growing players in Germany are just scratching the surface," Foti said.
Combining Technology and Trust
To tackle fierce competition, Fineco plans to combine the ease of tech platforms with the trust customers place in traditional banks.
Income Boost and Securities Lending
To boost income, it will start lending securities bought for clients to institutional investors, covering assets of about 64 billion euros.
Securities Lending Potential
Deputy General Manager Paolo Di Grazia said around 40% could be used for securities lending, citing strong demand for exchange traded funds (ETFs) that Fineco buys in large volumes for clients.
An investor recently offered to pay up to 75 basis points to borrow some ETFs, he said.
"It's a very good number," Di Grazia said.
(Reporting by Valentina Za, editing by Gavin Jones; Editing by Nivedita Bhattacharjee)
