Fintech for retirement planning

Expert article for Computerworld dated 6 December 2017

For young people, saving for old age is about as interesting as going to the opera or a philosophy reading. Start-up company VIAC wants to change that. Working together with Ergon Informatik and the WIR Bank, this new company has now launched a 3a pillar app on the market, aimed at making the concept of planning for retirement more palatable to ‘digital natives’.

The company’s founders are just as you would expect the founders of a start-up to be: passionate, extremely busy, and highly enthusiastic about their idea. Daniel, Christian and Jonas have a vision: they want to make the ostensibly unappealing and abstract topic of retirement planning palatable to young Swiss people and at the same time offer them a simple and very reasonably priced 3a pillar solution. The three founders of VIAC are all around 30 years old. “Retirement planning is a very important issue for our generation in particular as the first and second pillar will not be as reliable a source of financing for our pension in the future,” says Daniel Peter, the brains behind VIAC.

Although, he adds, young people lack financial expertise and they often do not see the benefit in thinking about something so far in the future. The complexity of the financial markets and possible investment strategies are also off-putting. In many cases, smartphone-based financial solutions are not really suitable for their target group either. For young people with a long investment horizon, however, saving via securities is a very attractive prospect, as Daniel emphasises. As such, what is required is some kind of starting point that makes financial services simple enough to entice digital natives to use them. This is precisely what the founders of VIAC are trying to do, starting with a 3a pillar app for smartphones. The three founders are keen for their product to shake up the system currently used to plan for retirement in Switzerland. “At present, this system thrives on the high fees it charges. We thought it was most unsatisfactory for customers that a considerable proportion of their savings was being spent on fees,” co-founder Jonas Gusset tells us. “We designed VIAC to be so cost-effective for the customer that even private investment with an online broker is more expensive in Switzerland, even before taking into account the tax benefits offered by the third pillar. Our app is cutting the prices of retirement planning solutions in Switzerland.”

Benefits of Switzerland as a location

It is actually a while since Daniel came up with the idea for the new 3a solution. In February 2016, he reduced his hours at his well-paid job in the financial sector to 60 percent; nine months later he was working exclusively for VIAC. In the three months that followed, partners Christian and Jonas also left their jobs in finance and joined him. It then took a year to find a suitable partner in the banking world – WIR Bank. This was followed by an invitation to tender for the technical implementation of the solution, with Ergon Informatik being awarded the contract. The company began implementing the solution in May 2017. It was by no means a done deal that the start-up would choose a Swiss IT service provider when it came to the technical implementation of its idea – after all, engineering services can be procured at much more reasonable terms than in Switzerland through nearshoring or offshoring. “We regularly receive requests from Asian suppliers who want to develop and design for us. As our product has such a strong connection with Switzerland, though, for me it was an obvious choice to produce there, i.e. where the returns would be generated,” Daniel says, before adding: “Swiss developers are familiar with our financial system, so they understand what needs to be implemented in our very specialised software much more quickly. I don’t have the patience to explain something ten times. I want to explain something and then move on to the implementation phase as quickly as possible – ‘right first time’ is my motto.” In the WIR Bank, the start-up’s founders have found a partner that shares their values and quality demands.

The bank is a 100% Swiss cooperative bank and aims to be mindful of Swiss business. Daniel Peter knows from experience that this has to happen, and not just for idealistic reasons: “Nearshoring often looks better value on paper than it is in reality, because it is time-consuming and it involves too many people.” Development partner Ergon Informatik is also investing in Switzerland as a location for development. In order to keep the routes via which information is shared as short as possible, Ergon was quick to provide the VIAC team with an office on-site at their premises, in close proximity to the developers of their app and the usability team. The latter worked closely with the young entrepreneurs right from the start of the process. “For us it was crucial that all services could be purchased from one source, particularly within the area of User Interaction,” says Christian Mathis, who is also responsible for VIAC’s marketing. “It meant we were able to make progress more quickly and could swiftly resolve any queries and problems. For example, we get so deeply immersed in financial material that it’s not always easy to present our subject matter in layman’s terms. If the UX team ever found our onboarding process complicated, they gave us their feedback directly, made suggestions and were then in a position to design a user interface that is much more straightforward and attractive. By the same token, there are design ideas that are difficult to implement or which lead to unnecessary extra work. As the team of developers was also on-site, the two teams were able to find quick solutions to these kinds of things. The short decision-making channels were essential for our ambitious timetable.”

Time is money

The 3a pillar business is very much seasonal – if you miss the peak season from November to February, you will miss out on most of that year’s business. The VIAC team set itself an ambitious goal with this in mind: “We knew that we needed to be finished by November 2017!” The decision to start the project came in mid-April, so by the time the project started in May, there were six months left until the ‘go live’ date. This meant a tight schedule was necessary for the implementation plan, as were as few inefficiencies as possible in the collaboration. “In the end, our original schedule was delayed by three weeks,” Daniel says in summary. “Each of the project partners, hosting and development all played their part – as did we. We still conducted in-depth testing at the end though – we don’t cut any corners when it comes to security and stability. And we achieved our goal of going live in November!”

Best-value 3a solution in Switzerland

The VIAC 3a solution can be opened in less than eight minutes. The app is easy to use and, from just one Swiss franc in starting capital, you can invest in thousands of shares. The system is unmatched in terms of price as it does not require any bank staff or product salespeople for it to work, and the customer can take control of their 3a pillar themselves, with the option of investing as much as they want, when they want, without any minimum deposit, fee or term. For young people in particular, this provides an attractive and important savings incentive. The current interest rate for the 3a pillar is almost zero. Although saving via securities would make sense for a large part of the Swiss population, studies show that only 25–30 percent are investing a proportion of their 3a assets. VIAC’s 3a modular solution means an equity component of up to 100 percent (technically this is 97%) can be chosen. VIAC is the first fully digitalised 3a product on the Swiss market. Thanks to the digital opening process, it is theoretically possible to pay in the 3a pillar contribution for the previous year up to 31 December, and do so wherever you are in the world. Transferring 3a assets from another provider to VIAC is not a problem either. Switching may save the customer thousands of Swiss francs in fees. The app is free to download from Apple and Google’s respective app stores. www.viac.ch