This article was published in the Ergon Magazine SMART insights 2021. Order your free copy now ->
Bank Vontobel has captured the spirit of the digital age with the very first Swiss online money and capital market platform: cosmofunding.com. The prestigious investment house has made it easier than ever to match attractive issuers with potential investors. Private placements, public bonds and loans can be posted in just a few userfriendly clicks. Stefan Pomberger, Head of cosmofunding, on the art of simplifying complexity.
On its website, Vontobel says: “We actively shape the future. We relentlessly question the achieved, striving to exceed the goals and expectations of our clients.ˮ And that’s exactly what Vontobel does. This attitude nourishes the roots of progress so that it can grow and thrive on competitive advantage – and in a Swiss banking sector that tends to drag its digital heels, that advantage is more important than ever. Vontobel sees itself as a leading-edge financial services provider that elegantly fuses banking and technology for the benefit of the client. Its cosmofunding platform is a vibrant example of this.
Everyone's a winner
Vontobel launched cosmofunding.com in 2018. The platform gives issuers an easy way to create standardised bonds, private placements and loans, instead of having to go through the banks or other traditional financing channels as they did before. Investors now benefit from access to markets that have been virtually off limits to date. In addition, digitalisation simplifies complex process chains while making them more transparent. A win for both sides.
Stefan Pomberger explains, using the example of a local authority looking to finance a new school building. The authority would naturally go to its regular bank but what if there were a better offer elsewhere? “Cosmofunding opens up new groups of investors, with Vontobel in the background as the arranger. We also use a rating agency to get an independent assessment of transaction quality.ˮ
What does this mean time-wise? Initial onboarding generally takes a few days. The issuer then posts their project on the website, where it is presented to investors for a certain length of time in the form of an auction. This period – a week, say – is determined by the issuer. It usually takes five days after the end of the auction for the money to be paid out, although this can also be configured. Depending on how the client structures things, the entire process could take a few days, or until they need the money.
Time is of the essence of course. Stefan Pomberger again: “With Ergon we managed to develop a minimum viable product, or MVP, very quickly. That was the basis of the platform we took live eight months later. I was extremely impressed with the combination of speed and outstanding technical expertise.ˮ
“We want to make the entire process even faster and leaner so that we can move into new asset classes and markets.”
Corporate finance the game-changer
At its heart, cosmofunding.com is an ingenious, forward- looking B2B solution. It has little in common with crowdfunding. It attracts the full range of Swiss-based institutional investors – banks, pension funds, asset managers, insurers, foundations, etc. – looking to place their surplus liquidity. The current market climate of low and negative interest rates makes it difficult to do that profitably, so financiers are increasingly exploring new investment opportunities. One of the advantages with cosmofunding.com is that that it presents a choice of investment opportunities in the form of standardised contracts with a rating attached. The quality offered by this process represents immense added value.
On the other side of the equation, Vontobel initially concentrated on unsecured public-sector borrowing. Cities, local authorities and cantons are all highlyrated borrowers that offer the perfect testing ground for new financial services like cosmofunding.com. The semi-public sector was added later on. These are entities such as transport firms, hospitals and water treatment plants that belong to government bodies.
Corporate finance was the final piece of the puzzle and it was a game-changer. Here we're talking about traditional, secured forms of financing - for example, using mortgages with promissory notes. Vontobel developed a process to securitise the standard bank mortgage and make it available to the capital market. “It’s a win-win situation for all. cosmofunding.com hosted deals worth around six billion francs between its launch in the autumn of 2018 and 2020. That looks set to increase,ˮ Pomberger adds proudly.
Scaling quality long term
Vontobel is naturally interested in business models that are scaleable and thus offer clients investment opportunities, efficiency and cost advantages. Cosmofunding impressively reflects this approach. It is standardisation at a high level, in which issuers and investors alike accept a set operating framework. The platform's reliability is underscored by extremely high security standards, integrated by Airlock. Cosmofunding.com created the perfect lasting arena for Vontobel to demonstrate its commitment to quality and client service.
What does the future hold for cosmofunding.com? Vontobel intends the platform to bloom into the leading financing ecosystem. It wants to get all of the various stakeholder groups interacting at a high level. This also includes developing new asset classes on cosmofunding. Indeed, winter 2020 saw the first offering of a digital public bond, listed on the Swiss stock exchange. It further strengthened the basis for cosmofunding’s organic growth in the corporate finance segment. It is also looking to expand internationally and Stefan Pomberger has his eye on the DACH region. “We have this great partnership with Ergon, so we're confident we can do it. So far we've always delivered high quality on time and I think you can see that from the platform. The user experience is unequalled and that makes you hungry for more.ˮ
What I’ve learned from WFH
During the pandemic, we’ve learned that the more you communicate, the fewer misunderstandings arise. That’s particularly important when everyone’s working from home, and I hope we can hold on to that attitude.
A new appreciation of time
It wasn’t like we had less work to do – quite the opposite – but we gained a new appreciation of time. We’ve realised that certain things just take time.
Performance is everything
The longer we don’t have that element of personal contact, the more essential performance becomes to maintaining trust. That’s especially true of relatively new client relationships.