Nomura will be launching a robo-advisory platform in Japan that will make use of Nomura AM’s ETFs, Mikaal Abdulla, 8 Securities’ CEO and co-founder, told FSA.
The product will therefore be different from 8 Securities robo-advisor app Chloe, which makes use of ETFs managed by different fund managers.
Abdulla said that Nomura’s ETFs account for nearly half of total ETF assets in Japan.
Besides the new robo-advisory platform, 8 Securities will also be developing different technology platforms for Nomura’s distribution network, he said.
“The core principle of the partnership is that they have this asset management experience and track record, but they are not a technology company. So it was pairing these two strengths in order to get new products in the market,” he said.
Nomura’s interest in a robo-advisory comes from the recognition that they need a new distribution channel to target millennial investors in Japan, Abdulla said.
The firm’s average client base is 60 years old, he added, and management realised the need to begin focusing on Japan’s millennials, who generally do not buy investment products.
Nomura AM will be investing in both the Hong Kong-based parent company 8 Limited and the Japanese subsidiary, 8 Securities, according to a statement from the firm.
The investment in the Japanese subsidiary is around ¥1.6bn ($15m), which will make the Japanese asset management firm a majority stakeholder of 8 Securities. The investment in the Hong Kong-based parent is ¥1.1bn, which will make Nomura AM a minority shareholder of 8 Limited.
8 Securities Group provides robo-advisory services through its Chloe app in both Hong Kong and Japan. Chloe, which was launched in Hong Kong in August 2016 and in Japan in February 2017, is the newer version of the group’s 8 Now robo-advisory platform, which was launched in 2015.
Japan and robo
More firms are starting to roll-out robo-advisory platforms in Japan.
“When it comes to robo-advisors, Japan is more advanced and more vibrant when compared to Hong Kong. We are seeing competition from both existing financial institutions, such as the large banks, asset managers and start-ups,” he said.
Abdulla also added that the projected market in Japan is 10 times larger than in Hong Kong, given its huge population. Japan’s population is around 127 million, which compares to Hong Kong’s 7.35 million.
Among the major markets of Asia (ex-Japan), Hong Kong, as well as Singapore, ranked the lowest in terms of the willingness of investors to use robo-advisory platforms, according to a study by Cerulli Associates.
In Hong Kong, besides 8 Securities, the other robo-advisory platform available for investors is Yunfeng Financial’s Youyu app.
Regional plans
8 Securities plans to launch its robo-advisory platform in other parts of Asia, according to Abdulla.
“The software was equipped to be multi-currency, multi-market, multi-lingual and multi-compliant, so we have a global mindset in building the business,” he said.
The firm is looking at Southeast Asia, specifically Singapore, Malaysia and Thailand, as well as in Taiwan and China, expecting to enter those markets by 2019.
He noted that in China, the firm plans to launch a platform that would enable clients to invest offshore, whether it is through a stock trading app or a robo-advisory app.
Separately, Singapore-based Bambu, which is a provider of core technology for robo-advisory platforms, announced last week that it secured a US client and is opening an office in London. Nick Wakefield, who was the firm’s sales consultant, was also appointed as managing director for Europe, according to the firm’s monthly newsletter.
