Saxo’s role will be to supply financial and regulatory technology, “such as cloud-based services, big data and artificial intelligence to Chinese banks and fintech companies – especially in areas of trading and investment, robo-advisory, asset management, risk solutions and regtech,” a Saxo spokeswoman told FSA.
China auto-maker Zhejiang Geely will use its local knowledge and contacts to support the deployment and operation of the partnership.
The ownership structure of the JV will be an equal fifty percent split between the two firms.
“No financial licences are required in China, because it is a technology JV,” said the spokeswoman, who added that the start-date of its operations has not yet been publicly disclosed.
Kim Fournais, CEO and founder of Saxo Bank described the JV as “an important first step in strengthening our presence in China”.
Geely became Saxo’s majority shareholder in September 2018, which signalled the Danish bank’s ambitions to expand its business into China.
“We will continue to explore further opportunities, working in tandem with regulators and the opening of Chinese markets, to provide transparent, efficient and safe access to investment opportunities,” Fournais added.
The growing robo-advisory market in China offers potential for financial technology providers such as Saxo, which is best known for its multi-asset online trading platforms.
China Merchants Bank was the first domestic lender to launch a robo-advisory service in December 2017. Its Machinegene Investment app provided direct access to domestic mutual funds and gathered RMB 3bn ($428m) of assets within a few months or operation.
Robo-advisors’ AUM in China currently stands at $179bn, according to database research firm Statista, and is expected to show an annual growth rate of 48.6%, resulting in AUM of $875bn by 2023.
However, Saxo and other foreign tech firms face tough competition from domestic players, such as Hundsun Technologies, owned by Alibaba’s Jack Ma.
Indeed, earlier this week Vanguard, the world’s second-biggest asset manager, formed a JV with Ant Financial, part of Alibaba, to provide investment advisory services to retail investors.
Ant Financial will supply the technology platform and operate the fund dealing system. Vanguard, as investment manager, will provide investment-related services including investment strategy advice, asset allocation and product selection, a Vanguard spokeswoman told FSA.
The US firm’s larger rival Blackrock has reportedly been in discussions this year with China tech leader Tencent about a future partnership.