Allfunds Group, the B2B WealthTech platforms for the fund industry, offering fully integrated solutions for both fund houses and distributors, today (23 April) announced a partnership with Google to enhance its capabilities through cloud computing, advanced data and analytics and generative artificial intelligence as it also released a trading update for the first-quarter period ended 31 March 2024.
It said the partnership aims to deliver transformational solutions for Allfunds' extensive network of Distributors and Fund Houses, providing enhanced capabilities, strengthened security and cutting-edge tools to address the complex challenges of fund distribution and it will focus on two key areas:
● Drive data and AI innovation that will allow Allfunds to create new financial information products, fostering new growth opportunities.
● Develop a secure, scalable, sustainable technological architecture to aid Allfunds' operational growth and migration to cloud services.
The partnership will enhance all end clients’ access to advanced data analytics tools, and in addition, complement Allfunds Data and Analytics present offering, providing a more robust technological architecture.
Fund houses will have the ability to gain deeper insights into investor behavior, market trends, and risk profiles, enabling more informed decision-making for product development, portfolio optimization, and distribution strategies.
Simultaneously, distributors will benefit from faster access to critical data, streamlined operations, and greater scalability, made possible by the infrastructure and technological architecture optimization powered by Google Cloud.
Juan Alcaraz, CEO and founder of Allfunds said: "With the integration of AI becoming an increasingly important part of the investment process for the financial industry, our partnership with Google Cloud demonstrates the continued investment by Allfunds in best-in-class initiatives and services. Allfunds will continue to build on our strong value proposition as the one stop-shop for wealth professionals as clients continue to operate in an increasingly complex market landscape.”
Tara Brady, president, Google Cloud for Europe, Middle East and Africa added: “There is a significant opportunity to transform the financial services industry with cloud and AI technologies. Our partnership with Allfunds will help power its innovation journey with Google Cloud's AI technologies and our secure and scalable infrastructure. Our collaborative efforts will empower Allfunds' clients with the tools and insights they need to make better-informed decisions and drive growth.”
Key highlights of the quarter
• Strong AuA growth. Allfunds´ total assets under administration (‘AuA’) increased by +4% since December to €1,433bn, representing a 7% increase year-on-year.
• Trends anticipate change of cycle for Allfunds. Platform business enters a normalisation phase:
− Key markets, such as Southern Europe, UK, Northern Europe, Middle East and Asia, all experienced inflows in the quarter (€4.2bn of inflows in these regions in 1Q);
− "We continue to see positive month-on-month evolution in 1Q, which points to a change in the trend experienced in the last year";
− In this quarter, clients have invested again in mutual funds for the first time in 2 years;
− Largest inflows in 1Q occurred in the fixed income asset class (€6.2bn) vs. money-market as seen throughout 2023, indicating trend towards higher value-added asset classes.
• Record net revenues in a quarter. Total net revenues of €153m, representing a 18% increase year-on-year and 4% quarter-on-quarter.
• New partnership with Google Cloud, through which Allfunds will drive AI innovation and infrastructure optimization.
Alcaraz said: “In 2024, Allfunds’ outlook is positively charged. During the first quarter, we are reaching a turning point in flows from existing clients, which hints at an anticipated recovery. We are on the verge of having all of our engines contributing positively and thus, accelerating growth.
"Our commitment remains unwavering: we are dedicated to serving our clients effectively through our comprehensive and diversified platform, spanning services, geographies, and client types. Additionally, we continue growing our private markets capabilities for end-investors via Allfunds Alternative Solutions, which has increased at a faster pace than our total AuA. We also keep looking for attractive opportunities in the market to reach our mid-term goals. As we continue to drive growth, our focus remains on delivering an outstanding offering to our clients and further executing our strategy through the rest of the year.”
• Allfunds’ AuA growth on a year-on-year basis remains strong at 7% (31 March 2023: €1,336bn), as the pace of net flows has reached an inflection point and they ended flat this quarter, also mitigated by a recurrent pipeline of migrations.
• Platform service AuA([2]) increased by 10% to €1,028bn since 1Q 2023 (4% since December 2023), driven by continued positive market performance in the quarter, as well as net flows:
− Market performance contributed more than €44bn in this first quarter, following strong performance mainly in equities.
− Net flows were flat, representing (0.1)% over beginning of period (BoP) AuA(3), as a result of continued new client activity which compensated outflows of the quarter:
o Flows from existing clients decreased by €3.4bn, representing (0.3)% over BoP AuA. These outflows were concentrated in a very limited identified number of clients and mainly in Central Europe and Italy.
o Excluding Central Europe, quarterly flows from existing clients were positive for the first time in the last year amounting to €2.7 billion, a strong sign of recovery.
o Flows from new clients added €2.8 billion, representing 0.3% of BoP AuA and, on an annualised basis, 1.1% over BoP AuA. Expectations for new client migrations on track to deliver guidance for 2024.
• Dealing & Execution AuA increased around €5.7 billion (1.8% growth year-on-year and 1.4% during the quarter), again mostly driven by positive market performance.
• Allfunds Alternatives Solutions continues its successful progress: as of 31 March 2024, it has reached €6bn of AuA in alternatives products distributed to clients across more than 10 key markets.
• Total net revenues of €153m, representing a 18% increase year-on-year and 4% quarter-on-quarter, with growth across all revenues lines:
− Platform revenues amounted to €138m (17% growth since 1Q 2023):
o Total platform margin increased to 3.9bps (1Q 2023: 3.6bps), while platform service margin (excl. NTI) has remained stable year-on-year;
o Transaction revenue amounted to €27m, an increase of 29% from 1Q 2023, indicating a return to normalised transaction activity after 2 years of subdued levels;
o NTI amounted to €26m, on the account of higher average cash volumes and higher efficiency of our operations.
− Subscription revenues increased year-on-year by 23% to €16m, driven by the successful integration of recent acquisitions, with like-for-like growth in the high-teens vs 1Q 2023 in line with our 2024 guidance.
Allfunds’ pipeline of new clients remains strong; 27 Distributors have been onboarded in the year-to-date, continuing the momentum established during 2023. Of these year-to-date onboardings, 41% represent onboardings from competitors; 33% have shifted their operations from in-house to outsourced via Allfunds; 26% are newly-benefitting from the open-architecture model.
The company has also observed good year-to-date progress in the onboarding of 22 Fund Houses to the WealthTech platform, contributing to complete the range of fund offering in the platform.
The Company’s subscription-based business has also delivered a solid performance in the quarter, with 49 new clients in the period (20% increase year-on-year). Pipeline is stronger year-on-year (30% increase) and very well diversified geographically.
• By business line, the strongest performing areas have been Allfunds Tech Solutions (which has added 10 clients over the period), Investment Solutions and Blockchain.
• The strongest regions have been Iberia, Central and Northern Europe, Middle East and Asia.
• Allfunds Connect has now surpassed the 10,000 monthly professional users milestone, reaching an average of 10,255 monthly professional users in the period (6% increase year-on-year).