3 Things To Know About iFAST Corporation Ltd From Management

Last week, Jean Paul Wong, the corporate communications director of iFAST Corporation Ltd (SGX: AIY), gave a presentation on the company’s business and its future. Here are three things I learnt from the presentation.

[Editor’s note: An article on three more takeaways from Jean Paul Wong’s presentation has been published. It can be found here.]

What the business is about

iFAST is an Internet-based investment product distribution platform with assets under administration (AUA) of S$7.16 billion, as of 30 September 2017. Currently, it has a presence in Singapore, Hong Kong, Malaysia, China and India.

The company has two main business divisions, namely, Business-to-Consumer (B2C) and Business-to-Business (B2B). Together, they offer more than 5,800 investment products (including unit trusts, bonds, stocks and exchange-traded funds), and services such as online robo-advisory portfolios and financial technology (fintech) solutions to their customers.

The B2B platform is used by financial advisory firms, financial institutions, and banks. Meanwhile, (which includes FSMOne in Singapore) comes under the B2C platform.

FSMOne made news recently by offering a low-cost online investment platform that allows customers to invest in multiple products such as funds, bonds, and stocks using just one account. The platform also provides robo-advisory portfolios.

The value proposition

iFAST’s suppliers (such as fund houses, banks, and insurance companies) are offered access to multiple B2C and B2B customers through iFAST without a need to enter into individual distribution agreements and business relationships with multiple clients.

Meanwhile, the B2B customers are able to use iFAST’s platform to provide multiple investment products to their end customers (referring to the customers of iFAST’s B2B customers). iFAST also provides convenience for its B2B customers by collecting fees from their end-customers and performing some backend operations.

iFAST’s B2C platform provides a competitive and transparent fee structure and online robo-advisory portfolio management services. The fintech solutions are built in-house, and they provide a seamless investor experience, according to Wong.

iFAST’s moat comes from a network effect. As the company signs up more suppliers, more B2B customers will see value in the platform, as there are more products to sell to their own clients. With more sales, the suppliers would then be keen to add more products, bringing in even more sales when iFAST’s B2B customers sell more products to their own customers. A similar phenomenon applies to iFAST’s B2C business too.

How iFAST makes money

iFAST earns recurring net revenue through trailer fees, platform fees, and wrap fees. The recurring net revenue is calculated based on a percentage of the average AUA of the investment products that are distributed on the company’s platforms. The major part of this revenue is from trailer fees, which are the fees that a fund house pays iFAST for carrying its funds on the platform.

iFAST’s non-recurring net revenue includes sales charges and commissions paid by customers to invest in unit trusts, stocks, and so on.

Below is a summary of the flow of fees:

Source: iFAST’s 2017 third quarter earnings presentation

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has a recommendation for shares of iFAST Corporation Ltd. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.