iFast Corporation Limited (SGX: AIY) is a wealth management financial technology (fintech) platform with assets under administration (AUA) of S$9.04 billion as of 30 June 2019. The group runs a platform for the buying and selling of securities such as unit trusts, equities, and bonds, and it offers access to 9,700 investment products including 6,500 funds from over 250 fund houses.
With iFast’s AUA hitting a new all-time high, investors may be wondering if there’s any growth potential left for the group. iFast is one of the pioneer fintech companies in Singapore (being incorporated in 2000), and it has a strong track record of providing a wide array of unit trusts for investors to choose from. Over the years, the group has continued to innovate and evolve its platform by offering shares and bond investments.
From what I have observed of the wealth management industry and what iFast has communicated about its growth prospects, I teased out three powerful and enduring growth drivers that I believe will propel the group into its next phase of growth.
1. More active management for high-net-worth individuals
iFast has two main divisions for its business: The B2B (business-to-business) division is where the group offers a service known as iFast Global Prestige to financial planners and advisors in order for them to use the software as an investment planning tool for high-net-worth individuals (HNWI). The B2C (business-to-consumer) division is represented by the Fund Supermart and FSMOne platforms, which individual retail investors tap on to purchase unit trusts and equities, respectively.
The B2B segment contributed around S$18.1 million — or around 80% — of recurring revenue for the group and is considered the larger division with better prospects. This division has seen a steady rise in recurring net revenue since FY 2016, from S$24.5 million to S$33.9 million in FY 2018. With a growing trend of more HNWI requesting investment planning from their advisors, this division is poised to grow even further in the coming years.
2. Rising middle-income segment
With Asia seeing a rising middle-income segment, iFast is well-positioned to capture a greater slice of the pie for wealth management solutions. More people have both the ability and propensity for investing and are looking around for reliable sources to tap. iFast’s track record and wide variety of funds should stand in good stead, and management is even so confident as to aim for a target of S$100 billion in AUA by the year 2028, as it sees strong growth potential in Asia.
3. Liberalisation of the banking industry
Many countries such as the US and the United Kingdom have started to liberalise their banking industries as the emergence of technology has enabled the creation of digital banks that can serve untapped segments of the population.
Last year, Hong Kong announced that it was awarding digital banking licenses in a first attempt at liberalising its banking industry. This is being implemented in phases over a few years. Though iFast put in a bid for a license, it failed to secure one when the first batch was issued. It is intent on applying for one of the next batch of licenses (but no timeline has been provided so far for this to occur).
In Singapore, the Monetary Authority of Singapore has just opened applications for a digital banking license, with a total of five to be given out (two full banking, three restricted banking). iFast intends to apply for a digital banking license here, too, in order to grow its business to the next level.
The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore has recommended shares of iFast Corporation Limited. Motley Fool Singapore contributor Royston Yang owns shares in iFast Corporation Limited.