- 14/03/2024
Today, we have the pleasure of speaking with Michele Ferraio, the CEO and co-founder of StashAway, a leading digital investment platform. Michele's journey into the world of startups and digital innovation is both unique and inspiring. Before taking the helm at StashAway, he made significant strides in the tech industry by founding the Italian and Pakistani operations of Rocket Internet, where he was responsible for launching five companies across these two countries. His rich background in the financial sector, from working as a consultant at McKinsey in both Milan and New York offices, primarily serving financial institutions, to his role at the Milan-based Private Equity Fund Manager Synergo, has endowed him with a deep understanding of the financial landscape. At McKinsey, Michele offered his expertise to several world-class financial institutions, advising them on a myriad of topics. His transition from finance to tech showcases a versatile career path driven by innovation and strategic thinking
During your recent live session on Bloomberg, you discussed StashAway's mission. Can you elaborate on how StashAway is shaping the future of financial markets, and what sets it apart from other financial platforms?
StashAway offers a holistic platform for clients to manage all of their financial wealth, from cash management to diversified portfolios and alternative investments.
Our goal is to make it simple and cost-effective to invest intelligently. Simplicity is at the centre of all that we do: Whether you’re a seasoned investor or just starting, we make it easy to invest in a globally-diversified portfolio tailored to your risk profile – by either building it by yourself or choosing our expert-managed one. Clients can easily automate their investments with us and dollar-cost average into their portfolios, which takes the stress out of investing and gives them headspace to focus on what matters the most to them.
Next, on how we manage investments intelligently: We follow a systematic investment framework that analyses macroeconomic data to drive intelligent asset allocation decisions. That means we’re cutting through the noise and positioning our portfolios based on what the economic data actually says. We are not a supermarket, offering many variations of the same product; for instance, on StashAway, you will find only one ETF that tracks the S&P 500, one that tracks gold, and so on and so forth: we do the heavy lifting of curating the best ways to build exposure to all global asset classes, and help investors build and manage their portfolios.
Lastly, we have a transparent, cost-effective fee structure that ranges from 0.2% to 0.8% p.a., with fees decreasing as the value of your assets increases – this is in contrast to traditional financial products that charge between 1.25% and 5% annually.
In a 2019 interview, you were asked about StashAway's use of Artificial Intelligence (AI) in its investment strategies. Could you provide an update on how StashAway incorporates AI in its services and if there have been any advancements in this aspect since the interview?
I have been sceptical of some of the other tech trends of the last few years, but I think that Generative Artificial Intelligence (e.g. ChatGPT) is different: there’s certainly some overhype, but I do believe it has the potential to change the way we work (and not only that!).
Our teams are experimenting with new AI techniques in functions like data analysis, coding, and more, with the goal of delivering innovative, user-friendly investment solutions to more people. I think there are also potential applications in compliance and risk management, whereby AI can help to improve productivity and automate manual tasks.
While there has been a lot of chatter about AI-powered chatbots, I think we still have some way to go with the tech. When it comes to something as personal and important as your investments, it can get frustrating if a chatbot is not able to respond in a meaningful way. At StashAway, we’re still committed to having real people answer your queries: our team picks up the phone in less than 8 seconds and responds to whatsapp messages in less than 1 hour.
As the Co-Founder and CEO of StashAway, what leadership principles have guided your journey, and how do they contribute to the company's success?
I started the company with 2 co-founders: Nino, our CTO, and Freddy, who has been our CIO for the first 6 years. I think that our ability to work together and leverage the deep competences that each of us brought to the table has been a significant factor in making StashAway successful until today. Our partnership has been rooted in:
- deep respect for each other’s knowledge and skillset,
- unquestionable openness to bring to the table any disagreement and discuss it until a solution is found and
- very high standards for everything each of us does.
These same principles have become the drivers behind StashAway’s culture which underpin our ability to build the company so far: it’s about collaboration, openness and high professional standards.
Spending half of your career building consumer-focused solutions, how does StashAway prioritise user experience and tailor its services to meet consumer needs?
We believe that it’s absolutely key to listen to our clients: we continuously refine the digital investing experience based on real customer feedback. Through customer interviews, product analytics to uncover usage metrics, and rigorous user testing, we identify areas where we could serve our clients better and prioritise our product roadmap accordingly.
For example, in the last few months we focused on giving users with multiple portfolios clearer visibility of their investment performance and on simplifying the experience for new users: as our investment offerings expanded over the years, new users could feel overwhelmed when exploring the wide range of portfolios. To that end, we refreshed our mobile app; With the new look and feel, users can now see an overview of their investment performance on the home screen once the app loads. The home screen also features some of StashAway’s most popular portfolios, reducing cognitive overload and alleviating decision paralysis. We also created an all-new Invest section, which showcases all the products in a clear and logical structure. Related products are grouped together, making it easy to scan the breadth of StashAway’s products in one go.
Even with a very easy to use App, we also recognise that investors may at times need some level of human touch. Our goal is that clients never feel the need to approach our customer support team, but when they do feel the need, we want that experience to be perfect: as mentioned earlier, we always have a real person on the other end of the line – whether you’re reaching us via email, WhatsApp, or phone. In fact, for inbound client calls during business hours, we pick up the phone in just 8 seconds. Such a customer-centric approach eliminates the frustration of long hold times commonly experienced in standard banking experiences.
What’s more, clients of StashAway Reserve, our offering designed for high-net-worth individuals, also have a dedicated wealth advisor to provide them with personalised and comprehensive financial advice.
Considering the evolving landscape of fintech, how does StashAway leverage technology to stay at the forefront of innovation, ensuring a seamless and secure financial experience for users?
As mentioned in the previous question, we are completely focused on what our clients tell us their major friction points are. The goal is to stay ahead of the curve, be innovative and build innovative solutions to address investors’ pain points. Let me give two recent examples.
In Singapore, our clients were asking for a guaranteed return; they were able to get it investing in term deposits with the banks, but the banks made it difficult, with rate changing often, minimum or maximum amounts being put in place and “best rates” available at different banks every week, requiring people to potentially opening multiple bank accounts.
To address this, we launched Simple Guaranteed, delivering the best guaranteed return available into the market through a super-simplified user experience. Our customers are loving it!
As a second example, take our recent initiative in MENA for example – we realised that investors face a multitude of challenges when it comes to dollar-cost averaging due to a lack of digital infrastructure supporting automated investing. In fact, investors in the UAE could only make recurring payments by either establishing a standing order with a limited number of banks – a process that is not only complex, but could even require a trip to a physical branch – or via debit cards, which would result in high fees on every transaction.
In collaboration with Lean Technologies, we introduced the UAE’s first-ever open banking-powered solution that allows for recurring deposits. Through the integration of Lean into the StashAway app, we made it possible for clients to effortlessly establish a recurring deposit in just two minutes. Clients also have the flexibility to adjust the deposit amount and frequency, as well as approve or skip individual transactions. With this, we’re putting the power back into the hands of investors, enabling them to easily finetune their financial plans while staying committed to long-term goals.
StashAway operates in 5 markets, are there particular differences in how they manage their savings?
In Asia, over 40% of household financial assets are held in low-yielding bank deposits – in contrast, this number is just 13% in North America. That’s why across our five markets (Singapore, Malaysia, Hong Kong, Thailand, the UAE), we’ve always been focused on empowering people to put their money to work.
Investors across the board generally want the same thing – frustrated by the product-focused, commission-driven business models of traditional wealth managers, investors are eager to explore user-friendly, client-centric investment platforms that can meet their unique needs. Case in point, a McKinsey study found that 80% of Asia’s affluent and mass-affluent population is open to receiving advisory services through digital channels.
Of course, there are still cultural differences to consider. Hong Kong, for example, has a strong investing culture, where short-term profit-taking often takes the spotlight. While dollar-cost-averaging may not offer the same adrenaline rush, it’s a practical and effective way to build wealth for the long term. So, in Hong Kong, we focus heavily on financial education around long-term investing through a wide range of channels, from a weekly newsletter to webinars and events. In Thailand, instead, we focus our communication more on the importance of diversifying globally, as for local investors it has traditionally been difficult to invest outside of Thailand and StashAway now makes it possible and frictionless.
Before we say goodbye, is there anything you can tell us about new initiatives from StashAway?
Amid a higher-for-longer interest rate environment, clients have been looking for higher yields. Our Simple cash management offers access to appealing yields in local currencies. For example, we launched Simple Guaranteed in Singapore last year, which invests in fixed deposits and has attracted a lot of interest.
For high-net-worth individuals, they may also want to diversify beyond traditional fixed income. To this end, we recently enhanced our private markets offering to introduce private credit investment opportunities from a fraction of the traditional minimum investment required.
Historically, private credit has demonstrated greater resilience against volatility, delivering stable returns and stronger downside protection compared to public bond markets. However, individual investors are still often excluded from such investment opportunities due to high minimum investment requirements that traditionally start from $250,000 USD. With StashAway Reserve, Accredited and Professional Investors in Singapore and Hong Kong respectively can now invest in private credit from a much more accessible entry point.
