Earlybird welcomes Flanks to the portfolio!
Revolutionizing Wealth Management: Our Investment in Flanks
By Tim Rehder, Nina Mayer & Ferdinand Dansard — Earlybird Digital West team
In the ever-evolving landscape of wealth management services, a substantial shift is on the horizon — a shift towards Open Wealth.
This trend ultimately aims at the automation and intelligence of wealth management services — a vision that is boosted by the momentum of Open Finance and evolving European regulations enabling customers to seek full control of all their financial data.
This article explores our investment thesis in Flanks, a Barcelona-based Fintech company where we recently led the $ 8m Series A round.
I. Market Opportunity
The wealth management market, as a subset of the financial advisory market, has been showing steep growth with the greatest wealth transfer in history: over the next 30 years, >$ 38trn will be transferred from baby boomers to the next generation of investors (Capgemini). However, the industry is still vastly dominated by manual processes, with high administrative burdens and prone to human processing errors.
Streamlining and harmonizing siloed data while automating wealth services, will be the basis to improve the user experiences for investors and to scale wealth management offerings to a broader spectrum of affluent and retail investors.
1. Regulatory Tailwinds
The opportunity for Flanks and Open Wealth is vast and rooted in the principles of data sharing and transparency akin to open banking: Europe, pioneering this movement, has introduced regulations like PSD2 or the proposed PSD3, and recently put forward a framework for Open Finance more broadly (FIDA regulation), establishing clear rights and obligations to manage financial data access beyond payment accounts.
Customers maintain full control over who accesses their data and for what purpose (in line with GDPR), while financial institutions are obliged to make customer data available for third-party services. Flanks, leveraging this trend, positions itself as a key player by aggregating global wealth data across custodians into a single API and building automated wealth services on top. This approach aligns with the upcoming MiFID III regulation which intensifies the need for financial advisors to know the holistic investment position of their clients.
2. Demand for Automation:
The industry faces a high demand for automation. Based on the expected shift of wealth to the next generation, new customer segments enter the market. The way financial services are delivered is expected to change since customers are looking for more hyper-personalized offerings and for leveraging technology to optimize their financial investment strategy.
On top, institutions see a need to serve broader masses of investors and find scalable solutions to do so. Wealth democratization is a trend in the financial industry as there is demand for offering financial services to individuals who may not have been able to afford such services before, including both retail investors and affluent individuals.
II. Introducing Flanks:
Flanks is building the missing infrastructure layer, empowering wealth managers to automate their product offerings end-to-end. Through its API layer, Flanks digitizes and aggregates global wealth data, offering a real-time 360° view of investment portfolios. Beyond data aggregation, Flanks automates manual processes for the wealth manager, i.e. from profiling customers enriched through their wealth data to suggesting intelligent investment decisions on the basis of the customer’s historical trading strategies stored in the user’s custodians. This software layer empowers wealth managers to digitize and automate their service lines, targeting large institutional banks as well as family offices, asset managers, and financial advisors.
With over 300 custodian connections today, Flanks thrives as more users join its platform, enhancing its reach and depth. This data network effect supports Flanks’ position as a leader, creating a virtuous cycle of value for both the company and its clients.
Flanks has the potential to become the industry standard for B2B partners in the wealth management industry. We were impressed by Flanks’ impact on its clients and the founders’ industry knowledge.
At the heart of Flanks’ success are its founders — Joaquim de la Cruz and Sergi Lao, two software engineers, joined by Álvaro Morales, a private banking executive. Their shared vision of making Flanks the standard software layer for wealth services, coupled with their technical depth, positions Flanks as a driving force in the industry.
In conclusion, Flanks represents the future of wealth management — a future where automation and data intelligence lead to hyper-personalized and efficient wealth services at scale. We see Flanks as a gateway to a more accessible, transparent, and intelligent wealth management future.
Welcome, Flanks, to the #EBVCgang!
