UBS Look To Startups To Drive Innovation In Financial Services

Global wealth manager, UBS, takes innovation seriously. As well as investing in disruptive technologies they have also developed a series of initiatives aimed at finding the most exciting new companies within the fintech space globally. This includes their biennial Future of Finance Challenge.

The competition, launched in 2015, aims to find the most exciting startups, or established and growing companies, that will shape the future of finance. In 2021, UBS looks to find innovations in four areas: Sustainable banking; Reimagining investing; App stores and platforms; Tech and cybersecurity.

And this year has seen more submissions than in previous years, particularly for the tech and cyber security category. Veronica Lange, Head of Digital Engagement at UBS, sees this reflecting the broader industry trend, “it shows how much more interesting the finance industry, and also UBS, has become as a partner for tech companies.”

For each category, 10 startups will be chosen as finalists. Following expert mentoring, they will pitch their innovation to the international judging panel, and the winner of each category will be chosen.

Nurturing startups over the long term

The bank’s commitment to the startups doesn’t end after the competition. Winners from previous years have gone on to work with UBS to implement their solutions. According to Lange, “the type of collaboration post-competition will depend on the maturity of the startup. When they’re in early stages, we work with them to help in their development process towards a market ready solution. When they’re more advanced, there’s an opportunity to have a more ‘close-to-market’ collaboration.”

Some of the previous finalists include Diveplane (2019), who help UBS to leverage synthetic data within their banking operations; Wonder AI (2017), who support the bank with their ultra-high net worth clients; and Tradelegs (2015), who provide algorithms for systematic options trading to the investment bank. “It’s a very broad spectrum from investment banking to retail banking, wealth management and pure tech innovation” Lange noted.

Since 2015, about 50% of the finalists received additional funding after the Future of Finance Challenge, some with significant funding rounds.

Tackling the gender funding gap

UBS also has a focus on diversity and inclusion, particularly when it comes to gender equality. A recent study the bank undertook on the funding gap noted that female entrepreneurs globally receive less funding than their male counterparts. This is despite the fact that women, on average, generate more revenue per dollar invested than men – 78 cents per dollar compared to 31 cents.

Source: UBS report, The Funding Gap

As a result, UBS has been doing more to raise awareness of female entrepreneurship within the fintech space. This year, for the first time, they have included a Female Founder Award as part of the Future of Finance Challenge.

Opportunities for Luxembourg fintech startups

Beyond the Future of Finance Challenge, UBS is continually looking to work with new and exciting companies in the fintech area. They also have their eyes on Luxembourg. The bank sees it as a strong breeding ground, given the country’s great position as an entry point to the EU, regulations that are supportive of innovation, and the long history of financial services.

Despite this, there have been few Luxembourg entries to the UBS Future of Finance Challenge to date. Lange speculates that this could be due to the high volume of local opportunities. With so many banks and investors in Luxembourg ready to support local talent, it’s understandable that early stage startups would seek initial funding closer to home. She points out though, that “UBS, as a global wealth manager with business across the world, can be a good partner for companies in Luxembourg if they want to scale beyond the EU.”

It’s an exciting time for the financial sector globally, and for fintech startups specifically, as international banks and financial institutions look to invest and collaborate with new companies and adjacent industries. And that’s particularly exciting in a place like Luxembourg.

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