Ikigai launches in UK to disrupt the asset percentage pricing model
Ikigai, a fintech start-up hoping to disrupt both banking and wealth management, has officially launched in the UK.
The offering includes a debit card, a savings account, and a diversified investment portfolio – all accessible through one app. Every new client also gets a relationship manager.
In an effort to disrupt current wealth management pricing models, Ikigai is charging a flat £10-a-month fee to early access users.
The fintech’s technology partners include Railsbank and WealthKernel
That’s as opposed to charging an annual percentage of a user’s portfolio, which incumbents and fintechs alike still do.
Since unveiling itself a year ago to FinTech Futures, Ikigai has raised £2 million in seed capital. As of yesterday, it welcomes UK users to open accounts via the Apple store. Android access is “coming very soon”, according to a spokesperson.
The fintech’s technology partners include Railsbank and WealthKernel. US investor conglomerate BlackRock’s asset allocation guidance manages customer portfolios.
Ikigai’s current and saving accounts sit in a safeguarded account at the Bank of England. Whilst Wealth Kernel holds all customer investments, hence the carry compensation for up to £85,000.
Disrupting the percentage model
“When you look around at investment propositions, they’re always as a percentage of the assets under management,” co-founder Edgar de Picciotto told FinTech Futures back in March 2020.
Whilst incumbents’ fees generally get higher the more you invest, fintechs’ fees generally get lower the more you invest.
Fellow Ikigai co-founder, Maurizio Kaiser, said in March he never understood why, if he invests £10,000 with a traditional wealth manager, he’ll be charged £100 a month. But if he invests £100,000, he’ll be charged £1,000 a month – “it’s the same service at the end of the day”, he said.
“I think the pain points are quite similar across different income levels,” de Picciotto added. He is firm in his belief that whether someone’s earning £50,000 or £150,000, the percentage model is just as frustrating.
Ikigai means “a reason for being” in Japanese. It serves those trying to grow larger, longer-term investments currently capped by percentage-based fees.
The start-up therefore wants to tap a middle ground. Between challenger banks’ “overpriced” metal cards, and incumbents’ “clumsy” travel insurance bundles.
Both de Picciotto and Kaiser worked at McKinsey & Company together for a time before setting up the start-up.
“We realised that despite all the very cool new apps that were coming up, we weren’t seeing the ones that would push us to switch,” said Kaiser.
“From there, it was immediately clear to us that we needed to combine the best digital banking experience with a transparent and straightforward investment financial institution.”
Read next: UK challenger ikigai to launch flat-fee investment account
This is a great product offering by Ikigai. I would like to ask if you have considered expanding to emerging markets like Nigeria? Am a former banker, and I see a huge opportunity in Nigeria. Would be happy to take this forward. Thank you.