We supported an ambitious WealthTech scale-up in structuring and launching investment services aimed at EU banks. The assignment consisted of three complementary workstreams: (i) a pre-study and proposal for a micro-investment feature linked to card payments, (ii) the development of a forward-looking business model leveraging upcoming European regulations (Retail Investment Strategy (RIS) and Financial Data Access Regulation (FiDA)), and (iii) a pre-study and proposal, via a software partner to a private banking group, for a lean common flow for investor profiling (MiFID II).

WealthTech Scale-Up Support: Pre-Study & Proposal, Business Model & Go-to-Market Enablement

Taking over the SFDR epic owner role on the project in order to deliver the project in a timely and qualitative manner.

Supporting the EU’s Green Deal

The Sustainable Finance Disclosure Regulation (SFDR) is a pivotal component of the EU’s Green Deal, aimed at transitioning capital flows towards sustainable investments to achieve carbon neutrality by 2025, as set by the 2016 Paris Agreement.

SFDR Requirements

The SFDR requires financial market participants (FMPs) and financial advisers to disclose at both entity and product levels how they integrate sustainability risks and principal adverse impacts into their investment decision-making processes. It also introduces additional product disclosures for financial products making sustainability claims.

Increasing transparency and investor protection

The objective of the regulation is to provide transparency to investors, to strengthen investor protection and to make it easier for investors to compare financial products and services on their sustainability claims and consequently, to guide their investment decisions.

Regulatory technical standards (RTS)

The SDFR RTS specify the methodology, content and presentation of information to be disclosed at product level (precontractual documents, sustainability-related websites disclosures and periodic reports) and at entity level (principle adverse impact indicators (PAI) statement and website disclosures). 

Scope

All Article 8 (promotion) and 9 (objectives) products (funds, T21, T23, mandates) were impacted and all group, banking and insurance entities were involved, along with other distributors. The entity level PAI statement involves all investment decisions, including conventional Article 6 products.

Moving target

The SFDR RTS had to be implemented considering incremental guidance from three European supervisory authorities (European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA)) and sometimes deviating FAQs and review comments from several national supervisors. Consequently preparations had to be adapted in an agile way, while meeting the strict regulatory deadlines.

Soon after the introduction on 1 January 2023, an update to the SFDR RTS was released on 17 February 2023.

To keep the in-house Responsible Investing methodology competitive and compliant, a yearly review cycle was initiated, introducing changes to the disclosures.

EU-Taxonomy in SFDR and NFRD

Given the relationship between SFDR and the EU-Taxonomy classification system of environmentally sustainable investments, the asset management-related part of the corporate Non-Financial Reporting Directive (NFRD) reporting was also in scope of the project (reporting over 2023 in the group annual report). Also the first preparations for the implementation of the Corporate Sustainability Reporting Directive (CSRD) based on the European Sustainability Reporting Standards (ESRS) by the European Financial Reporting Advisory Group (EFRAG) were supported.

Other related topics

Other related activities were added to the scope along the way, including EC Consultations for SFDR review and the SFDR precontractual and periodic data collection exercises by the Commission de Surveillance du Secteur Financier (CSSF).

Future updates in the pipeline

The SFDR RTS is a dynamic framework, subject to further updates. An impact assessment of the pending SFDR RTS update was made, while an ongoing broader SFDR review might introduce further changes.

Handover

Pending further internal and external updates, the opportunity was taken to implement further organisational and operational (e.g. automation) improvements and to hand over the epic to an internal epic owner.

Ready to assist

Phibonacci will continue to closely monitor developments in sustainability-related regulations and is ready to assist existing and new clients in further implementation.

SFDR RTS and EU-Taxonomy – Increasing transparency on the sustainability of investments – June 2022-June 2024

Taking over the PRIIPS epic owner role on the project in order to deliver the project in a timely and qualitative manner.

PRIIPs stands for Packaged Retail and Insurance-based Investment Products, which are investment products that retail investors can buy. The PRIIPs Regulation is a European Union regulation that aims to provide retail investors with clear and comparable information about these products through a Key Information Document (KID). The PRIIPs RTS are the Regulatory Technical Standards that specify the content and presentation of the KID.

The Commission Delegated Regulation (EU) 2021/2268 introduced changes to the way costs, charges and performance scenarios are calculated and displayed, as well as introducing template amendments. Also the obligation to provide past performance information (for non-structured products) and previous performance scenarios calculations on top of the KID itself was introduced.

All active funds with a UCITS KIID (end of UCITS exemption) and insurance products, distributed to retail clients, were impacted.

PRIIPS RTS IMPLEMENTATION – 1 January 2023

Take the role of Product Owner a.i. to define the MVP of a Call For Action Framework, initially to be configured for a data actualization exercise.

Data actualization – Call For Action Framework

Carefully manage the phase-out of the Business Accounts (SME Business), as part of a strategic alignment, based on the proposed scenario (1-year period to avoid loss of fidelity premium).

Phase-Out Business Accounts

Perform part of the due diligence on a Belgian Savings Accounts Portfolio offered on the market. Purpose was to assess the Operations and IT impact of a potential acquisition and to draft and negotiate an optimal operational transaction plan as part of the envisaged Asset Purchase Agreement (APA).

Potential Acquisition of a Belgian Savings Accounts Portfolio

Take the Product Owner role for the Post Logon website (secure website) of a Belgian retail savings direct bank.

New Post Logon website

Participate in the final preparations of the Asset Purchase Agreement (APA) with the buyer, to make sure the carve-out and transfer of funds and bonds investment portfolios and pension savings accounts (PSA) can be executed and to start the preparations for the execution on the seller’s side. The assignment was extended with managing the execution of the APA and the carve-out related to TAK21 portfolios.

Carve-out pension savings accounts and securities and TAK21 portfolios

Investigate the alignment of products offered and customer segments serviced with the client’s newly defined strategy map. Prepare action plans and project plans to perform rationalizations decided upon.

Strategic alignment – products and segments

Build an aggregated project portfolio overview in terms of content, timelines, resourcing, risks and interdependencies. Initiate proper project portfolio management and resource planning to ensure both local and global programmes and projects can be managed and executed in an efficient manner.

Project Portfolio Management