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SigFig locks in big banking partners for its tech-enhanced advisory services with $40 million round

TechCrunch TechCrunch 24/05/2016 Jonathan Shieber

SigFig, the developer of tech-enabled financial advisory services products, has raised $40 million from the venture investment arms of a slew of big banks.

The new round is a testament to the company’s belief that partnering with large financial institutions is the best way to get better financial advisory tools into the hands of the investors who need them, according to chief executive Michael Sha.

Financial services firms are big spenders on technology already, but typically they’re spending on infrastructure and back-end systems rather than on customer facing tools, says Sha.

“What they’re missing is access to the right kind of technology,” Sha says. “As well as the engineers who are really good at building a customer experience.”

Apparently some big banks agreed with Sha’s assessment… to the tune of a $33 million equity and $7 million debt round of funding.

Participants in the new round include Santander Innoventures, UBS, Eaton Vance and New York Life. Previous investors Union Square Ventures, Bain Capital Ventures, DCM, and NYCA Partners also put up cash in the latest round. Meanwhile, Comerica Bank gave SigFig a $7 million debt facility.

Through the company’s direct asset management platform, SigFig manages a pretty paltry $100 million. But the real business, says Sha, is in the services it provides to financial services firms. He was mum about how much the company manages through those deals, but said that revenue for the company is still based on a calculation of assets under management.

SigFig differentiates itself from asset management competitors like WealthFront and Betterment by billing itself as more of a full service shop for the financial services firms that still manage the bulk of America’s wealth.

“The idea is not that we’re building technology that is algorithmic money management,” Sha says. “There’s CRM, client tools, and money management,” through the SigFig platform.

This investment follows an earlier announcement last week that the startup had actually engaged in a much deeper partnership with the Zurich-based bulge bracket bank UBS.

“What we do with a partner like UBS is different than what we do with other partners,” said Sha. In the UBS case, SigFig is working more closely with their wealth management advisors than with some of the other partners, that are just deploying SigFig’s toolkit across part of their network.

While none of the tech-enabled financial services firms have emerged as a clear winner in the broader market. It’s clear that the industry is rapidly moving to adopt more tech-based services to appeal to their consumer customers — rather than their business banking clients.

“We are definitely at a watershed moment, where a lot of financial institutions are embracing this idea of digital wealth management,” says Sha.

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