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RAIZ INVEST LIMITED (RZI) - Democratizing Investment: CEO Brendan Malone on Accessible Wealth-Building, Roundup Innovations, and Tailored Portfolios

August 04, 2024 • Andrew Musgrave

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Unlock the secrets to effortless wealth-building with insights from Brendan Malone, CEO and Managing Director of Raiz Invest Limited. Discover how Raiz Invest has revolutionized the way Australians approach investing, starting with just $5 and expanding into diversified portfolios that even include Bitcoin and property. Brendan shares the company's innovative journey, highlighting how features like the Roundup concept have removed barriers to entry, making investing accessible to everyone. Tune in to learn how Raiz Invest is not just a savings tool but a comprehensive platform that includes superannuation options, cashback rewards, and specialized portfolios tailored to customer feedback.

Join us as Brendan dives into the strategies that have driven Raiz Invest’s impressive revenue growth and increased funds under management. From the highly requested Raiz Plus, offering 150 investment choices, to the phenomenal success of Raiz Kids, designed to secure the financial future of the younger generation, Brendan reveals how customer engagement and feedback have been pivotal. Hear firsthand about the development of new products and enhancements, and get inspired by the powerful story of a company that continues to innovate and meet the evolving needs of its customers.

Andrew Musgrave:

Welcome back to ASX Briefs, and joining me today is Brendan Malone, the CEO and Managing Director of Raiz Invest Limited. Raiz Invest is a pioneering financial services company that offers a micro-investing platform designed to help Australians build their wealth effortlessly. With innovative features like the Roundup concept and a wide range of investment options, Raiz Invest has made investing accessible to everyone. Brendan, thanks for joining me today and welcome to the podcast.

Brendan Malone:

Great to be here, Andrew, looking forward to the conversation.

Andrew Musgrave:

Okay, to start off, could you just tell us a bit about the history of Raiz and also the core focus of the business?

Brendan Malone:

Absolutely. Raiz is Australia's market-leading wealth tech platform. What we aim to do is empower all Australians with hands-on financial experience and education. Having launched the business back in February 2016, it was built on two core principles that small amounts add up and that customers need ways to save and invest without changing their current lifestyles. Raiz breaks down these barriers for investing and helps all Australians to get started. Customers can start with as little as $5 across nine different diversified portfolio options. But we also more than just a savings product. We offer Raiz Invest, Raiz Invest Super, where employer super guarantee can be invested. Raiz Rewards, which is a cashback platform to help save that little bit extra, especially in these economic times. We also have a Sapphire portfolio that includes a 5% allocation to Bitcoin, so customers can understand and experience Bitcoin in a controlled environment. But then we also have a Raiz Residential Property portfolio so customers can understand and engage with the property market in Australia. But there's lots more, including things like Raiz Kids.

Andrew Musgrave:

Okay, and the company has shown significant revenue growth and increased funds under management, so can you share the key strategies that have driven this growth, particularly in the Australian market?

Brendan Malone:

Yeah. So the Australian business is our core market and at Raiz we understand. I think the strategy is more about understanding what our customers like and what their feedback is. Listening to our customers has been so important. Product development and innovation is what engages new, but also re-engages and maintains and retains our existing customers. So to build a product suite that works together for all our customers is so important. We listen to our customers in various ways, like our Emerald social responsibly themed portfolio. Our customers asked for it, we built it and it fast became our second most popular portfolio. Our Raiz kids product that helps parents, grandparents, aunts and uncles saves for the little ones, and even our Raiz Rewards program. As I said, it can save people. People can save that little bit extra. So building a product and a product suite that sits together and can help everybody, or all Australians, has been what has been the key success of our business strategy and growth.

Andrew Musgrave:

Okay, and the company has launched several new products, including Raiz Plus and enhancements to Raiz Super. So how have these new offerings been received by the customers?

Brendan Malone:

Andrew, as I said, the important ingredient is that we've listened to our customers and they've helped us innovate. Our customers have requested these new products and last week we saw our Raiz retail plus portfolio increase to 150 investment choices, but also that plus portfolio where customers can create and weight their own portfolios with a choice of 150. That plus portfolio has been highly requested since we launched it in the retail offering in August last year for our superannuation Raiz Invest super customers. They've continually asked for it. So listening to our customers is what's made the success of our products and drives the product innovation which is so key, and that's what keeps them engaged.

Andrew Musgrave:

Can you also provide an update on the progress of Raiz Kids and its contribution to the increasing funds under management?

Brendan Malone:

Absolutely. I'm personally proud of the Raiz Kids growth and I do have a three and six-year-old, but the engagement that we've seen since launching this product has been huge. Last week we put out an ASX release on our quarterly 4C and commentary and it showed that we've had growth. We now have over 40,000 Raiz Kids accounts, which is a growth rate of 8%, but also the FUM that's in these accounts is up 15.6% over the quarter to over $44 million. The importance with this kids product is that many of our accounts have automated deposits on, which means investments are made daily, weekly or monthly on a reoccurring basis. As I said, it's very hard to change people's lifestyle or actions but, if you can, customers are leaning on the technology that's out there today, like Raiz, to assist with this and automate those deposits. So to see the growth in the kids' product over the last couple of years has been great.

Andrew Musgrave:

Now you've got over 300,000 active customers and that is growing. So what are some of the strategies the company's employed to maintain high levels of customer engagement and satisfaction?

Brendan Malone:

Customer engagement and satisfaction. And that's that listening to the customers but also letting the customers know. And we don't have to brag, we don't have to promote, but customers are picking up that we're listening to. If there's something not right from a colour scheme or a messaging, they will let us know and we're pretty responsive and get things changed if not overnight, very, very quickly. So watching the customers, especially on social media, saying I raised this with Raiz, it's been fixed, it's been great. We have a world-class customer support team that works very hard and answers all questions in full. We all know that it's terrible if you don't get your questions answered, so we make sure that the team's fully up to speed on the product, the development, what else is happening out there in the market or the economy. And we've seen that the satisfaction scores are up over 98% for our customer support.

Brendan Malone:

Education is also what brought me into the business. The financial education and empowering customers is key, an example being that we deliver a newsletter to our customers that provides a brief, bite-sized market update, break down some of the financial jargon into palatable pieces of information that they understand. This newsletter has recently seen an increase to over 40% open rate. Now that's pretty key for a financial services newsletter to have an over 40% open rate. So, listening to the customers, providing them that education and being there for them, no matter what economic cycle we've seen and over the eight years of Raiz we've seen a lot of different economic cycles to be there and be the support and the help that customers are asking for has been key.

Andrew Musgrave:

And you've also launched the Raiz your Game campaign in partnership with Seven West Media for the AFL and AFLW season. So can you discuss the early results of this campaign and how they align with the broader marketing strategy?

Brendan Malone:

Yeah, absolutely. Seven West has been a great partner for this. The importance of having the Raiz your Game campaign on the Seven West assets is it not only creates brand awareness and recognition and I'd love Raiz to be a household name it creates the re-engagement opportunities. As customers may have used Raiz a few years ago and if you look at a few of our last investor announcements, we've continually delivered product improvement, product innovation and product growth. So a customer may have used Raiz a few years ago, either outgrown it or reached their savings goals and gone somewhere else. But now that product suite has broadened as their financial education and experience has grown. So the Seven West and the Raiz your Game campaign reminds customers about Raiz and we've seen accounts be reactivated, which has been great.

Brendan Malone:

The Raiz your Game campaign also sits. You think about it. It's on the TV, it's on the 7 Plus app, et cetera. The Raiz your Game campaign sits very nicely with our own digital media, in-house experience and skills that we have. We're very good at acquiring financial services customers online and quite effective from a cost point of view, but over the last sort of six to eight weeks in particular, we've developed some new in-house generative AI capabilities and digital marketing campaigns that sit along the Seven West assets to make sure that we're getting the right message to the right customer at the right time, especially in this environment out there.

Andrew Musgrave:

Okay, and in recent times there's been some commentary around your operations in Indonesia and Malaysia, so can you just give us an overview of what's actually going on there? Some of those have been shut and what's the general focus moving forward for Southeast Asia?

Brendan Malone:

Yeah, look good question and there's a lot of commentary out there. But over the last two months we made it pretty clear that we had two major goals. The first one was to make sure the business is sustainable and transition the company to cash flow positive and the 4C last week showed that but it was to also divest from Southeast Asia. Both of those sort of goals work together, and we have divested completely from Indonesia and we're in the process of divesting from Malaysia at the moment, and what we want to do is focus on the huge and scalable opportunity that we have in our home market, being Australia. So that's the key is the opportunity that we have in Australia.

Andrew Musgrave:

Okay, and just to wrap things up, you did mention the 4C came out last week, so if you can just touch on a few highlights from that, but also what's going to be some of the key milestones for the company over the next 12 to 18 months.

Brendan Malone:

A few of the key highlights, especially in relation to the Australian operations.

Brendan Malone:

Over the quarter the revenue growth was up 28.1% year on year. We've had steady growth in our active customers, up 3.7% over the year. And then, as I mentioned earlier, with the Raiz Kids account, the cross-promotion that we're doing across our product suite and the engagement and take-up from our existing customers across our other products, with both the plus accounts up 6.5%, Raiz Kids accounts, who are up the 8%, and even our superannuation customers are up 7.7%. So the momentum that we've got going forward is great and the numbers show that the start we've had to the FY25 has been positive. The customer growth, product innovation. The June quarter delivered the fourth consecutive quarter of positive operating cash flow. But the momentum that we currently have with customer growth, FUM growth and the product innovation, with a stable underlying cost base and our cash position, will continue to drive further growth over the next 12 to 18 months and we're all very excited for the huge opportunity in Australia and I'm looking forward to getting the annual results out in the month of August

Andrew Musgrave:

Well, Brendan, thanks for your time today. It's been great to catch up. A fantastic update on where the company's at, and we look forward to further updates in the upcoming months.

Brendan Malone:

Great Thanks, Andrew. Thanks for having me.

Andrew Musgrave:

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.