CZECH REPUBLIC Trends and Developments Contributed by: Tomáš Sedláček, Zdeněk Husták, Adam Nečas and Mikuláš Zacpal, BBH, advokátní kancelář, s.r.o.
tors must invest for at least ten years and the first withdrawal from the LIP can only be made after the age of 60. In addition, employers can also receive tax benefits for contributing to their employees’ LIPs. As a result, the LIP is an attrac - tive tool for long-term savings and could have a significant impact on the Czech capital market. The Rise of New Investment Platforms: Banks Face Fresh Competition In recent years, there has been a significant rise in the popularity of digital investment platforms. Unlike traditional investment funds offered by banks, these platforms provide several key fea - tures, including low costs, easy access and sim - plicity, a wide selection of products, and liquidity. These platforms and the investments they offer are now popular among retail investors. Today, the market is seeing a particularly strong growth in ETFs, which give investors easy access to a diversified set of assets. By way of example, the popular digital bank Revolut takes advantage of both worlds. Revo - lut has more than 800,000 clients in the Czech Republic who are mostly investing in US stocks and ETFs. It is no surprise that Revolut chose the Czech Republic as a pilot market for launching its specialised investment app, citing the high level of interest in investing among Czech cli - ents. On the other hand, most local banks offer tradi - tional investment options and, typically, invest - ment funds are actively managed by a fund man - ager within the respective bank group. However, banks recognise the need to accommodate services utilising the evolving products and new preferences of their clients. Therefore, they aim to simplify and smarten their investment prod - ucts while more often collaborating with existing investment platforms. Currently, an increasing
number and variety of investment products are available in the Czech Republic through partner - ships/white labelling with investment platforms. For instance, the local Air Bank collaborates with Interactive Brokers, enabling customers to invest in global stocks directly via the bank app. This platform allows users to manage their invest - ment portfolios entirely within the app, offering easy access to a selection of companies world - wide to invest. In the app, customers can view their portfolio, purchase or sell shares, and con - veniently track their investments. This approach reflects the growing trend among banks to sim - plify investment processes and offer seamless integration with established investment plat - forms, enhancing accessibility and choice for Czech investors. This shift away from more traditional products also creates room for a broader range of invest - ment products. Banks are thus discovering new ways to expand their service portfolios with modern investment options and how to keep their investment products attractive for their cli - ents. In recent years, crowdfunding became one of the more popular options in the Czech Repub - lic as it benefits both investors and businesses which are financed. This funding model provides investors with a smart way to invest in business projects, while enabling investors easy diversifi - cation and portfolio management. Local crowd - funding platforms, such as ROIER or Investown, now give retail investors easy access to invest - ment opportunities previously reserved for insti - tutional investors. In this way, investors can more effectively diversify their portfolios and spread risk, contributing to their financial stability. For borrowers, crowdfunding is also attractive, offer - ing flexible financing conditions.
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