FinTech or TechFin?
Interview with Alex Medena, CEO of FinFabrik and Advisory Board Member of WTIA’s Fintech Core Focus Board.
Hi Alex, can you tell us a little about your company and where its value lies?
Alex: Sure, FinFabrik is a capital markets and wealth management technology solutions builder, comprising of three products; BrokerFabrik a fully integrated software system which caters to brokerage firms, AlgoFabrik which specializes in investment management using automation capabilities, and WealthFabrik which is a bespoke wealth management platform powered by machine learning layers for wealth management businesses.
We basically started 11 months ago by acquiring the IP (intellectual property) of InvestLab, a HK-based retail brokerage platform focused on global retail trading.
Imagine you have a brokerage license, RO, capital but you don’t have front, middle, and back end technology or the architecture to make financial advice and trades on the fly for your clients. This cloud-based technology aims to change all that: our solutions are B2B or B2B2C SaaS model.
For us, it all boils down to customer experience. Now there are two types of retail-investment experiences; active trading where a client may have intrinsic motivation to buy stocks based on hearsay or market news, and then there’s passive trading where a client wants to save for future plans such as college, retirement or for a rainy day which is more under wealth management that today involves robo-advisors. FinFabrik deals with both kinds of experiences: we marry retail trading to wealth management.
Unlike most startups; they start with an idea, a little capital, a powerpoint, they do an MVP and try to pitch to market and sell, we have technology from the get-go.
What’s the current direction FinFabrik is taking to develop its business?
Alex: We have a 1-2 year roadmap where we will bring more sophisticated data analytics tools and machine learning technologies to help end-users or end-investors to make the best decisions for their financial goals. It could be highly customized to the individual with risk-level assessments, bespoke research report and advice based on personal investment preferences and habits. Machine learning is aimed at helping customers learn much more about themselves than they would on their own, especially when they are overloaded with so much market information available everywhere.
And where do you find challenges in your business?
Alex: We do find that many brokerage firms and wealth management companies have either full or partial inflexibility in their infrastructure, meaning they are unable to shift or change due to technical complexities or costs. What we do is we built our solutions in modules and through APIs which could plug into their current existing infrastructure and deliver the functionalities they need. For example, a company may need portfolio management tools, fix connectivity or a dashboard for brokers; they can add that to their existing infrastructure.
Your company stresses on something called “financial inclusion”, can you talk a little about that?
Alex: Yes, this is absolutely important to us. There is the misconception that wealth management is only for the wealthy. Our mission, and myself as well as our other two cofounders strive to create a legacy to change things which include engaging and opening doors of financial education and wealth management access to under-served or unserved population; this includes middle-to-low income earners, minorities, women, or the financially illiterate who have the same kind of financial goals as the higher earners though at a lower scale. That scale doesn’t make it less important for the people in that “segment”.
We are in 2017 and we still talk about financial inclusion which means we haven’t done enough in Fintech. The technology is there and the cost of running these platforms is lower than before.
Banking in general and private banking in particular is a relationship based business though the latter is not scalable anymore and there is limit as to how many clients a relationship manager can service properly. Second, technology helps understand clients’ needs better and service them efficiently. Thirdly, and again technology plays a big part here, financial literacy is a key aspect particularly with gamification.
And what is FinFabrik’s role in Fintech?
Alex: While most companies tout the word “FinTech” and call themselves “FinTech companies” they are more “TechFin” companies.
The technology is actually irrelevant and merely an enabler to enhance customer experiences and business processes. We honestly believe that FinTech should mean that finance comes first.
We have a vision that is further than individualised solutions based on demographic segments: we want to create hyper personalised content catered to each and every individual and this could be done through AI (in the broad sense), but the end goal is not to build a business on machine learning or AI, the goal is to provide financial services to people in the best possible way.
Therefore, we market ourselves as such and we are doing what we can in terms of public speaking and education to bring more awareness to easier financial management enabled by technology.