In this edition of the fintech interview series I caught-up with a fintech that is quite a bit further along on its journey than some of the previously featured companies.
Founded in 2010 InvestCloud offers investment managers a software as a service based platform that allows them to run any part of their business. It is another example of how fintechs can offer small and midsized financial firms services that only large firms would normally have access to.
In this case, as the name suggests InvestCloud targets the investment sector with a cloud service. It has taken all the know-how required to run trading firms and put it into a cloud based package. It is aimed at the mid-market. Customers include asset managers, investment banks, wealth managers and hedge funds,
The software is split into modules, which include tools to enable customers to communicate with clients, manage clients, automate processes, do analytics, complete reports and do all the back office trade processing. Because the product is modular some firms want the entire end to end package with a module for every business need, while others might just take one.
The software is designed to enable business analysts and designers to customise the software rather than expensive programmers. To this end it created a technology known as programmes writing programmes (PWP) which provides code generation that allows business analysts and designers to customise.
Will Bailey, executive vice president Europe and Innovation at InvestCloud told me: “Programmers are good at writing code to solve complex problems but when it came to workflows and visualisations and specific customisations that clients need we thought there must be a better way.”
The idea for this has a lot to do with the background of original founder John Wise, now CEO. He was previously co-founder of data warehousing company Netik which is used by some of the largest investment banks in the world, providing data and reporting services.
Bailey said the Netik product is expensive and out of reach of companies other than the very largest. “It had a price tag attached to it that was too large to take out to the broader middle market.”
After Netik was sold the team got together and identified the problem that programmers were required for any customer specific work. Bailey, a software engineer himself originally, worked in the US defence sector before moving into financial software working on trading systems. He met the investCloud original founders in 2011, the year after it was founded.
“We realised that the designers and business and analysts need to be able to make changes,” he said.
To this end InvestCloud’s engineers focus on building the code generators that business analysts and designers at customers can use. “When customers want very specific designs we deliver the tools to create them directly to them, the people that understand the problem.”
Small firms will often ask InvestCloud for modules for everything while bigger things might request support integrating their existing systems
As I said at the beginning of this post InvestCloud is further along its journey than many of the previous fintechs interviewed. It has a customer base of 700 companies and its platform is used by companies to manage over $1.7trn of investments.
It has established more traditional investment companies as well as challengers amongst its customer base.
There is a long list of customers. These include: AMX, Anchor Private Clients, APEX Clearing, Capital GroupChilton TrustConifer Financial Services, Dinosaur Merchant Bank, FCI Advisors, Nutmeg, and .WeInvest
Most customers use InvestCloud’s multi-tenanted SaaS platform but some clients prefer a private cloud, which is also available
When InvestCloud, which began in a garage in California, won its first customer in 2012 it had around 20 members of staff and now it has over 300 globally. “We are now an established organisation and no longer in startup mode.” It has operations in various US cities as well as London and Bangalore
The majority of InvestCloud’s staff business analysts and designers and the tech team is deliberately small and experienced. “Because we do not have to do much customisation we can keep the tech team small and have people that understand the business do things for our clients,” said Bailey.
Bailey said the biggest challenge in the early days for InvestCloud was “getting people to really understand the value of the cloud.” Hard to believe today but Baily said: “In 2010 the fintech industry was very much a local install base and there was a lack of understanding of the value of the cloud. “We had to do a lot of education.”
“But around 2014 people started to get it and now I rarely get a question about the cloud. People have accepted cloud is the right decision,” added Bailey.
The opportunity in the future is multi-billion dollar said Bailey because investment companies have been underserved by digital.
Read the previous fintech interviews
If you are a fintech and want to feature email me on [email protected]