Finantix was established twenty years ago. The finance industry, financial technology and the company itself are about to enter a new age of opportunity.
That long-awaited year of visionaries and visions, reflections and projections, 2020, is almost here. As it approaches, we caught up with Alessandro Tonchia, co-founder of Finantix and a seasoned observer of commercial and technology developments in the financial industry. We asked him to look back, to the time when Finantix was set up, to share his views on some of the most important developments in the last two decades, and to look forward to the next twenty years of the industry and the company.
Alessandro, every successful start-up needs a differentiator. What did you want to do differently when you started Finantix?
Alessandro Tonchia: We always had this sense that financial service providers, wealth managers, banks, insurers, could interact more personally and more intelligently with their clients. In practical terms, that comes down to a belief that the relationship elements of the dialogue between client and adviser are as important as the mathematics. So, over the years, we have tried not to forget the communication factor alongside the technical functionality. It’s always been about making it easier for financial institutions to offer more engaging experiences. That’s been a major point of difference for us. And, as we constantly reinvent with technology, it’s exciting that we are now really getting into the space of how we can use research, how can we use notes to capture client conversations.
Do you think that Finantix has reinterpreted the technology element of fintech?
Alessandro Tonchia: We certainly focus on technology in context, or combining technology with philosophy, if you like! One of our key strengths is to be holistic. To understand what’s relevant to the client. We try to capture the high touch of private banking, rather than focus just on the mechanical element that the algorithm might have. It’s about understanding your client. By speaking to them, by capturing their goals, ambitions, concerns, behaviour, rather than just by ‘computing their performance’.
At this stage in your development, and with 2020 just around the corner, would you go as far as to say there is a visionary element to what Finantix does?
Alessandro Tonchia: Are we visionaries? We certainly want to work with innovative financial institutions who have vision. Those who are willing to re-design their client service model using standard technology that can be purpose-assembled. We ask what are the building blocks of their future?
“ It’s about understanding
your client. By speaking
to them, by capturing their
goals, ambitions, concerns,
behaviour, rather than
just by ‘computing their
And that’s what we engineer, in a solid way, based on our understanding of how the world of wealth management and financial advice ticks. So, we’re about forward-looking engineering. With the solidity and acceleration that ready-to-go building blocks can offer. But also ensuring the compatibility of those building blocks with the trends of the future. I guess that makes us strategic enablers.
At this stage in your development, and with 2020 just around the corner, would you go as far as to say there is a visionary element to what Finantix does?
Alessandro Tonchia: Are we visionaries? We certainly want to work with innovative financial institutions who have vision. Those who are willing to re-design their client service model using standard technology that can be purpose-assembled. We ask what are the building blocks of their future? And that’s what we engineer, in a solid way, based on our understanding of how the world of wealth management and financial advice ticks. So, we’re about forward-looking engineering. With the solidity and acceleration that ready-to-go building blocks can offer. But also ensuring the compatibility of those building blocks with the trends of the future. I guess that makes us strategic enablers.
It’s been twenty years now. How has the financial industry evolved since Finantix started and what has been the biggest change driver?
Alessandro Tonchia: I don’t think there is a single event that shaped the industry. Post Big Bang there was a movement in thinking that you can offer more banking to the mass affluent segment. Not that there were only private banks before, but it became more of a popular discipline. Perhaps the biggest evolution is that more people than ever have access to some form of financial services and recognise the need to plan for their financial future.
Even today, over a decade later, it’s still a major industry reference point. What impact do you think the crisis of 2008 had?
Alessandro Tonchia: The crisis prompted the regulator into action and that in turn caused a realisation that pen and paper is not enough in our industry. You have to have a system that allows you to sell and advise with energy and conviction but that, at the same time, protects you from your enthusiasm becoming mis-selling. That equation emerged from the crisis. It became a sophisticated exercise to compute risk and communicate it to your client effectively. A large element of industry focus now is about blocking a sale of something that is incompatible with the risk understanding of the client.
After the crisis, what was the effect on Finantix and the solutions that you developed?
Alessandro Tonchia: I would say that the first 10 years of our experience was focused on enabling wealth managers to put in the building blocks of financial planning and portfolio management. The raw infrastructure.
” Perhaps the biggest evolution is that more people than ever have access to some form of financial services.”
The last 10 years have been not just about enabling people to do something, but to block nefarious stuff. To avoid doing certain things in order to remain compliant. That’s much harder.
What are some of the specific technology challenges that regulatory compliance creates?
Alessandro Tonchia: Becoming, and remaining, compliant requires better data. Better real time computation. Better understanding of the client, to compute what you can and cannot do with that client. It becomes a more complex equilibrium. So much so that even institutions who did not want to use technology, because they didn’t see the positive advantages, now they realise that they might incur fines and reputational damage if they don’t use it.
So, is compliance shaping the industry landscape for better or worse?
Alessandro Tonchia: The road to compliance has been bumpy and even rocky at times. Take MiFID II as an example. When it went live, people had band aid kind of solutions. Rushed together just to tick the box. Now, they are thinking in a much more conscious way about the balance between compliance as a need and as a way to become client-centric, to give the right advice, to be almost making a virtue out of the compliance hurdle. And they are thinking, as the dust has settled, how they can be effective from a sales point of view, without risking that what they are selling can cause damage by not respecting all the rules.
One consistent industry theme is how fintech changes constantly. How can your clients keep up?
Alessandro Tonchia: If you’re, say, a wealth manager dealing with technology, you’re seeing different waves coming. Digital customer experience. AI. Machine learning. The wise wealth manager just takes little bits of each of those waves. The ones that are really relevant to their business. Stripping them of the hype. Taking a sub-set of the wave of innovation that really can make a difference to them. In measurable terms. That’s what we can say the wise wealth manager would do to keep up with technology.
And how can Finantix help make sure the technology they adopt justifies their investment?
Alessandro Tonchia: One very important role we have at Finantix is to do the technology cherry picking on behalf of our clients. For example, we take those pieces of AI that make a private banker measurably more productive. We take out the hype and all the upside headlines and we carve out some very concrete benefits. We are not the visionaries here. But we do play a key role in making our clients’ differentiated, digital, and dynamic service experience visions into reality. We deliver the strategies that make an adviser more efficient. We select for our clients the pieces of AI that will help towards very specific goals. And, always, we stay strategically aligned with the KPIs that the business is trying to achieve. I would summarise it like this: we understand our clients’ processes, whether they are private or retail banks or insurers, then we select very relevant, very impactful technology sub-sets from the cloud of hype!
Are we approaching a time in the financial industry when quality of technology will be indivisible from quality of customer service?
Alessandro Tonchia: It is a hygiene factor but a critically important one, both for end customers and service providers. If you have sub- standard technology as an adviser, you know that a large part of your work will be administrative in nature, and that you will sooner or later be embarrassed in front of the client. I am sure that is a consideration in picking the next job. The same goes for the client. Maybe you don’t go to a bank just because they have a single function more on their digital platform, But, as a customer, these days you would probably not go to a bank that does not have a robust portal or a mobile app and cannot demonstrate a better customer experience.
Many expert commentators are pointing out that traditional revenue sources are drying up. Where will the next generation of financial services business come from?
Alessandro Tonchia: I think there is a chance for new services based on a more holistic understanding of wealth. That’s where maybe there is more revenue to be had. Moving away from “I manage a certain slice of your portfolio”. Going forward, the proposition becomes: “I can offer more holistic services that can coordinate your portfolio. I can build a strategy for your pension and how you leave money for your children. I can show you how you can better manage your property in a tax efficient way. And I will charge you more for that”. That piece of sophisticated, holistic, advice is still up for grabs. It’s about acquiring the heart of the client. Becoming their financial strategist rather than just the manager of a slice of their wealth.
As their customers’ needs and expectations evolve, and their markets change, how can Finantix enable your clients to adopt new approaches?
Alessandro Tonchia: When Finantix started, we went into business with this notion of capturing important client-adviser dialogues. These ‘soft’ elements of ‘what can the bank do for you?’ Technically, our promise is that we support a
” Our data model is rich enough to support the customer experience all the way, from mass affluent to ultra high net worth, from a vertical proposition to fully holistic advice.“
presentation of client wealth that understands and accommodates different financial goals. That breadth is suitable for a holistic approach. We can be the aggregator, the platform, for holistic advice. However, we can also support organisations that still want to provide specific advice only, say portfolio management, or bond sales. Our data model is rich enough to support the customer experience all the way, from mass affluent to ultra high net worth, from a vertical proposition to fully holistic advice.
Ever-increasing pressures on fees, combined with limitations on human adviser bandwidth, have made it more and more popular. But will robo advice ever replace the personal touch?
Alessandro Tonchia: Robo has a distinct role to play, especially in the mass affluent market. But I believe it’s not a question of ‘replacing’ the personal touch. Robo is a level of service that’s right, in terms of scope and pricing, for its target customer. Then, the more your service moves towards private banking, the more differentiation and sophistication you have to be able to offer. If an institution is running a multi-segment strategy, all the way from robo, and under, to gold-plated advice, Finantix can support them with the same building blocks. So the service provider can migrate people from one segment to the other in a consistent way. In every segment, you can reduce or increase the sophistication of what you offer, including the level of personal touch. So there is right sizing of the level of service to the financial potential and service requirements of clients.
CRM has become the de facto term for how financial service providers interact with their clients. What do you believe CRM should really mean?
Alessandro Tonchia: Perhaps it should mean ‘Closer Relationship Management’! Our perspective on CRM at Finantix is that it can become a true relationship manager. Not just a record. We can manage and add value to the client relationship. We can shape the content, the conversation, the logic. We don’t only know and record ‘straight’ facts, such as the value of the client’s wealth. We understand the structure and context of that wealth. It’s not just recording stuff. It’s helping you record intelligent stuff. One example would be our meeting preparation tool. We prepare the meeting with the right language, with the right compliance frame. Yes, it gets automatically recorded in the administrative CRM system. But it’s also actively contributing to that closer relationship and its management.
Another client service aspiration that’s gaining popularity is ‘frictionless’. What does it mean to you?
Alessandro Tonchia: What should it aspire to mean? For us, it’s an idea that everything which is administrative, everything not relevant to the client conversation, is taken care of automatically. That includes thinking, is this product compliant or not? Thinking that at the end of the meeting you need to compile the notes by hand. Thinking that you need to put an email in a tracking system … Now, you can really focus on the client because everything else is done for you. Taking away all the side worries of the adviser, so that they can concentrate on the human conversation. The core messaging. The matching of client concerns with proposals at the high level. Because everything beneath that layer is automatically dealt with. That’s what ‘frictionless’ means.
There’s a lot of discussion in fintech around shaping technology approaches to demographic profiles. Do you think this kind of segmentation works?
Alessandro Tonchia: Appetite for technology is a matter of style rather than age. All technology should be as transparent as possible. You want to have a platform that allows you to personalise around the client profile and needs as much as possible. According to a wider range of preferences. Everything, level of service, channel of service, type of investments, scope of advice, it all depends on a hundred demographic factors, lots of personal preferences that are hard to capture. Personalising, based on a whole array of past history and current behaviour – the more you do that, the more you add value. That’s the true segmentation.
As Finantix enters its third decade, what do your clients want from your technology?
Alessandro Tonchia: Clients know the type of customer experience they want to generate. But they get to the point where they say, “all of this is great, but I don’t have enough data, or the right data”. So, you have this tension between the drive for personalisation and meaningful advice and a dearth of data that can focus and shape those decisions and that personalisation. That’s why we have made our data model much richer and more holistic. We offer an information container about the client, a client intelligence machine, with a lot of techniques that can help you fill that container. And being able to do that is what our clients want.
And what does the future hold for Finantix?
Alessandro Tonchia: ‘Constantly re-inventing’ will continue to be our ‘mantra’, if you will. We’re in the best shape ever to deliver the solutions our clients need to help them significantly improve their business performance. We have seen some big developments this year that will help us to grow in 2020 and beyond. Motive Partners became a major shareholder and they are a powerhouse of technology innovation and financial industry insight. We are growing our footprint globally, including Asia Pacific where we’re increasing our presence in major financial centres. We’re making strategic acquisitions to broaden and deepen our offerings. And we’re investing in the human talent that will be key to supporting our clients, going forward. I believe the future holds fantastic opportunities for us – and for our clients!
Finally, how will Finantix stay fit for purpose, whatever changes the future brings?
Alessandro Tonchia: Our enterprise-ready, modular, highly configurable platforms and pre-assembled offerings mean that we can give legs and muscles and intelligence to many possible approaches. So, however the future plays out, our Finantix technology will be rich and flexible enough to configure all possible options. Whatever the chosen direction is for bank A or B, we have the language to express and support their target operating model. You, wealth manager, private or retail bank, or insurer, tell us what you want. We’ll get you there faster and with optimised support for your specific propositions and segments. We’ll deliver different, strategic, nuanced offerings, at a lower cost of design and management than the other vendors around. And we’ll continue to be the go-to technologists for financial institutions that want to achieve frictionless, secure, personalised and easy-to- use customer services. That’s how Finantix will stay fit for purpose.