We just released a new video that shows how a bond instrument works and a heads up on our release of the Bond Manager which will be released shortly.
Financial institutions, at least in the Nordic region, is still used to buying core business software like back office and broker solutions that are delivered to them on a server of their own and installed by a team of consultants while paying a large up-front fee. In 1999 Salesforce was launched and the way business software was sold was at least in my mind changed forever.
I am myself a Software as a Service junkie and an avid user of Atlassian, Salesforce, Office 365…you name it. In my opinion there is no reason for every “buying” software where you get a DVD or some other form of deliverable because the value of this piece of code has already depreciated to almost zero.
There is absolutely no value in software if it is not being constantly developed and has a team of developers behind it to make automatic upgrades and increase the usability of the software. This is for the same reasons why you should never own any asset that is depreciating because that is in fact a liability. For example, don’t own a car, lease it! Don’t own software, lease it!
This is why we at Bricknode are offering a completely online based software platform now without any contract terms. You sign up for almost nothing and you can cancel the service within the first 30 days and get your money back. If you want to cancel later, fine, just send a cancellation and you are off the hook.
Now, back to actually paying for what you use. My colleagues know that I absolutely love Atlassian, I use it for most of my companies that I participate in. For my smallest company I pay $30 per month and for my largest company I pay $2,000 per month and guess what, those fees correctly reflect the value I am getting from the subscription for each company.
The same thing goes for Bricknode, where else can you get a complete brokerage solution including back office, broker interface and customer portal for $70 per month? If you have 20,000 customers and you use a lot of add-ons you will be paying above $10,000 per month but that should reflect the value that you are getting from using the software or something is wrong with your or our business model.
Imagine that a financial institution would like to offer a new product, maybe they would like to offer online trading of shares to their customers or distribution of mutual funds. For $70 per month they can have a complete system up and running with Bricknode the same day it is ordered. They can try it on a few customers, see if the business is promising, if not they can just discontinue the service and cancel the software.
I think that everyone building a FinTech company should think in this manner and work with monthly fees like this, remember, if the incentive is not there for developers to incrementally improve their software service there is no value for customers or the company producing the software. Without ongoing development and with the current speed that the financial world and regulatory environment is moving any financial software will be dead in 3 months. Well…maybe a little bit exaggerated but you get the picture!
Investing and advisory is changing rapidly! For the first time since the dawn of online investing the financial services are changing from list based sites into more enticing offerings using the tools offered by social media.
An interesting article in Investment News presented examples of even the older generation moving to online services to manage their assets, read the article here.
Instead of having to select between individual stocks the casual investor looks to follow others and being able to invest in themes. A great example of a stock focused site for this type of investing is Motif Investing who has created a new type of brokerage firm around this concept.
This relates to all asset classes and not only stocks which is why Bricknode; with its broad API; can support financial service firms who wish to create their own concepts using Bricknode Financial Systems as the general framework.
At least in the Swedish financial press there is a very hot topic currently being discussed with regards to the kickback-based business models used by financial advisors.
Today’s newspaper holds an article written by Christoffer Folkebo, the CEO of Max Matthiessen, a well-known insurance advisory firm. The article focuses on developing a standardised way for presenting all fees surrounding fund investments in a transparent way for customers.
I have previously touched upon this topic through various articles including “3 steps for surviving as a financial service company in the 21st century”, Thoughts on commission less world in our LinkedIn Group, Richard Leeson also wrote a good blog post on the topic titled “A Commission Less World”.
If for example kickbacks for financial advisors are to be banned the industry has to find a new scalable way of doing business. Obviously a financial advisor has to receive some sort of compensation for their work and the most transparent way would be to just charge a fee upfront for their services. If an advisor would charge for their hours spent only the very rich could afford having this type of service which means that the advisors instead could move towards implementing some sort of subscription model.
The next question one has to ask is what is the end customer ready to pay for? My response would be:
By categorising customers in certain ways it is possible to automate some of the ongoing advisory process and by doing this the advisor would be able to scale out their services without selling hours.
In summary, all these events and business model adaptations are a testament to the fact that IT-systems are getting an even more centralised role in all aspects of the financial services business.
As a financial technology service provider we often get asked where in the chain of software systems we fit in. In this era of holism it still seems difficult for financial service companies to grasp the concept of holistic thinking (think Apple). The notion that several systems would have to be used by a financial service company in order to run the business is obsolete.
We have previously discussed how a financial service company would have to think in order to survive in the 21st century and holistic thinking is the main point. Most of the IT-costs that occur within the financial industry have to do with integrations between various systems on the back end of the system. Back end meaning the “boring” connectivity, which just has to work in order to deliver at least some kind of service to the end user. The most back end focused organisms out there are the large banks and looking at their front ends (facing the customer) you can rather quickly grasp the fact that 99% of the money is spent on the back end!
The back end, or engine so to speak, should just work while firms should be able to focus on creating better products and a better experience on the front end for their customers.
In this first part of the “Points of interaction”-series we will have a look at some front end interactions to consider for a financial service company.
This is the absolute most important interaction for a customer of your financial institution. This is where you have to manage customer worries like:
None of these questions appear in the head of a professional investor, trader or even with an active individual investor but imagine someone who are only placing a few orders per year!
More often than not financial software is developed by professionals who do not consider these items. Because of this, you as a financial service executive have to demand this sort of thinking from your vendor. In order for you to increase the activity and customer engagement this process has to work seamlessly and it cannot be achieved if holistic thinking is not utilized.
Your end customer has to be able to manage their cash very easily. Think about deposits, withdrawals and currency exchange among other things. Your customer should be able to handle these basic tasks without any hassle. They should not have to think about settlement dates following their sales and that you will charge them interest on deficits if they make a withdrawal before the settlement of a sale has occurred. The end customer has to receive this information in a very transparent way.
What are some of the questions that you have to address in this interaction?
The end customer requires a few types of reports to manage tax and monitor performance. Availability of reports should naturally be 24/7 and reports should be available for both advanced and basic users.
Instead of just presenting the customer with x-number of reports one could consider a more wizard-like approach where the customer could select which metric that is of interest or the actual need to be fulfilled. How does holistic thinking play into this part? Well, everything that occurs on the customer account has to be reflected in real time in order to avoid confusion, this means that you cannot use separate systems for the reporting but everything needs to be viewed as a whole!
This is where you as a financial service company have the possibility to really interact with your customer. You should be able to communicate with your customer based on what actions your customer has taken, what holdings exist or other types of information that should be available to you. Sure, you could work with a 3rd party CRM which is integrated or work with exports and imports of data between those systems but again, this would decrease efficiency and increase costs.
Use your holistic thinking here and demand a solution where everything can be done as a whole!
Bricknode has joined the likes of SAP, MetLife and numerous other industry leaders who have migrated to MongoDB!
Why did we do it? Well, MongoDB offers unparalleled possibilities for us with regards to scalability, security and future expansion. Our attitude has always been that the database is something that “just should work” and offer the highest performance possible in order for us as a company to focus on delivering great solutions to our customers problems.
Migrating to a new database is very often a long and cumbersome process if at all possible but the team at Bricknode accomplished this with great speed thanks to the dynamic framework of the system.
Take a moment to read the great White Paper which has been assembled by Erik Ekblom by clicking here.