We have accomplished something incredible at Bricknode, let us just look at a few points that come to mind.  

The problem with this though is that it creates a burden to explain in a short format and it might be difficult to grasp the extent of the opportunity that our wide product suite permits us to act upon. 

It might be difficult to take in that a small company based in Skövde, Sweden has been able to build a product that can be used to rival or complement products built by multiple billion-dollar firms. One of the best confirmations of what we have created is real, is when new staff members join Bricknode from large tech companies and after a few months tells us how incredible it is that we have been able to create such a system on such a small team.  

By using new tech and thinking in new ways I view what Bricknode has accomplished in the financial industry in the same way as what SpaceX is doing in the space industry. No one thought it was possible until it was! 

Getting this message relayed to the world is the real challenge. Most of our efforts over the years has been spent on building extremely smart and generic solutions in the back end which could support any type of financial operation and customer segment that we would choose to target in the future.  

In our interim report for Q1-2022 we talked about our revenue model and how we are working to make the growth less “bursty” by adding more product segments, like Bricknode Investment Manager, Bricknode Deposits, Brokerage as a Service using our own brokerage license, etc.  

The current focus is, and has been, on the product segment called Bricknode Broker where the ticket sizes are large, but sales cycles are long (5 – 6 months). This is where the sales team that we assembled 5 months ago started to work. 

The main limiting factor on growth rate right now is what capital is available for starting organized and sustainable efforts on selling and marketing various verticals.  

In addition to the Bricknode Broker segment the sales team started to work on Bricknode Lending during 2022 and now we are getting ready to start working on Bricknode Investment Manager and Bricknode Deposits. As soon as we can conduct regulatory business using a brokerage license we will be working on Brokerage as a Service too. 

All these product possibilities have been sitting within our product core but we have not had the resources to expose them by associating each one with marketing, sales, and customer success efforts but that is where we are now. 

This short video illustrates what we have been doing at Bricknode. 

So, where do we see our competition? We have a hard time finding someone that can perform as wide an aspect of services like we can but within the different segments we have competition. The main difference with Bricknode compared to other suppliers is the fact that we have been, and are, operators of our own software which we use ourselves. We build stuff that we have a need for and thus we do not work in just theory when developing products which is a huge advantage.  

Developing product is no longer an issue for us but getting the word out to explain who we are and what we can do to everyone from potential customers to other stakeholders is an issue. This is a challenge that we humbly take on and increasing our transparency and communication to all stakeholders is one step on the way to understanding and recognition! 

Best regards,
Stefan

Today, we formally announced that Bricknode has started the application process for a brokerage/securities license in Sweden. Ever since Bricknode started in 2010, we have had the ambition to add a subsidiary to the company group where we can be the primary broker and custodian for our software users. This will boost our own scalability and help deliver a complete service to many customers.

In order to understand the benefits that acquiring a brokerage license will bring our different customer groups, it is helpful to know how we work with them today.

Distinct customer groups

Within the brokerage product division today, we see two groups of customers. The first group are customers who have their own full regulatory permissions to carry customer accounts. These companies can be rather complex and relative to our other customer groups, there are fewer of these around.

In terms of Bricknode solutions, these companies consume pure software, and they can also outsource their back-office operations to Bricknode if they do not want to manage this themselves.

Today, these companies must also establish their own relationships with banks, brokers, exchanges, fund companies etc. to access financial instruments that they would like to distribute.

This means that each customer needs to have their own relationships which can be less cost effective and take a lot of time to cut through red tape. This is bad from a few standpoints.

First, even if Bricknode delivers the software solution on the same day that it is ordered by the customer, it could still take months before the customer gets approval by institutional brokers and fund networks that it might need to access. In addition, it can take years before relationships are set up to manage international tax withholding and other administrative things that should just simply work.

Second, time to market for new valuable products is greatly increased and companies can go out of business even before getting to first base.

The second customer group is characterized by firms that lack full regulatory permissions for carrying or operating their client accounts in their own firm. Some are simply not interested in having the administrative overhead that is required for those accounts like tax reporting, corporate actions, MiFID II reporting and so on. These can be financial advisors or various types of FinTech companies.

There are many of these companies around but today they need to find an external party that holds the required licenses and that has relationships with various trading venues. This  third party might already have a different software provider to Bricknode, so the deals are ultimately lost if the  third party does not want to go through the process of switching core systems.

The problem is that Bricknode cannot supply the full plug and play brokerage solution for this group of customers, since we must go through a  third party which can introduce more costs for the potential customer and make the whole setup less attractive.

Acquiring a license: benefits for our customers

By setting up a subsidiary of Bricknode with a brokerage license we can merge our administrative services into the brokerage division, and we become a one-stop-shop for customers that do not have their own regulatory permissions.

Bricknode is then the only party that must set up and maintain the relationships with trading venues and issuers of financial products and we can obtain economy of scale.

When it comes to the other customer group that has full permissions, we can now present them with a choice where they could either maintain their own external relationships or switch to Bricknode as their primary brokerage firm. The latter would enable them to participate in the cost savings that this would generate both from shrinking the administrative overhead and from lower trading fees.

 

Acquiring a license: benefits for Bricknode

From a revenue perspective, obtaining a license would greatly increase the market opportunity for Bricknode in the short and long term. It will help create higher margins and shorten sales cycles in general.

As the provider of accounts, Bricknode would have a direct legal relationship to each account holder. This would enable us to apply all our internal tools and knowledge to optimize processes and the end customer experience.

Brokerage-as-a-service

Not that long ago, big UK-based fintech Revolut decided against setting up their own regulated securities firm when they launched equities investments on their app. Instead they made a partnership with another company that is providing and carrying those accounts and making the trading facilities available. It makes a lot more sense for our prospective customers to let Bricknode take care of everything under the hood too, so they can just focus on the end customer.

There are still very few alternatives today for this sort of service and no one is in control of the full back-office software like Bricknode is with Bricknode Broker. By controlling all technology, Bricknode can be agile and quick in ways that other companies who rent their back-office systems for this purpose can only dream about.

Bricknode will provide these accounts and facilities as a pure back-end service and will not have its own B2C offering that could compete with the services of our customers. During the years Bricknode has established technology and the required facilities to provide a wide array of financial instruments like global equities, funds, bonds and more. We see no technical limitations with regards to the products that we can provide, and we think that this complete service bundle will be revolutionary.

Together with front-end partners like Additiv we will be able to provide financial advisors with stellar tools to manage their customers and a full suite of financial products to distribute. This is all the while making sure that the financial advisor builds their own brand and customer loyalty. This is something that is not being done today when financial advisors are forced to place their customer accounts with standard retail brokers that compete for the same customers.

The time is now

Why now, you might ask. Simple, it’s because we have not been ready for this in the organization. Thanks to the IPO we have been able to onboard the right team members for this and we now have the necessary resources to do this with great quality. We have also been able to conduct the full administration for current software customers which has enabled us to build up the required internal routines and learn everything first-hand.

Getting a license to perform regulated activities will not do any harm to the current pure Software-as-a-Service offering where business is expanding aggressively over multiple product lines based on Bricknode Core. It will, however, add a whole new dimension to Bricknode and unleash us from many limitations impacting customer acquisition today.

I just need a few words to give you my answer to the title of this article, it makes my life easier!

Each time I find a new problem that should be solved within finance and I start to dream up a new application that I want to create I always use Bricknode as the core. It fills the role of being everything from a ledger with multiple transaction dimensions to CRM to a general database where I can store all my entities as Custom Fields if I wish.

It is forever expandable and I can build out my own functionality to extend the platform with extreme ease. With Custom Fields I can create my own state storage for events and with Webhooks I can get away from constant pull operations.

This truly is a real operating system for financial operations with the only limit being your own imagination of what you can build.

In our last release we added a first generic endpoint in our API where you can work with Custom Fields on any entity without using the specific endpoint of that entity. This was a fantastic idea by our engineering team and we are following up on this by adding new endpoints for creating and updating Custom Fields in our next release which I am keenly anticipating.

Please get in touch to explore how you can use Bricknode as the core for your next software project and cut down your time to market considerably!

Using the Bricknode API is extremely easy, especially in a .NET environment. The following video demonstrates how to build a simple console application to collect customers from an instance of Bricknode Broker and then listing customer numbers.

This is for all you FinTech entrepreneurs who would like to give the likes of Revolut, N26, Lunar and Klarna a run for their money. In this article I will demonstrate how to literally configure a new subscription to Bricknode as a core banking system to start managing current accounts within 30 minutes and at a fraction of the cost that legacy suppliers charge.

We love to empower entrepreneurs so they can bring new solutions to the market at lightning speed.

First I simply signed up for a subscription at www.bricknode.com and I got the logins for the system the same day.

Now, if I wish I can take care of everything myself or I can ask for help from the customer success team. Starting a current accounts business is extremely easy and this article explains everything that you need to do to get going.

Where will you hold your customers cash?

As a first step you will probably already have established a relationship with a bank, or “Custodian” as we call it, where you have an account for client assets. This account has to be created in the Bricknode system as a custody account so the system knows where the assets are stored in the world outside of Bricknode.

Basically the only concept that you really have to understand before you start is what we call Account worlds and Dimensions, that’s it.

Here is an illustration.

The “Internal accounts” are your individual customers accounts, your partners accounts and could also be your own accounts, we call you the “House”. All the assets that reside in the Internal accounts has to be backed up by assets in the outside world, like cash at a client account at a bank.

In Bricknode Financial Systems (BFS) I have now received access to four interfaces, these are:

In the screenshots that follow I will reference which interface they are coming from with BackOffice, Partner, Customer or API.

Let’s have a first look at BackOffice to set up your first Custody account.

When you first log on you will come to the Dashboard, which you can easily customize with regards to the widgets that you see.

Locate the House View in the upper right corner.

To create a new account simply click on the Create button.

In the resulting dialog I will select Custody Account as the Account Type and I will name the account Bank 1 Client Assets, we are going to store the actual IBAN number of the custody account as a property on the account but it is recommended to include parts of the account number in the label so you can easily identify the account going forward.

Within Bricknode an account can hold any asset so we are not limited to having one account per currency, which a lot of traditional banks seems to be limited to because of legacy systems. We do have to set a base currency on the account though because this is used for calculating account returns in percentage terms, we do not have to deep dive into that here though.

If your bank/custodian limits you to one custody account per currency, no problem, just set up more custody accounts within Bricknode to reflect that.

Now the first custody account is created and I can progress to the next step.

What currencies would you like to accept?

Within Bricknode it is possible to manage any financial asset/instrument that I know of, in this article though I will only discuss traditional currencies. Any account can hold any type of asset but for currencies I want to configure a default custody account for ease of use and I also want to activate a certain number of currencies. Let’s navigate to System Data->Currency Management for this.

Within Currency Management I see that there are 33 currencies available by default but I have set a lot of them to Closed. I have the option to open currencies with different permissions to make them available to BackOffice, Partners and/or Customers.

To start with I have enabled four currencies and I use the same default custody account for all of them.

Setting up the partner and the customer

In this article I am working with a partner relationship where a user called Bricknode Partner is bringing in business and the first customer is called Bricknode User. Creating these users manually in Bricknode is very easy, simply navigate to User Management and create the users through the creation buttons.

Repeat the same process as above for creating the customer manually. Through your own customer facing apps or websites you would be doing this using CreatePersons in our API. If you use DotNet you should get our NuGet package where you have everything already implemented.

Working with the customer account

Let’s navigate to the customer within BackOffice and create a simple account. When you use the API you would implement the function called CreateAccounts for this purpose.

Deposit cash

The transactions relating to deposits and withdrawals would probably come automatically from an integration with a payment service or the custodian but here I will illustrate a manual deposit. Click on the action menu for the account and select Deposit Money.

The resulting dialogue will default to the right custody account and set the Trade Date, Settlement Date and Value Date to today. I have entered a deposit of EUR 1,000.

The balance and the transaction will now show up in the Overview within BackOffice.

The partner perspective

On the customer account I have set up a relationship with the Partner user.

And I have also set up a Power Of Attorney with “View” permission which will enable the Partner to see what is going on in the account. When you use the API you would implement the method called CreatePOAs.

On the dashboard, which the partner can arrange and add widgets to, the customer account can be seen and the related transactions.

By clicking on the customer the partner can drill down into the details.

The customer perspective

If you do not have your own app or website ready you can let your customers log on to the standard customer portal where full interaction can take place and the content can be fully configured by the administrator together with branding.

Reconciliation

The final step is the reconciliation of accounts that should occur daily. Remember the Internal and External accounts, the first I will check is the total balance of the Custody Account against the account statement that I get from my bank/custodian. To view this I will navigate to Positions->Cash.

Now I will filter on the transaction dimension Settlement and enter the balance date of what I would like to reconcile and also select Custody Account as the Account Type.

Here I see that EUR 1,000 is present in the custody account which should align with the account statement from the bank/custodian. If it does not I can click on the account and drill down into each transaction to see where the difference comes from.

Now when I know that the External account is fine I want to know if these assets are correctly spread out across Internal accounts too and for that I want to activate the Add-on that we call Reconciliation Manager. By navigating to the Marketplace I can request a trial of this Add-on right away.

The Reconciliation Manager is now activated and available in the House menu.

 

From the reconciliation overview I can drill down into each transaction if I wish by clicking on the House icon in the list.

Now I am all set and can continue doing business!

I love metaphors! They are extremely useful for explaining new concepts before they gain mainstream recognition. Like the Ents in Lord of the Rings I also think that if things are not worth taking a long time to do, they are not worth doing at all.

We have built a real operating system for financial activities, the same way that Microsoft built an operating system for the computer. It took us 10 years to build this thing and for the next 10 years our plan is to become something for everyone.

Windows harnesses the communication with the computer and standardizes how you use the processor, memory, storage and much more. Bricknode standardizes how you perform financial activities of any kind. Trading stocks for us is like storing data in computer memory for Windows. Initially Microsoft had to create their own applications on top of their own operating system as well, like office. We have created “office”-like applications like Bricknode Broker, Bricknode Fund Manager, Bricknode Lending and a few more to perform specialized financial activities and we are just getting started!

Are you a startup FinTech company? Get in touch with us, just as a new software developer would not start off by developing a new operating system we can deliver it to you and you do not have to concern yourself with the nitty gritty details of communicating with the CPU, you can get started right away with building the business logic and customer experience.

Are you an industrial company with 20 shareholders where you are going to manage a shareholder loan with interest calculations and monthly payouts? We have the “office”-application for you!

We deliver the software in the way we think that financial software buyers should be able to receive software in the 21st century. Delivered the same day, no strings attached and completely composable and scalable. You activate the stuff that you need when you need it, just as the App Store, and you pay only for what you use!

Launching a financial service company or managing financial activities have never been easier. If you want to build your own applications for managing financial activities come join our marketplace and we will give you a free setup of Bricknode Financial Systems right away as a developer. Just as with the App Store you can build and market your own business on top of ours.

Let’s start the operatingsystemfor.finance-revolution together!