A close look inside Saxo Bank’s new developments with CEO Kim Fournais – Live from Saxo Bank HQ, Hellerup, Denmark

“We were established in fintech before the word fintech was even coined” reminisced Saxo Bank CEO Kim Fournais in his office with FinanceFeeds CEO Andrew Saks-McLeod this week.

Within the modern surroundings of Kim Fournais’ office, Saxo Bank’s enthusiastic and technologically-driven CEO elaborated on the company’s latest and forthcoming developments.

“The world is not built multi asset, but that is where everything is heading” – Kim Fournais, CEO, Saxo Bank

In his notably enthusiastic manner, Mr. Fournais explained “In operating as a true multi-asset provider, our aim is to cater for the specialities of each of the asset classes because, for example, an equities trader is not like a futures trader or an FX trader, therefore we must engineer our trading platform so that it meets the needs of each type of trader, which is an important aspect, but the entire environment needs to be in one place, on one platform.”

“We launched the SaxoTraderGO platform in May last year with this very much in mind” said Mr. Fournais. “You can do pretty much everything on SaxoTraderGO. You can trade, you can invest. We are now launching SaxoSelect which is a product for people who want to trade active strategies or passively managed strategies. This will be completely embedded into the user experience. We fully understand the notion that you can be an active trader, a self-directed trader or a completely passive investor, on one platform with one flexible interface built specially to cater for different client profiles.”

With regard to the current drive within the industry to encompass multi-asset trading environments, Mr. Fournais concurred that many firms do not have the framework to offer a true multi-asset environment and cannot price underlying assets in CFDs or clear certain future contracts, yet the multi-asset flexibility is vital to being able to offer customers the range of products that they want.

“44% of our clients are multi asset traders, and these 44% represent 84% of the entire revenue” revealed Mr. Fournais.

“Looking back at our origins, we came from trading and became multi-asset really early but it is very complicated to build a platform where everything can be traded on one account” explained Mr. Fournais.

“It is one thing to simply set up a brokerage, take an off the shelf MT4 solution and then embark on a digital marketing campaign, as with many firms that have experienced a ‘churn and burn’ scenario whereby they have to keep replacing customers very regularly and at very high cost, however offering a full solution that caters for traders, institutions and developers with a wide range of instruments requires a very different approach.”

Mr. Fournais looked back fourteen years, when Saxo Bank first entered the multi-asset trading arena. “We have been multi asset since 2001 and onboarded our first white label partner in 2001” he said.

“We will mature a lot further in the future years because our focus with regard to development is to build everything on the OpenAPI solution. We are now collaborating with a lot of fintech companies which is very interesting” – Kim Fournais, CEO, Saxo Bank

“Fintech companies range from large development companies to innovative startups. Some of the interesting ones may be a few young entrepreneurs sitting in a garage in Tel Aviv, for example.”

“The openness and freedom which this brings is very interesting. We are still about investing and trading, but are becoming much more mobile, and based on OpenAPI, and are of the opinion that platforms need to be intuitive. I think what Steve Jobs said was right when he famously noted that the more easy a product is to use the more people will use it.”

Facilitation is everything

To elaborate on this further, Mr. Fournais explained

“We have already built many data distribution agreements with exchanges so that we can deliver everything that is on our platform via OpenAPI. This means we can work together with companies that have a fantastic idea. They can develop something that is truly interesting that can cater for a segment that we would never otherwise reach” – Kim Fournais, CEO, Saxo Bank

“With a combination of dedicated software and smart fintech entrepreneurs, electronic trading firms can begin to build a business on our business” said Mr. Fournais.

How can we create a win-win situation?

“In this industry, if companies do not partner to create win win situations, their business won’t last for long. I like to analyze the mindset behind this analogy because it is fascinating” Mr. Fournais said.

Mr. Fournais put this into a context by taking a look at the development of the natural world as an example.

“Do you know the reason why the homo sapiens survived the Neanderthals? Geologists over the years have examined how the homo sapiens lived differently to their forebears. They found foreign artifacts, which meant that the homo sapiens traded and collaborated with each other. Other neanderthals and other animals typically did not do that.”

“In regions of the world where there is no economic development have not progressed for generations, whereas in regions where early humans settled and began building infrastructure, prosperity followed. Before the medieval period, people began to be less nomadic, and actually based themselves in certain places and then traveled to other settlements and traded with them, using what they had established as a base.”

This natural progression applies to friendships, marriages, just as well as it does to building companies – You need win-win” – Kim Fournais, CEO, Saxo Bank

“If you have a business model where the clients cannot be happy and active for a long time then you have little ability to develop it or even sustain it. Basically you pay a lot of money to give people a bad experience and this is not a good business” continued Mr. Fournais.

This modus operandi ensures that Saxo Bank has no difficulties with competition.

“Instead of competition, we look for potential partnerships. Nobody does everything fantastically, so therefore we want to create something with no weak points and this can only be done by partnering with other fintech firms and service providers” he said.

Once several, now one!

Mr. Fournais explained how the ability to provide all manner of kinds of entities with a trading environment that they can build their own infrastructure around has been furthered by the development of the device-neutral SaxoTraderGO platform.

“We originally had proprietary platforms that were designed for web browsers, think downloadable clients, such as the SaxoTrader and separate solutions for iPhone, iPad, as well as Android, but they were separate platforms” said Mr. Fournais.

“We were always passionate about having an ethos which embodied just one bank, and one platform. This means that every operational aspect should only happen in one place. A part of the operational platform could be operating in UK, India, the Far East or North America, for example, but there should be no replications of data. There should not be multi charting systems, instead it should all be one system, regardless of location, business type or device.”

“We invested a lot of resources in creating geographical footprints, which are global points of sale” said Mr. Fournais.

“Currently, 60% of our retail business is direct client line, whereas the institutional side is divided between hedge funds, family offices, and people coming to us because we offer a complete portfolio solution which can run thousands of accounts on a managed account basis on an omnibus model.”

“Companies that go down this route often need a multi asset platform, and a portfolio management system which is fully integrated. This also goes for White Labelling solutions, which empowers other financial companies to services their clients on a B-B-C basis leveraging the same technology.”

“Going back to what I was talking about previously with relation to this, it is important to look at how a fintech company can disrupt the industry. What’s happening with peer-to-peer lending or crowdfunding platforms as well as companies that have disrupted other sectors such as Uber, AirBnB, Google and Apple. These have changed the lives of other people” – Kim Fournais, CEO, Saxo Bank.

“The facilitation model is an important one to follow here, as there are a few client segments we want to cater for. We can have the distribution funnel operating direct with private clients. Big banks have recognized this but it takes a long time to implement because it is IT heavy and traditional banks are not good at venturing outside of their comfort zone.”

“Assessing the potential clients is quite straight forward. Anyone who has any financial means and is not spending every penny every month generally would start thinking about their pension or longer term investment needs. Investing via electronic platforms for a retail audience is not the casino segment anymore and is very much part of the long-term plan for serious investors. Most people still don’t trade FX or CFDs but many have stocks or ETF or bond portfolios” said Mr. Fournais.

“We made a very difficult decision. We decided that we want to make sure that we have all asset classes in their purest form on one account. Now, it’s about how we can combine that ethos in a more relevant way for clients. It could be a capital allocation model, where they could choose themselves, however if it is completely intuitive, and the, for example, the risk is displayed per instrument, then it makes it more comprehensive” he said.

Down with cost, up with intuitive trading environment

“Everyone wants to reduce cost and complexity in order to provide a much better delivery to clients. We have a comprehensive system for this as it is cloud hosted to provide the same infrastructure globally in 26 languages, in the form of one rather than many systems.

“Solutions don’t have to be delivered by only one provider” concurred Mr. Fournais. “There are different solutions on the market which manage capital adequacy, partnerships, portfolio management and so forth, and as an example, companies can work with a specialist in portfolio systems.”

“There are things we have to do ourselves but there are always things that one may wish to buy off the shelf if we could. If a product can be bought off the shelf, then evolution is faster, therefore if we can provide OpenAPI to developers, this resolves that problem and it can be offered out for crowdsourcing and a bespoke system can be developed very quickly using top quality infrastructure” – Kim Fournais, CEO, Saxo Bank

“When looking at the entire structure, we have something which is absolutely compelling” enthused Mr. Fournais. “I find this so interesting. So many things that are changing in the world today are quite fascinating. The banks are a case in point. The notion of all the banks trying to build their own solution is mind-boggling. For example, Major banks spend many billions on proprietary systems, and still are not operating with one whole multi-asset platform” he said. “More than 90% goes to maintenance and regulatory reporting.”

Mr. Fournais, who is still completely enthusiastic about what he has created over the last 23 years alongside co-founder and co-CEO Lars Seier-Christensen who has now moved on, with Mr. Fournais remaining sole CEO, exudes excitement and enthusiasm when discussing new developments and relishes the thought of further discovering what is possible in terms of disruptive, high quality fintech solutions.

“The most important thing is that we are a facilitator, which means connecting to the best liquidity providers globally and then packaging the technology that we develop and distribute it in the best solution, which in this case is SaxoTraderGO or OpenAPI” he said.

“We are more unique in the sense that this direction is where the world is going but it is not where the major banks are. They are not multi asset, highly digital facilitators, built on OpenAPI” he said.

In conclusion, Mr. Fournais smiled and said “It is all about the Saxo experience, which really incorporates the digital part of the value chain, including the relationship management. We are developing all of our technology to support this. It is compelling, and now, with the new methodology and technology, we can make this available to everyone. We can democratize trading and investment to the benefit of our clients and partners.”

Photographs copyright Andrew Saks-McLeod