LONDON (IFR) - Financial technology firm Fenergo is doubling its staff as banks sign up for its software to “onboard” clients and carry out compliance and due diligence more easily - further evidence of the technology shaking up capital markets.
Dublin-based Fenergo is among several fintech firms targeting the “middle office” - where the front office ends and before the back office deals with transactions. Many bankers see that middle ground as too labour intensive and ripe for overhaul and cost cutting from automation. Major banks can each employ thousands of staff in the area.
”The area of biggest potential saving and most ignored is the middle office,” said Marc Murphy, founder and CEO of Fenergo.
”I would project that at least 50% of the manual efforts in the middle office can be replaced by automation,” he told IFR.
Fenergo has 62 banks now live on its system, including Santander, HSBC, UBS, BNY Mellon and Bank of China.
It said its software allows banks to onboard clients more seamlessly and quicker. That should allow banks to cut through the manual handling and reduce costs, run regulatory checks quicker and stay on top of what is needed as compliance and supervision demands change.
Murphy said Fenergo’s growth has been helped by two tailwinds: the extra regulation and compliance being demanded of banks, including know your customer, anti-money laundering and a swathe of derivatives reforms; and the digital banking revolution.
Fenergo said on Thursday it plans to add 100 more staff to the 200 roles it announced in April. It will take its headcount to 600.
It has just hired Michele Shepard as chief revenue officer and Greg Watson as managing director of sales and strategy. Shepard was previously chief revenue officer for Vertafore, a technology provider for US insurers. Watson joined from HSBC’s investment bank, where he was head of the client management group, which included managing client onboarding and due diligence.
Spencer Lake, former vice-chairman of HSBC’s investment bank and senior Merrill Lynch banker, joined Fenergo’s board this year as vice-chairman.
Fenergo is backed by Insight Venture Partners, a New York private equity and venture capital firm founded in 1995, which has raised over US$13bn (9.97 billion pounds)and invested in more than 250 software, internet and data firms. It was Fenergo’s main backer in a US$75m fundraising in 2015.
Fenergo’s revenues in the year to March 2017 were €30m. This financial year the target is €50m and Murphy said it was on track to comfortably beat that number.
He said the target is to reach €100m in revenues and to list on Nasdaq in 2020.
Helping banks navigate increased compliance and regulations is the focus of many of the financial technology firms that are targeting capital markets activities.
Murphy said a lot of bank clients complain they have already submitted data and documentation requested by banks, often when new regulations are issued or a client wants a new product.
”What we’re doing doesn’t make banks unique, but it allows them to trade and transact in a secure and compliant fashion. Regulation can be mutualised and shared as a commodity among like-minded banks.
”We’re not a utility, we’re a technology company, but we’re using the principals of a utility to allow people to share their work to be safer and more cost effective whilst ensuring they stay compliant,” he said.
Reporting by Steve Slater