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The first and foremost fintech - Saxo chief insists
Speaking to The Asset, Kim Fournais, founder and chief executive of Denmark’s Saxo Bank, says his firm is the original fintech and has further innovations in the pipeline
Tom King 12 Nov 2018
Kim Fournais
Kim Fournais

Denmark's multi-asset trading and financial-technology firm, Saxo Bank, began life in 1992 as a brokerage business called Midas.

After obtaining a banking license in 2001, the name was changed to Saxo and the firm focused its core commercial activity into building an online financial platform to deal in forex, equities, CFDs, futures, funds, bonds and futures.

Now out of the 1600 employees Saxo employs in its global network, some 50% are employed in the development of the bank's technology and work across all divisions of the firm. "It's risk, it's legal, it's compliance, it's sales, it's technology, it's operations, it's platforms, it's market access, it's the whole thing," says Kim Fournais, founder and chief executive of Saxo.

Fournais does not envisage any let up in the pace of development at Saxo either.

"Things are moving rapidly now, and I think they need to because there are so many global macro trends that are becoming critical; regulation is one important one for sure, but also I think the complete change in consumer behaviour is creating new business models," he adds.

This is where he sees more opportunity as traditional banks and financial services firms struggle and lose market share. In order to focus on the client experience, Fournais says you have to reduce costs and complexity and create scalable solutions in a very simple way.

"You cannot do it utilizing the kind of legacy technology platforms banks run on, and traditional banking business models are not calibrated to adapt to the new client expectations," Fournais says.

Turning to the growing competition emerging from the ubiquitous spread of fintechs across Asia, the Saxo chief questions just how many of them are currently making money. He considers alliances with banks or financial services firms as the best way forward for the newcomers.

"I think it's fair to say that a majority of them are not paying the bills. I think partnerships and how people collaborate and the whole ecosystem of open banking needs to change dramatically," says Fournais.

Addressing his company's place as a market leader and innovator and how he plans to stay ahead of the curve, he insists he can handle the multi-pronged industry threats. "We saw it coming in the sense that when I started the business model 26 years ago, I knew I couldn't be everything for everyone. So, we've had to specialize, and then in the mid 90's we started developing technology," Fournais says.

"I think that's also why I said we were definitely a fintech before the term was created," he adds.

Saxo Bank recently confirmed that all the necessary regulatory approvals had been received to enable China's Zhejiang Geely Holding Group and Sampo plc of Finland to acquire shares in Saxo Bank.

The deal, which values Saxo Bank at 1.32 billion euro, means Geely Holding Group, Sampo and Fournais (with 25.71%) are the main shareholders in the bank, something Fournais is excited about.

Speaking candidly about Geely and its chairman Li Shufu, Fournais said he is extremely happy with the deal. It appears he has also found a business and entrepreneurial soulmate in the chairman of the Chinese carmaker.

"Chairman Li Shufu has done a tremendous job in China, but also in buying Volvo from Ford. The mayor of the city where Volvo is domiciled said that Geely has been the best ever owner of Volvo," Fournais says.

The high-level connection will of course benefit Saxo as it seeks to further penetrate its reach into China.

"China is a very, very important opportunity because the markets are growing and are opening up. China is probably going to be the biggest financial market in 10 to 15 years," says Fournais.

China is opening its financial sector to overseas competitors, allowing foreign firms to take majority stakes in joint venture brokerages in the country. Saxo takes a long-term view in obtaining the licensing in China, and Fournais acknowledged he was watching very closely the new changes in ownership developments.

Asia is strategically important for Saxo and regularly receives the first roll out of new products and services. Fournais says a significant new platform tailored to investors will launch in early 2019 with Singapore being singled out as a first international recipient.

The Lion City is proving to be a sweet spot for the bank. "We have two and a half times more new clients this year in Singapore than before. Singapore is one of the places that's really, really doing well," Fournais says.

The change in dynamics of the firm and financial backing from the Chinese conglomerate also means Saxo is now on the lookout for acquisitions in both Asia and other key markets. Perhaps the timing is perfect to snap up one of the fintechs Fournais thinks is not making money.

"We want to scale now, that's very important for us and we can do that really in three ways. One is the direct business which is traders and investors that grow with us. The other one is the partner business, and third thing is M&A," Fournais says.

"What we're looking at now is that a lot of the brokers out there, the specialized banks, because of everything we have discussed, have cost and complexity issues. They don't really make money, So if we buy them, move the clients to our platform, we can reduce costs and complexity and have a better client experience," he adds.

Another prospective opportunity motivating Fournais is the emerging technology transfers between the automotive empire of Li and the cutting-edge financial technology developed by Fournais' firm.

Watch this space.

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