Fresh off a win at the FinTech Pitch Battle organised by DBS, ex-BlackRock MD Bernard Lee is ready to raise the bar for professional asset management, by broadening the access to sophisticated investment analytics.
Enter HedgeSPA, which was mentioned by Forbes as an industry disruptor.
A sophisticated investment platform driven by predictive analytics, it performs asset selection, portfolio rebalancing, decision/execution and reporting for professional investors. Leveraging on data science techniques, Professor Lee and his team help investors harness the power of the internet and massive computing to achieve out-performance never thought possible.
As one of the leading FinTech influencers focused on investment analytics, Professor Lee comments on Singapore’s growing FinTech space and the importance of continuing to drive its long-term growth.
FinTech platforms target specific verticals of bank(s) and generally aim to improve services for customers — this has been the case with payments, currency exchange, lending amongst others — what FinTech trends are you most excited to see this 2016?
With HedgeSPA being one of the leading FinTech platforms, it focuses on transforming investment management.
In that sense, Dr. Lee acknowledges “we focus more on raising the game for institutional investors.”
Indeed, his firm operates in a different manner compared to most FinTech firms, especially typical robo-advisory firms that focus on serving primarily retail investors.
Drawing from one robo-advisor’s recent $60M fundraising round, Dr. Lee suspects that there may be some truth to the market rumor that players are booking hypothetical revenues against client acquisition costs, since advisory fees are much lower than industry average and they are regularly waived.
Dr Lee succinctly observes “there’s a market of inexperienced investors who can benefit from some tools instead of accepting what may be arbitrary investment advice from product pushers, but robo-investing still has a long way to go before they can serve professional investors.”
His key takeaway from all of this? You need more players in the long game of genuine fintech innovation, not herd-mentality players in a race to the bottom by replicating roughly the same solutions in response to the same market trends.
What components make for a good FinTech-Bank partnership? Or do you think FinTech firms should coordinate amongst themselves to offer a comprehensive offering?
“Move forward from a zero-sum game mentality; and into thinking about a net positive sum game!”
An analogy that holds true, Dr Lee endorses the need for identifying win-wins from any sort of partnership. Leveraging on this core analogy at HedgeSPA, he values the opportunity to “give professional investors something that they could not afford and have access to before.”
With many young FinTech companies aiming to change the banking industry overnight, Professor Lee notes they should be more realistic about what they want to change as well as offering a value-added advantage to incumbents.
“Techies continue to dominate the fintech market – but mixing technology with financial contents has never been more critical” — especially as he notes that there is a surplus of technology talents laid off from financial institutions as a result of the global financial crisis, who are looking to disrupt and create new solutions.
Indeed, he notes “The Singaporean government remains eager to minimize job losses in the financial services sector, so their programs encourage local banks to work with local Fintech companies and hope that everyone will play fair and create more jobs. Meanwhile, overseas Fintech companies and their governments are far more aggressive in promoting technologies created by their surplus talents to replace local finserve jobs. The net result is that some local finserve jobs are replaced by FinTech jobs that are no longer located in Singapore.”
One way or another some finserve jobs will be replaced by fintech jobs. No single government can reverse the global trend of innovation. Either there should be a national strategy to boost local fintech innovation, or Singapore will risk having local fintserve job replaced by a fintech job overseas — through this, Professor Lee hopes Singapore would build, reinforce and drive an innovative FinTech ecosystem.
What is the biggest disparity between what financial institutions say is important versus what they actually invest in?
Professor Lee’s succinct observation holds true — “naturally, banks and other financial institutions will be scared by any truly disruptive FinTech firm that may potentially turn their business models upside down.”
Adding on, he notes that this is a trend likely to continue, as in most taxi companies will love a smart routing app but they are unlikely to fall in love with Uber or Grabtaxi.
What’s your take on FinTech? Disruptor or Enabler?
Professor Lee positions “FinTech as neither disrupter nor enabler.”
Rather, it is a natural evolution of the financial services industry — though he notes pain points will emerge and drive changes in Singapore’s financial services industry.
Rather than picking winners at pitching contents, Professor Lee cuts to the chase and argues that Singapore needs to “focus on the few guys who are most likely to be successful, and matching them with business opportunities as in what Singapore did in the 80s with its Government-Linked Company formula. After all, these pitching contests are decided by voting among the audience, who may or may not come with proven expertise in both finance and technology. Popularity contests are unlikely to choose companies that can create employment with deep and defensible expertise.”
What are HedgeSPA’s key takeaways for clients to remember?
“Aside from being faster, better, more accessible and more affordable, HedgeSPA is unique in its capability to deliver an automated investment process on the cloud, to those who truly understand how to scale their asset management business with analytics instead of growing by people” are only some of Professor Lee’s takeaways.
From BlackRock, Professor Lee has noted the fundamental need for a scalable model that does not replicate infrastructure as IBM once did with its mainframe technology in the 80s. With HedgeSPA, he hopes to break up today’s de facto monopoly in the asset management industry, by creating a sustainable architecture that’ll drive systemic Fintech innovation in Singapore as well as grow its asset management business.
To find out more about HedgeSPA, please check out their lunch seminar on energy analytics with real-time data this coming Thursday: Lunch Time Seminar Sign-Up as well as register your interest for their upcoming events (e.g. wealth management, selecting assets issued by chinese corporates) to be held in Singapore, Hong Kong and Tokyo.