Bernard Lee, PhD, CFA, is the Founder and CEO of HedgeSPA. Previously, Dr. Lee was an award-winning Managing Director at BlackRock in New York, and was responsible globally for recruiting and training its finance-related PhDs as a side responsibility. He built part of BlackRock’s highly profitable investment analytics platform, which won him a FinTech award from the publisher of the prestigious Risk Magazine. Dr. Lee was also a finance professor in the US and Singapore, taught/guest-lectured at Stanford Business School, Columbia & MIT-Tsinghua, and authored many journal articles and several books, including his upcoming new title “Investment Analytics: Theory and Practice”. He earned his PhD, MS and BA from Imperial College London, Stanford and Princeton, respectively.
Sachi Mulmi (SM), researcher with Frost & Sullivan, had an opportunity to conduct a Movers & Shakers interview with Bernard Lee (BL) – Founder and CEO of HedgeSPA.
SM: What is your company’s greatest challenge, and what strategy is in place to overcome it?
BL: While HedgeSPA is a global business, recent historical events such as the global financial crisis and disruptive political events such as Brexit have resulted in a noticeable drop in capital expenditures among Western financial institutions. In the meantime, over the last decade or so, Asian economies have created a massive amount of surplus wealth.
Despite such breakneck growth, many Asian financial institutions simply do not have the management bandwidth to implement the sophisticated tools to help manage these fast-growing pools of wealth. That’s where HedgeSPA comes in. Our state of the art tools can help Asian institutions leapfrog a few generations of investment technology.
However, helping these institutions go from basic infrastructure to the latest technology will require extensive user education and potential change in attitude and culture. Achieving customer success in such an environment will require soft skills and cultural awareness, requiring resources beyond the typical make-up of an implementation-focused technical team – we see that as our single biggest challenge currently.
SM: What do you want the company to accomplish in the next couple of years and how would you define its success?
BL: HedgeSPA has achieved initial success in a few key markets (partly thanks to the Accenture FinTech Innovation Lab, which works with 22 of the world’s largest financial institutions), and we are looking to replicate our success in comparable markets. By identifying the early adopters in each key market, we plant the seeds for HedgeSPA’s future growth in those markets to convert future adopters.
SM: What consumer trends do you consider the most relevant for the FinTech market and how are you addressing them?
BL: One of the trends in the buy side of the FinTech industry is the major increase in customer awareness and, subsequently, receptiveness. Business Insider predicts that investment FinTech firms such as HedgeSPA “will manage US $8 trillion in global assets by 2020”.
In the past, a common belief among our institutional customers was that “no one ever gets fired for buying IBM”. We are taking advantage of this increase in customer awareness of more innovative FinTech providers to acquire new users and spread awareness of our specific solution.
SM: What are the relevant drivers and restraints for this market?
BL: The inherent nature of FinTech companies’ immense online presence creates room for more opportunities to increase efficiency and decrease costs. By utilizing this advantage, we at HedgeSPA can push our product into the hands of professional investors who need an affordable, sophisticated, and secure service for their investment needs.
One of the restraints of the FinTech industry is regulations by government and other institutions. FinTech companies are usually more agile than traditional financial services such as banks and asset managers to meet emerging regulatory requirements.
SM: What is the potential impact of FinTech on traditional financial services?
BL: Traditional financial services such as banks and asset managers continue to use legacy systems that they have been working with for decades, often due to the lack of simple migration paths. The advantage of FinTech companies like HedgeSPA is that we offer a similar service with newer, more advanced technology that is natively web-enabled. It is not uncommon that the same problems taking days and weeks to solve within traditional financial service firms may only take minutes or even seconds on a platform such as HedgeSPA.
That usually results in significant cost and time saving that can be passed onto end investors. Financial service firms who refuse to adopt eventually will find it extremely difficult to contend as their competitors can now cut fees to gain market share at their expense. We expect the traditional financial industry to be driven increasingly by those who focus on value-added services.
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