Over the past decade, Tindeco has stood out from the crowd with its innovative asset management solution: Tindeco VISION.
End clients of wealth managers are at the core of Tindeco’s vision of the future of WealthTech. As money managers, Tindeco’s co-founders realised that poor technology was limiting the ability of the industry to create value for their clients. It led directly to high costs and resulted in managers offering customised, bespoke solutions only to their largest clients. The co-founders were determined to develop technology that could redefine the operating model of wealth and asset managers and help them to better serve their clients. They also realised that the gap in the marketplace presented a lucrative business opportunity.
The two entrepreneurs set out to transform the industry in 2010 by developing an investment management platform that was powerful yet simple to use, low cost yet high quality and would provide the flexibility required to implement investment processes efficiently. Most importantly the platform would be designed from the ground up to provide flexible automation. A decade later banks, family offices and fund managers around the world are using Tindeco’s VISION platform. In short, the revolution is here.
The two co-founders Michael Kaimakliotis and Neil McLachlan first met in 2007. At the time, Kaimakliotis, who now serves as Tindeco’s CEO, had already spent 20 years in finance. “I began my career at Timber Hill which was the market-making arm of Interactive Brokers. The company was amazing,” he remembers. “They had basically automated their business and were trading equities and equity derivatives on every liquid electronic exchange around the world. Thomas Petterfy who founded and still controls the company hired me. I had the chance to see how he built an $80bn. company based upon automating the management of financial risk.”
In 2007, Kaimakliotis was running asset management for one of the larger Swiss private banks. At the time, McLachlan, who is now Tindeco’s CTO, had recently moved back to Zurich from Sydney after helping an Edinburgh-based FinTech firm set up a presence in Asia. Born in Vienna and married to a German wife, he had returned to Switzerland to start a family. “I brought Neil on to manage the development and deployment of an investment management platform for the asset management business that I was running,” Kaimakliotis remembers.
McLachlan was astounded that the technology landscape was so fragmented. ”There were so many different systems in the landscape,” Kaimakliotis says. “They had to be integrated with each other. They all had to be fed with market data. And in the end they still ended up having different analytics. So someone in the back office would be looking at completely different numbers from someone in the front office. All of the systems were based upon ‘old’ technology and none of them had any real flexibility. That led to armies of analysts and portfolio managers spending much of their time working in Excel. Customising existing third party software was extremely expensive and only took them incrementally nearer to their target.”
“As soon as an investment manager offers clients any degree of customisation or any degree of sophistication, the costs go straight through the roof,” Kaimakliotis explains. “So if you want to offer people portfolios that really add value, you need a technology platform that provides a high degree of automation.” They decided to create a platform that did just that.
“In essence our software takes a different view of the world that’s more generic and more powerful than a traditional system,” Kaimakliotis explains. “You can use VISION just like any ordinary system. But deep down VISION has been architected to work with rules rather than assets. In any ordinary system when you buy a stock, you book it into the system and that’s the end of the story. In VISION you can book rules into the system. The rules represent the systematic elements of your investment process. They can simply be rules that do things like cash management or periodic rebalancing. But they can also be quantitative strategies or hedging strategies. The more systematic you are, the higher the degree of automation that can be achieved. But it’s not that we want to make everything automatic. The desire for automation actually originated from the desire as an investment manager to have more time to focus on identifying insight-based investment opportunities.”
Due to the flexibility of VISION, Tindeco competes against both bigger businesses and smaller startups. “We’re going up against the gorillas in the room like BlackRock’s Aladdin, SimCorp Dimension and Charles River. At first, we competed against them and won awards. Now we’re regularly winning business,” Kaimakliotis says. “They tend to be fairly comprehensive. Lots of features. But they’re based on older technology and they’re often very difficult to use and very expensive. The feedback that we hear most often from clients is that they are choosing VISION because it’s much more flexible, easier to implement and very usable. To be honest, we know that our pricing is also attractive.”
Comparatively new enterprises tend to be more technologically driven and lack a vision of how their technology can transform the business of their clients. And they fail to reach the same scope that Tindeco has. Startups also often try to sell clients ideas rather than fully developed products. ”A few years ago, there was a lot of buzz about startups that said they were doing what we were doing. Today, most of them are out of business.” That was very frustrating says Kaimakliotis. “One way of putting it that there were a lot of companies that came out and may have had a nice GUI, (a graphical user interface that looked very good) but they didn’t have any core engines behind it,” says Kaimakliotis. “We built the engines and then we built the GUI.”
But Kaimakliotis says the biggest challenge proved to be patience – both in terms of the time it takes to deliver such a massive solution, but also in terms of the company culture. “It would have been very easy to focus on only one product rather than the grand solution we have pursued,” Kaimakliotis says. “Pursuing the greater vision meant that we had to form a team where we had specialists in the many areas required but relatively little overlap in skillsets. That can make effective communication difficult.”
“People have to be patient in explaining and expect misunderstandings to occur – and they have to be patient when that communication fails and someone delivers something different than was expected,” he continues. “People are only human. They only have that kind of patience when they have shared incentives. Everyone in our company becomes part of our employee stock option plan. That means we are all really pulling together. When a mistake is made, we regroup and look forward, trying to learn from our mistakes.”
Financing has been somewhat less of a challenge. They secured their initial capital from their families, who still own the controlling shares of the company. Tindeco also benefitted from two grants from Scottish Enterprise in 2014 and 2016. An added benefit of Scottish Enterprise’s thumbs up was that it helped them connect with new investors and sent a strong signal to the industry that what the Tindeco team was doing was truly innovative.
Today, Tindeco has established itself as one of the most innovative WealthTech startups in the world. It has offices in both Switzerland and the UK. So, what’s next? “We are opening up the VISION platform to give our clients even more flexibility,” says Kaimakliotis. “We have a full set of APIs and have developed a framework to let clients develop their own applications which will sit within VISION. We will also be developing tools to let clients develop new investment and/or risk management strategies themselves. Currently they can customise the base strategies that we provide.”
“Our ultimate goal is to become a utility for the investment management industry: Investment Management as a Service (IMaaS). This means that we would provide the platform that would allow any investment manager to use VISION to automate every part of their investment process that is performed systematically – and focus on the areas of the business where their value-add is the greatest. We believe that this efficiency will cut costs and enable the industry to develop better investment products to end-clients.”
Copyright © 2020 FinTech Global