Super apps have sparked a trend for companies to expand their product suite across verticals. As more companies look to implement financial services, there needs to be a simplified way of implementing new types of products. Stefan Willebrand –founder and co-CEO (pictured left), and Erik Hagelin, co-CEO (pictured right), at cloud financial services platform Bricknode – spoke to FinTech Global about why Bricknode was founded and became the building blocks for digital investment and lending products.
Willebrand is no stranger to the wealth management space or even to creating a leading WealthTech platform. Having initially run his own hedge fund that was based in Chicago at the age of 22, he eventually co-created his own spread betting and CFD platform. He built the software in Sweden and set up the licences in London and spent the following five years travelling back and forth between Sweden and the UK to run the business. However, he noticed there was a rising opportunity in the back end of operations. Keen to capitalise on this, Willebrand was presented with an opportunity to exit the company and moved ahead with creating Bricknode in 2010.
The opportunity that Willebrand had seen was creating a Salesforce for financial operations. In 2010, APIs and cloud services were starting to enter the market and create a lot of buzz. Around this time Salesforce had started to release its own cloud services and were helping companies across various verticals to easily implement new features. Willebrand watched this with a keen eye and saw a major gap emerging.
“You could use Salesforce for finance, but it was really just a CRM, with the database. They had no real business logic on top of it to take care of finance. So, I thought that must be a really big opportunity for someone to come in and take care of all of the financial operations.”
He noted that there was a need for a solution that could handle all the back-end processes for financial services, where a client could just easily plug into their system and focus more of their energy on creating customer value. “By taking care of the back end for other financial companies, we can influence so much more than we could if we simply operated our own direct-to-consumer product.”
Bricknode has established itself as a SaaS financial services platform. It is a scalable, fully cloud-based platform that is highly adaptable so any financial institution or startup can quickly launch new products or transform existing operations. It has its own core operating system that can connect with a firm’s existing applications. Its core contains existing APIs, such as transactions, accounts and financial instruments, and can be added to many other Bricknode APIs. The company’s main products include Bricknode Broker and Bricknode Lending.
The driving side of Bricknode is the flexibility. It is designed so that firms can take the tools they want and use them like building blocks that can be easily inserted into their existing frameworks. It’s this focus on easy building that Willebrand loves so much about Bricknode. He added, “I would really like to be a customer myself, because I like to create the stuff on top of it. I like using API’s and I like to do all that stuff.”
While APIs are all the rage in the current digitalisation climate, the market has not always been so eager. Willebrand stated that in the early days of Bricknode, financial companies were not keen on the idea of building their own service through APIs. Instead, they preferred being given a solution. The problem with that mentality is that a firm loses its edge. They are no longer anything special.
Fortunately, financial institutions have seen the benefits APIs provide. Willebrand explained that while in the early 2010s they would speak to back-office staff to implement a system, nowadays they are engaging with tech staff that want to make the most of the APIs.
Democratising investing through APIs
More and more people are getting involved with investing. With the rise of WealthTech apps and the worries of the pandemic, more people are taking the time to build portfolios to protect their futures. As the world heads into another turbulent period, people are likely to start thinking about investing again. A recent report from Investing Reviews found that searches for ‘how to invest’ have surged in the UK recently.
As more people want to get involved, firms will need to be ready to meet their needs. However, it can be hard to trial products to see what would be the best fit for their needs.
Willebrand explained that investing is transitioning to a position where it would truly help the consumers. “Investing is heading into a situation where it will be doing good things for the consumer, and the consumer would eventually be the one deciding what products will survive.”
Until recently, investing was dominated by the big banks or big wealth managers. There was little personalisation for customers. This is now changing towards a customer-centric approach, where the needs of the customer drives the types of products that are offered. The big hurdles firms have faced with fully transitioning to this system are time and cost. When trying to launch new products there are a lot of things to do, whether it is regulations, reporting, back-end functions and linking it to other products, such as a robo-advisor. “It has been very difficult for new, enticing and valuable financial services to launch in the market.”
On top of that, even if a firm has a system that lets them easily release a new product, there are other parameters it needs to meet in order to be successful. Erik Hagelin – co-CEO at Bricknode – added, “If you want to launch a product that is going to be well received in the market and be a valuable service, it needs to be accessible, transparent, cost effective, efficient, easy to use, and more. We are very picky today as the end client. To be able to offer all of that you need to have a value chain in place, under the hood, with all the infrastructure and everything to support that.”
This is what Bricknode is offering through its modular approach to financial services. The company helps a client compose the functionality they need for their investment proposition, supported by a marketplace of add-ons. Once established, the client can easily add and remove functionality. Through this, a firm is no longer tied to a vendor or a service and is much freer to explore products.
Enter Bricknode Broker
One of Bricknode’s flagship products is Bricknode Broker. This is a cloud native investment management software platform. It provides financial institutions with everything they need to deploy modern, digital investment and brokerage solutions. The system connects the client to global markets, boasts an automated back-office and offers pre-integrated wealth management and trading applications for end-users.
What makes this tool special is how unique it is. Willebrand said, “I think we’re one of the very few that have been able to take this into a real product, where we are not really a consultancy firm. So when you sign up for a subscription with us, you get it instantly. You can use it right away and you see what you get. It’s not like you need to enter into an agreement and then go through a huge gap analysis and contract what you’re going to deliver. With us, it is more like ‘hey, use this. If you like it, then great. If you don’t just shut it down.”
Hagelin reiterated how Bricknode is not just a consultancy shop, but a product company. He said, “The market is a bit unprepared for this model. They are not used to it. They are used to buying software and sending out Excel spreadsheets with 250 rows in an RFP, talking about all the different functionality and so on and to talk about it in theory. And since we are a product company, we can set up an instance within hours.”
Another boon of the modular approach to services is that firms are not wasting money for tools they do not need. Willebrand warned that firms should not be lured in by a monolith solution where you are just given everything. There are going to be features the firm wouldn’t even need and maintenance is going to be costly and time consuming. On top of that, if there is another solution the firm wants to use that is not offered in that monolith, they would need to get another vendor to provide it. The complexity and costs would just continue to rise.
Hagelin added that Bricknode’s modularity means it can even be a saving grace for firms that bought a monolith solution. Due to its connectivity, if a firm needs a specific feature not supported by their existing provider, such as investment management, then Bricknode can just implement the tool into their existing infrastructure, rather than the firm needing to swap out their existing stack.
The future of investing
Wealth management is changing. One of the biggest changes, which is happening across the whole financial market, is the focus on being convenient to customers. People do not want to put as many hours into reading the financial newspapers to see where they should be investing. Instead, they want information to be easy to find through their providers. As a result, Willebrand has seen more companies looking to implement educational tools that can teach them how and where to invest, as well as the ability to execute these decisions.
The future is really about helping the consumers. Hagelin added that one of the big trends he has seen is the rise of fractional shares. These are allowing people to get involved with investing with a lot less capital, something that is going to be even more beneficial as the cost-of-living crisis takes hold and people are not as able to invest large sums.
On top of that, firms are becoming more collaborative. Open banking has encouraged firms to be more open to engaging with each other. While financial services has traditionally been seen as an internal battle, many firms are seeing the benefits of opening up and working with other service providers. Willebrand explained that he is seeing more firms making connections on its platform. “We have several customers that have starting to do business amongst each other, because they are on the same infrastructure. And it’s so easy for them to automatically communicate and make deals between them and do better things for their end customers amongst themselves.”
One of the core aspects of Bricknode is that it is helping the whole sector. It is not trying to do everything and is happy to connect with others that provide solutions it does not. Willebrand concluded, “We don’t really want to do everything ourselves. If a company is offering a great solution that’s complementary to what we offer, then there might be a good opportunity to partner up. Harnessing the power of the financial ecosystem creates far more value for everyone involved.”
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