Adam you have spent your career automating processes on FX Trading desks. Why did you launch Kooltra and what have you set out to achieve with it?
I’ve always believed that capital markets should encourage as much competition and innovation as possible. A high number of smaller financial service providers reduces systemic risk, increases consumer choice and niche products, increases flow to upstream liquidity providers, and creates opportunities and jobs outside of the Tier 1 banks. Often, the main barrier to entry is technology, its cost and the expertise required to build and operate it. Our goal at Kooltra is to help capital markets entrepreneurs and lower-tier financial institutions offer OTC products like foreign exchange to their customers. My hope is that our efforts result in a greater access to products and services for lower credit consumers, such as SMEs and individuals.
A great example of how we want to leverage our platform is in the international payments and hedging space. Most small banks and money service businesses do not have the technology needed to offer a good FX service to their SME customers. They usually end up white-labeling a larger firm’s technology and liquidity in a bundled solution, giving up most of their P&L and sacrificing the customer experience. We’re building applications on our platform that deliver an end-to-end experience at a fraction of the cost. Downstream providers are empowered to manage their FX payments business in house, tailor their offering to their client base, and automate most back, middle, and front office functions to reduce operating costs.
I’m driven by the promise of cloud and other new technologies that can empower these smaller players. It all came together for me when I realized that Salesforce had already solved the problem of delivering complex enterprise software in a scalable model. While CRM is their core, Salesforce allows small businesses to embed complex technologies into their workflow processes, with a relatively small investment.
Salesforce didn’t have any FX functionality or much of a financial markets footprint back then, so I approached them to start a partnership. Shortly thereafter, Kooltra was born. We built the first capital markets oriented solution whereby our users get all the benefits of Salesforce’s infrastructure but with a capital markets platform layer sitting on top.
What primary areas of FX is your team currently focusing on and how does Kooltra help smaller institutions to overcome many of the barriers they face in the market?
We are currently focused on everything post trade. We act as an integrated back office and CRM, and centralize all your data in one place. Our various applications leverage our customers’ data to manage risk, compliance, settlements, regulatory reporting, customer reporting, and most operational processes. We tap into all of Salesforce’s analytic capabilities to provide insights into our customer’s business.
Foreign Exchange players of all sizes rely today on spreadsheets, manual processes, and legacy systems to manage critical middle and back office operations. These operations are straining as trade volumes grow and regulatory and compliance oversight expands. We hear daily from customers that they require modern technology to stem unnecessary risk, reduce complexity, and grow their businesses.
What types of FX market participants are already using Kooltra to streamline their internal operations?
Our clients today are primarily institutional FX brokers. They provide liquidity to banks, brokers, asset managers, corporates, and professional traders. They do so for both deliverable and non-deliverable liquidity and in both principal and agency models. We also work with Money Service Businesses (MSBs) who extend our deliverable capabilities into the area of third-party payments. We provide a customer facing portal to execute trades and make payments, as well as additional compliance, settlement, and accounting capabilities.
Please tell us a little about your platform’s key features and benefits?
FXCore is an integrated middle-and-back office, API enabled platform that supports post-trade operations for FX brokers and international payments companies.
FXCore automates and streamlines FX workflows across the customer and transaction lifecycle in a single platform and offers transaction processing, cash management, risk management, customer relationship management and analytics.
Its modular nature allows international payments companies to enhance FXCore with a web trading portal and compliance modules for a full, end-to-end solution. For institutional brokers, we are able to offer an out of the box Prime of Prime solution that leverages pre-built integrations with our trading platform and prime brokerage partners.
The true advantage of using Kooltra for brokers comes in how quickly we are able to set them up and at a fraction of the cost of traditional, legacy back office software.
Kooltra’s platform brings all of its clients data together in one place. What sort of meaningful reports and insights can be achieved by doing this?
By consolidating all customer and transactional data in one place, users are able to derive meaningful insights into their trading and risk behaviour. Reports can be historical or real-time and show aggregate trading volumes, trends, P&L and more. Kooltra leverages Salesforce’s powerful reporting capabilities, so users can drag and drop trades and generate reports for sales, back office and management on demand. Using Einstein Analytics, we are able to build powerful visualizations and dashboards; aggregating enormous amounts of data and allowing users to slice and inspect their data to get contextual answers.
What size of FX business do you cater for and what pricing options are available for them?
We work with firms ranging from 3 to 50 users and price on a SaaS model. Daily trade volumes range from less than 5 trades per day, to 100,000+. We encourage our customers to think in terms of the total cost of ownership and to take advantage of the SaaS model - allowing them to start small, take less risk upfront, and grow over time as their business scales. Our pricing starts at $2,500 a month and scales based on number of users, integrations, and data storage.
In what ways is Kooltra expanding its plug-and-play solution to help retail brokers fast- track their entry into the institutional space?
Kooltra is ‘plug and play’ with a growing list of integration partners that customers can choose from. We integrate with Prime Brokers, Prime-of-Primes, and trading platforms. Our goal is to continue to add new partners into our ecosystem, which will result in a quicker go to market with a wider selection of liquidity and platforms.
We also work closely with our customers to ensure that our application continues to get better. We are constantly building new features and upgrading existing ones. Due to our cloud SaaS model, we deliver frequent and free upgrades.
How quickly can firms be up and running with your turnkey applications and how have you engineered them to make that process easier?
It really depends on the type of business line, the number of integrations, and the complexity of the workflow. If a retail broker is setting up an institutional business line and they choose from our pre-built integrations, they can be up and running in a few weeks.
In cases where customers require specialized features or a new integration, some minor custom development may be required. For integrations, we’ve built an inbound FIX messaging platform on which we handle post trade integrations and push the trades into our customer’s instance. We also have an outbound messaging platform that allows us to easily configure files for messaging to prime brokers, regulators, and more. In addition to the integration tools, we have created UI widgets like trade blotters and form builders that allow us to rapidly build new workflows. Finally, Salesforce provides tools of their own to make configuration easy; our customers can define new custom logic, workflows, alerts and analytics to fine-tune our solutions to their needs.
Kooltra’s intuitive solution leverages Salesforce as an enterprise data platform. What are the advantages of this?
There are several advantages to this:
- Security and reliability - Kooltra is hosted on Salesforce, which provides a highly scalable and redundant infrastructure, trusted by Tier #1 banks. All data is stored in secure data centers and is replicated over secure links to a disaster recovery data center.
- Saas delivery - A cloud hosted solution means there’s no costly software to maintain, upgrade fees or on-premise software. Kooltra scales easily, allowing financial institutions to start with one user and add more users as they grow or scale.
- Focused innovation - Not having to worry about infrastructure or security, our engineering team is solely focused on innovating and solving for FX.
- Data and analytics - Kooltra leverages Salesforce’s data storage, mining and reporting capabilities. Users can create reports on-demand, with real-time or historical data.
- Development Platform - Our customers are able to extend our data model and build right on our platform. Many of our customers leverage internal or external developers to do so. The popularity of the Salesforce platform means there are lots of consultants to use at a wide range of budgets.
- Open APIs - Unlike traditional on prem or cloud hosted back office solutions, Salesforce provides a true multi-tenanted environment. This makes API integrations very simple. We’ve leveraged this to provide our customers with a wide range of REST APIs.
Kooltra helps financial institutions move their FX business to the cloud. What steps have you taken to ensure that their data is always secure?
All of our customer data resides within Salesforce’s servers. Salesforce has all the compliance certifications and processes you would expect them to have - given the vast amounts of sensitive data they store. We work with our customers to not only rely on Salesforce, but to implement their tools to enhance security. Locking users to certain IP addresses, enforcing 2-factor authentication, authenticating new devices, and advanced field-level audit trails and event monitoring are just some of the tools we can leverage.
How easy is it for clients to go beyond your plug and play apps to integrate and deploy additional customised solutions that they may want to build themselves?
Our platform is an open development environment, and ultimately, our vision is to allow our customers to build secure applications using our APIs and libraries. Ideally, a customer should be able to configure Kooltra, their integrations and workflows, as easily as an individual downloads apps to their smartphones.
Ultimately how big is the opportunity for Kooltra to transform the global FX market and what plans do you have for growing your engineering, sales and customer success teams whilst expanding your international footprint further?
The opportunity is very large, but fragmented. We are targeting a segment of the market which is very under-serviced and is really just starting to wake up to the opportunities around them. Niche providers in the institutional space have access to credit through prime brokers and prime-of-primes like never before, as well as new technologies like Kooltra. When combined it opens up opportunities that were previously out of reach.
On the payments side, they’ve typically been priced out of competing, or their client base is only just starting to demand their service. This is particularly true in the US, where business has historically been conducted in USD. That’s starting to change. When over 35% of the 140 million SMEs in the world have cross border exposure, there is plenty of opportunity for foreign exchange providers.
We are always looking for good people, both to hire, or partner with. We have a fantastic engineering team in Toronto. Our customer success team is spread across Toronto and London and is beloved by all our customers. We’re now building out our sales team, with a focus on the UK and US markets.