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There’s a fintech revolution going on inside Wall Street’s biggest firms.
At asset management giants from Blackrock to Third Point, banks such as Goldman Sachs and Citigroup, and financial service behemoths Nasdaq, MetLife and American Express, upstart fintech firms are revolutionizing the way they operate. These blue-chip institutions are both users and investors in the most disruptive fintech firms on Wall Street, as laid out in Forbes’ 2019 Fintech 50.
Pioneering fintechs are allowing banks to make faster and better underwriting decisions, and to get a better handle on their risk. Armed with powerful new sets of data and machine-learning algorithms, banks and insurers are now able to sift through haystacks of information to quickly spot financial fraud, identity theft and those who are trying to evade sanctions. Many of these same tools can be used to confirm borrowers’ identities, easing the flow of credit to individual lenders and small business. In markets, algorithms that study language are helping trading houses and exchanges spot manipulation. Mega-banks are using AI to get a better, real-time understanding of their market and operational risks.
Our Fintech 50 list includes stalwarts on Wall Street like pioneering data startups such as Ayasdi, Digital Reasoning and Enigma. Secure communications platform Symphony now counts over 400,000 users who generally pay $15 a month to have access to its encrypted, Slack-like messaging platform and hundreds of other tools such as financial applications like FactSet and KoyFin, screen-sharing functions and even virtual data rooms to settle trades. IEX, another longtime listmaker, is now where billionaire Thomas Peterffy’s Interactive Brokers trades. Addepar, the software platform wealth managers use to manage their client accounts, surpassed $1 trillion in assets in April, and assets rose a further 30% by year-end.
New additions to our list include, Axoni, founded by blockchain entrepreneurs Greg Schvey and Jeff Schvey, which aims to use smart contracts to overhaul the back office of the world’s biggest derivative markets. Axoni is currently working with DTCC and some of the world’s biggest bank to build a distributed ledger to settle credit derivative trades and its technology is deployed in foreign exchange. Recently, it added Goldman to a who’s-who of Wall Street backers.
Fintech is birthing a number of entrepreneurs. Kyrgyzstan-born Erkin Adylov got his start on Wall Street as an equity analyst at Goldman and then as a portfolio manager at hedge fund GLG Partners, before deciding he could build an AI stack for financial firms, including language algorithms to track emails and voice communications, and firmwide inventories of financial assets to trade or sell. Behavox, his five-year-old fintech startup, already counts some of the world’s biggest quant funds as users, and Adylov foresees building the company into the Microsoft Azure of sorts for AI on Wall Street.
You will increasingly see new lister Carta in initial public offering documents. The fintech helps private and public companies and their employees and investors track their ownership and is used by nearly 100 unicorns. The simple task of keeping track of equity grands, options and performance-based stock units and funding rounds was disorganized until Carta came along and began managing the capital tables of the world’s most valuable private companies. Named as a transfer agent in Tilray’s S-1, you should expect to see Carta’s name again if the likes of Slack and Casper go public.
The town of Fort Lee, New Jersey, is known to commuters as a feeder into the George Washington Bridge. It’s also home to a former community bank that now powers the online lending industry. Gilles Gade, the founder of Cross River Bank, assembled a group of investors to fix up a small bank after the crisis, then realized he could use its charter to originate loan notes for online lenders. Ever taken a loan from Affirm or Quicken’s RocketLoans? The actual loan note is issued by their bank-in-a-box at Cross River. Now that the secret’s out, Cross River recently took in $100 million in a round led by KKR that valued the former community bank at approximately $1 billion.
Here are the 11 companies serving Wall Street’s biggest firms that made the Forbes Fintech 50 in 2019, including a brief description of what they do, who their users are and how much they’re worth.
Addepar Mountain View, CA
Its cloud-based software allows financial advisors, family offices and private banks to track and analyze a client’s holdings and more easily bring new clients on board. Integrates to Morningstar, Quovo, Citco, iCapital Network and Salesforce.
Funding: $240 million from 8VC, Valor Equity Partners and others. Latest valuation: $500 million plus
Bona fides: Assets on the platform now stand at $1.3 trillion after rising 30% from April through December. Users include Morgan Stanley, AB Bernstein, Oppenheimer & Co. and Jefferies.
Cofounder & executive chairman: Joe Lonsdale, 36, also a cofounder of Palantir Technologies
CEO: Eric Poirier, 36
Axoni New York City
The company is using blockchain-based smart contracts to overhaul the back office of the world’s biggest derivative markets. Its distributed ledger will allow counterparties to see payments, calculations and other vital trade information in real time, improving efficiency and lowering risk. It’s already partnering with world’s biggest banks and financial intermediaries.
Funding: $59 million from Goldman Sachs, JPMorgan and others
Bona fides: It is currently putting the $10 trillion credit derivative market onto smart contracts working with DTCC and a steering committee of 15 of world’s biggest banks. It’s already settling foreign exchange trades using the blockchain.
Cofounders: CEO Greg Schvey, 32 and CTO Jeff Schvey, 33. The brothers also cofounded TradeBlock, which provides institutional trading tools for cryptocurrency.
Ayasdi Menlo Park, CA
Its machine learning technology, first developed for defense agencies, is used by big banks to analyze their market and operational risks as well as to detect patterns of potential money laundering. Ayasdi helped Citigroup pass the Federal Reserve’s stress tests and by improving their analysis of assets is helping banks be more efficient with their capital reserves.
Funding: $106 million from Kleiner Perkins, Khosla Ventures, Citi Ventures and others.
Bona fides: Customers include Citigroup, Credit Suisse, Department of Homeland Security, J&J and Lockheed Martin.
Cofounders: CEO Gurjeet Singh, 37; President Gunnar Carlsson, 66; and VP-Research Harlan Sexton, 64. All three are Stanford mathematics Ph.D.s.
Behavox New York City
It is fast becoming the one-stop AI shop for Wall Street, using algorithms to handle surveillance of email, voice, and text data and accompanying data lakes. Behavox also helps broker dealers locate asset inventories, and hedge funds to uncover hot and cold PMs.
Funding: $15 million from Index Ventures, Hoxton Ventures, Citigroup and others. Latest valuation: About $300 million
Bona fides: Nearly 30 customers, including Balyasny Asset Management, Arrowgrass, Marshall Wace, TP ICAP, Citigroup, Anglo American
Founder & CEO: Erkin Adylov, 35, a Kyrgyzstan-born former Goldman analyst and hedge fund portfolio manager.
Carta Palo Alto
It helps private companies, investors and employees track and manage their ownership, acting as transfer agent on equity grants. Already installed at nearly 100 unicorns, Carta aims to expand from venture-backed startups to private equity and real estate, becoming a seamless secondary marketplace for private asset sales.
Funding: $148 million from Spark Capital, Tribe Capital, Meritech and others. Latest valuation: $800 million
Bona fides: Tracking $500 billion-plus in company equity, including for Robinhood, Slack, Coinbase, Casper, Tilray and
Cofounder & CEO: Henry Ward, 42, who launched the company in 2012 as eShares, with serial entrepreneur and investor Manu Kumar, 43.
Cross River Fort Lee, NJ
Born from a small New Jersey community bank, Cross River has used its FDIC-insured status to become the banker to the world’s most valuable fintechs. It creates the notes behind the loans firms like Quicken’s RocketLoans, Affirm and Best Egg dole out. Cross River also handles payments and deposits for the likes of Stripe, TransferWise, Visa and Coinbase, among others.
Funding: $128 million from KKR, Andreessen Horowitz, CreditEase, LionTree Partners and others. Latest valuation: About $1 billion
Bona fides: $130 million in annual revenue, originated $20 billion in loans and growing 30%-plus.
Founder & CEO: Gilles Gade, 52. Prior to founding Cross River in 2008, the French-born Gade was a technology investment banker and analyst and CFO of a mortgage company.
Digital Reasoning Franklin, TN
Its machine-learning software can extract meaning from everyday communications and is used by top financial firms to screen employees’ email and instant messages for misconduct and by Nasdaq to watch out for possible market manipulation.
Funding: $110 million Goldman Sachs, BNP, Nasdaq and others.
Bona fides: Critical to Nasdaq’s SMARTS surveillance technology. Also used by Goldman, UBS and Point72.
Founder & President: Tim Estes, 39, who launched the company with the help of a professor while a senior at the University of Virginia, selling first to U.S. Army intelligence.
Current CEO: Brett Jackson, 57, a veteran tech executive.
Enigma New York City
Uses machine learning to integrate 100,000-plus datasets (e.g., FCC licenses, air travel logs, small business permits) to create a real-time map of the global economy. Enigma’s data is helping banks and insurers improve underwriting and fraud detection.
Funding: $130 million from New Enterprise Associates, Two Sigma Ventures, American Express and others. Latest valuation: An estimated $750 million.
Bona fides: Contracts can run into seven figures. Enigma is beginning to power MetLife’s underwriting decisions, and BlackRock’s marketing efforts.
Cofounders: CEO Hicham Oudghiri, 34, and Chairman Marc DaCosta, 34. The two studied philosophy together as Columbia undergraduates, with DaCosta later earning a Ph.D. in cultural anthropology.
iCapital Network New York City, NY
Online platform iCapital Network allows high-net-worth individuals and their advisors to analyze and invest in private equity, private debt, venture capital and hedge funds with as little as $100,000 per fund, compared to the millions usually required for access to such investments. Pending acquisition of Bank of America’s alternative-investment feeder-fund business will add about $20 billion in client assets to iCapital’s existing $6 billion.
Funding: $80 million from Credit Suisse, BlackRock, Morgan Stanley, UBS, BNY Mellon and others.
Bona fides: Nearly 70,000 investor accounts, after BofA acquisition.
Cofounders: CEO Lawrence Calcano, 56, a 17-year veteran of Goldman Sachs; managing Partner Dan Vene, and managing partner & head of research Nick Veronis.
IEX New York City
An average of 220 million trades are made daily on this stock exchange, which was built in the wake of the 2010 “flash crash” to give long-term investors a level playing field against high-frequency traders. IEX is now taking stock listings, and in October billionaire Thomas Peterffy listed his Interactive Brokers on IEX.
Funding: $100 million from Franklin Templeton, Spark Capital and others.
Bona fides: Has 2.5% of U.S. equity trading market share.
Cofounders: CEO Brad Katsuyama, 40, President Ronan Ryan, 44, COO John Schwall, 46 and CTO Rob Park, 40. The four were heroes of Michael Lewis’ Flash Boys.
Symphony Palo Alto, CA
Part Slack and part app store for Wall Street, the encrypted platform is where the biggest banks and investment firms communicate without compromising their data or breaching compliance rules. Users at competing firms message and share ideas, coders use it to collaborate on Github, and back-office staff can create data rooms to quickly fix trades. Customers have developed more than 500 automation bots using Symphony.
Funding: More than $300 million; latest valuation of $1 billion plus.
Bona fides: Used by more than 390 firms with more than 400,000 users; annual revenues are nearing $100 million.
Founder & CEO: David Gurlé, 52, a veteran of Thomson Reuters, Skype and Microsoft.
For full Forbes Fintech 50 2019 coverage, see:
The Future Of Real Estate: Fintech 50 2019
The Future Of Blockchain: Fintech 50 2019
The Future Of Lending: Fintech 50 2019
The Future Of Personal Finance: Fintech 50 2019
The Future Of Investing: Fintech 50 2019
The Future Of Payments: Fintech 50 2019
Fintech 50 2019: The Newcomers
The 10 Biggest Fintech Companies In America 2019
Ryan Williams, 30, Started A Revolutionary $800M Fintech. But Can He Escape His Kushner-Trump Connection?
A 29-Year-Old Dominican Immigrant Is Teaching Fintech Startups How Real People Relate To Money
This Startup Is Creating A Real-Time Data Map Of The Global Economy. BlackRock And PayPal Are Buying It
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