Acquisitions dominated the financial space in 2015 and many are predicting that the same will happen this year. Despite this, reports have detailed how challenger banks have to scale up by merging or acquiring in order to be a substantial competitor for the top five banks, which could suggest that the legacy financial technology providers will succeed. bobsguide spoke to Bill Stone, Founder and CEO of SS&C Technologies about how this company has excelled in fintech over the past 30 years, how the landscape has changed in that time and the value of acquiring at this stage.
Could you give a brief overview of SS&C’s role in finance and technology?
SS&C is celebrating its 30th anniversary this year, but when I started the company in 1986 the financial services industry was quite a bit different than it is today. In particular, we’ve seen the steady rise of a tremendous number of extremely large banks and asset managers. Alongside this, there has been a huge rise in the alternatives business, which was pretty nascent in 1986. If you include private equity and hedge funds, you are talking about a $9 trillion dollar industry that has really grown up in the last 30 years; SS&C has been a large beneficiary of that.
What are the biggest technological changes you have seen in the last 30 years?
When you think about your life, it goes without saying that technology has changed what you do and how you do it: you can use your smartphone to access Twitter, Facebook, Snapchat, Instagram, Uber or the 42 other things that you might use on a daily basis. The same thing has happened to fintech, but it started long before many can imagine in this day and age. In the 80’s, the big debate was between Microsoft and the IBM PC and which operating system was going to be the most dominant. As we now know, IBM PC did not make it and is now Lenovo.
What impact has this had on the financial services?
The world has changed so radically and at the same time, so has financial services. In this day and age, you might not carry cash because you might not need cash. Now you can use Apple Pay, Android Pay or PayPal, amongst others. This radical change has also impacted access to information - you can access your bank balance 24/7, whereas before you had to walk into your bank and talk to a teller, a human. We live in a world now where we cannot even imagine what life would be like without an ATM, a remote for your television or a mobile phone and things will continue to change.
Which markets do you think will be the next to radically change?
I think the securities market will have to figure out how to be able to sell and trade in less than 72 hours. For millennials, 72 hours is a lifetime and most things they do is in 0.72 seconds, so I think upgrading technology should be what underpins the worldwide financial services technology - this is what is going to have to happen in order to be able to trade instantaneously. We should be able to validate, move money and ensure that all transactions are cyber secure; I think this is what will really drive what happens over the next 20 years and it all depends on how quickly we can upgrade infrastructure on the financial markets.
What was your thinking behind the acquisition of Citi Investor Services?
Citi used one of our technologies called Geneva in the past and the ability for us to easily migrate their $400 billion or so assets under administration onto our platform made it very economical for us to acquire the system. This provided us with more scale and additional resources, in order to help us build newer technologies. As well as this, the acquisition gives us a very nice footprint in the Far East that allows us to invest more money in our platforms and provide a better service that delights our customers.
Why did this acquisition work?
Talented people that are motivated make acquisitions work – we added Citi’s 1400 staff to our roster, all of whom were extremely talented and willing to make the acquisition work.
Are fintechs your competitors?
We will always have competitors, but we re-invest $140 million each year on internal research and development, which means that startups are going to have to spend a lot of money to catch up with us. We have a lot of respect for the startups, as there are a lot of smart people in the world, but at the same time we will aim to continue to grow in a similar manner to today.