1 August 2017 waterstechnology.com

In 1992 somewhere in Copenhagen, a 26-year-old decides to become a broker. He buys a telephone from a local store and along with a friend, sets up a small broking company. In 2017, in the same city, a 51-year-old stands at the top of a winding staircase in an impressive office, supervising his firm’s global operations. Meet Saxo Bank’s CEO, Kim Fournais. By Aggelos Andreou with photos by Brindusa Ioana Nastasa

in which Saxo Bank can be described. For some

Danes, it is their country’s success story, while

for others it is one of Denmark’s largest firms.

But the most common description is that to

some extent it represents what their country is

all about: a tech-savvy and pioneering financial

institution, offering free meals to all employees

in a building packed with pieces of modern art.

For the rest of the world and especially the

financial services industry, Saxo Bank is a facilita-

tor. It’s an institution that uses technology to make

the life of traders and investors easier and allow

them to connect with global capital markets.

But for Kim Fournais, the firm’s CEO, it

is the physical manifestation of a personal and

professional bet he has already won, although

he continues to renew it whenever necessary.

“Saxo Bank is a dream, and it’s something that

makes me really proud,” he says. “It’s a passion,

an ambition, and above all, it’s a great

team effort.”

Breathing Technology

Midas was Saxo’s original name during its

first nine years in existence, until 2001,

when Fournais began flirting with tech-

nology. While trying to establish Midas as

a brokerage, he soon realized that brokers

could not rely on their landlines to place

and execute orders. It was obvious—at

least to him—that the power of the inter-

net was about to take over and eliminate

the boundaries of time and place.

“It was market practice for the trades to

be done on the telephone, but that was not

very efficient and not conducive to trans-

parent price discovery,” he recalls. “Even

the most skilled people can’t have more

than a couple of phone calls at a time.”

The whole process was archaic and cost

a lot of money. It also produced large num-

There are three ways

Sell Side

2waterstechnology.com August 2017

The Waters Profile

The Technology Artist

Kim Fournais:

Kim Fournais, Saxo Bank

The Waters Profile

3 August 2017 waterstechnology.com

However, this transformation

came at a cost, Fournais admits. He

says that Saxo spent two-and-a-half

years developing its first pieces of

technology, literally stagnating the

firm’s bank account. Saxo wasn’t even

sure if this effort would pay off, as

this evolutionary process was unique.

Nevertheless, the team kept plugging

away at it, as Fournais was convinced

that that is what all firms would do at

some point in the future.

Eventually, in 2001, Saxo brought

on board its first white-label partner.

Because of this, Fournais prides him-

self in establishing one of the world’s

first and most innovative financial

services fintech firms. “That was the

first time we really distributed through

other partners,” he says. “That was the

first stage of being a fintech firm where

we delivered ‘business-as-a-service’ to

another financial institution, and now

we have more than a hundred white-

label partners.”

Democracy

Surprisingly, Fournais’ obsession with

technology was not only a business

decision and an effort to differentiate

himself and Saxo from other sell-side

entities. And it wasn’t innovation just

for the sake of it. He is a tech enthu-

siast for a more important reason:

Technology serves no other purpose,

but to make global markets accessible

to the wider public. He says his mission

is to achieve the full democratization of

investment management and trading.

“Initially, we started as a voice

broker for foreign exchange and

futures, but when we started adding

technology to our offering, we

realized that we would be able to

democratize investment and trad-

ing because technology can provide

access to the capital markets to a much

broader audience and amplify trading

opportunities,” he says.

Ultimately, he says, the idea

was to create and make available

an infrastructure that would enable

every person on the planet to trade

bers of errors and most importantly it

did not serve clients well. “Back then,

you traded with a client, you put this

into a system, you printed out a letter,

and you sent it via mail and then three

days later the client got confirmation

of that trade,” he says.

In 1998, Midas launched its first

online platform. Three years later,

in 2001, along with his partner, Lars

Seier Christensen, Fournais decided

to take a big step and shift the busi-

ness model, transforming Midas into

Saxo. The broker became a bank, a

financial institution entirely focused

on technology, a strategy that remains

unchanged.

“Obviously, our big milestone

was that we decided to become a

technology company. I don’t think

we fully understood what that

meant at the time, but we decided

to develop our offering and be

present on the internet,” he says.

“Today, more than one-third of our

employees work in IT.”

When he discusses all the “firsts”

Saxo has introduced to the market,

you realize that Fournais was not just

a technology enthusiast, even though

his love of technology is immediately

apparent. He breathes technology,

and is determined to transform the

capital markets in the most profound

way. “We were the first ones to launch

a foreign-exchange platform with

streaming tradable prices, initially

with Deutsche Bank, and then with

UBS, and then we added a lot of

other banks,” he says. “Developing

our offering in this way was a game-

changer that also allowed us to build

scale in a relatively short period of

time and grow significantly.”

“We were the first ones to launch a foreign-exchange platform with streaming

tradable prices, initially with Deutsche Bank, and then with UBS, and then we

added a lot of other banks.”

4waterstechnology.com August 2017

and invest in global financial mar-

kets. For Fournais, this is a topical

issue, as in many parts of the world,

access to markets is limited to a small

number of people because banks

still refuse to remove financial bar-

riers to the masses. “Equal access

to investment opportunities across

global markets lies at the heart of

efficient allocation of capital and to

take advantage of any opportunity

that may lie in the markets,” he says.

“We aspire to play a fundamental

role in this by enabling transparent,

cost-efficient access to global capital

markets.”

Fournais says that what sets Saxo

apart in a crowded field is that it offers

a multi-asset trading experience from

a single account and in 28 languages.

“It’s built on an OpenAPI with an

HTML5 front-end, which is again a

significant tool and proof that we want

to give everyone the opportunity to

invest from any location in the world,”

he adds.

Setbacks

Fournais has sought to preserve

the tech mentality in all of Saxo’s

operations, making it a competitive

advantage. He says the bank’s main

philosophy is that a computer should

handle everything and can be just as

good as or even better than a human.

“That bar is being raised every

day with artificial intelligence (AI),

machine learning, big data and now

also biometrics,” he says. “We have

always had many more ideas than we

could realistically implement. That

is to say, it’s not a lack of ideas that’s

keeping us from moving even faster,

but the ability to execute them as it

costs a lot of capital and it takes a lot

of time to plan the execution.”

This continuous flow of ideas has,

at the same time, been a pain point for

Saxo. While creativity and innovation

are always welcome, having too much

of both can lead to setbacks.

Fournais admits that over the

years there have been a number of

projects the bank had to scrap. “That’s

a waste of time and money, but if you

learn something from those types of

experiences, then it’s good,” he says.

“Sometimes you pay a lot for learning

some lessons, but this is an important

part of building a business.”

What he and Saxo learned from

failed projects is the importance of

carefully weighing the pros and cons of

each new idea and planning a detailed

process around them.

“We are much better now at the

entire process—from ideas to planning

and execution and the rollout phase,”

Fournais says. “Everything we do is

rigorous—we need to go through the

necessary procedures in IT, operations,

legal and compliance, capital liquidity,

suitability tests, etc.—so many things

need to be checked.”

New Projects

Despite sporadic failures, Fournais

is keen to maintain Saxo’s innova-

tion stance. It is, after all, the bank’s

trademark and an integral part of its

strategic goals.

It is always tricky asking a CEO to

reveal information about what his or

her company is up to regarding new

services that have not yet been offi-

cially announced, but Fournais proved

to be candid, sharing a number of

technological advancements currently

on the Saxo test bench. He reveals that

the firm has been working with data

science and machine learning for many

years, aspiring to deliver new products

in the near future and expand the scope

of choices for Saxo’s clients. In fact, he

says that a few months ago, the firm

started working on a component that

will further personalize users’ trading

and investment experiences.

“It will understand your behavior,

your interests, what kind of news you

are interested in, what kind of instru-

ments you have traded and what kind

of risk profile you have,” Fournais

explains.

For Fournais, data is the most

important element of today’s trading

infrastructure, the element that allows

the provider to establish a one-to-one

relationship with its clients and ensures

that all operations remain relevant to

what the industry needs. With this

in mind, he says that Saxo is willing

to take the use of data to a whole

new level, where users will be able to

manage their own risk.

“We have developed an algorithm

that can predict when a client is likely

to churn,” he explains. “That is to say,

the trading behavior is likely to lead to

unprofitable trading. It’s clear to most

The Waters Profile

“Developing our offering in this way was a game-changer that also allowed us

to build scale in a relatively short period of time and grow significantly.”

The Waters Profile

5 August 2017 waterstechnology.com

people in the industry that there is a

lot of psychology involved in trading

and sometimes people don’t behave in

a rational manner.”

For example, he says, at times they

tend not to diversify, they can overlev-

erage, and they don’t use trailing stops

and risk management mechanisms.

“One of the things that we’re trying to

do with big data is to say that we can

predict things, for example, by identi-

fying previous patterns and explain to

clients the results of these patterns and

then we can propose potential solu-

tions to them,” he says.

The Tech Bubble

Fournais is aware that all these new

technologies have one thing in

common: They have the potential to

disrupt the financial services industry

in a meaningful way, where simplic-

ity and flexibility will be the core and

driving force behind financial opera-

tions. That’s exactly what he had in

mind back in 1992 when his Saxo

journey began. “When we started we

had nothing; we had no capital and no

KIM FOURNAIS

Name: Kim Fournais

Title: CEO and Founder

Age: 51

Hometown: Copenhagen, Denmark

Education: Engineering studies, Technical University of Denmark

Hobbies/Interests: sports: cycling, running, martial arts

Greatest Business Success: Saxo Bank

FUNDAMENTAL DATA

platform—just a telephone and a big

smile,” he recalls, although he quickly

adds that he always wanted to be a

pioneer in his field.

Back then, the industry was still in

its infancy, but now there are thousands

of firms, either startups or established

fintech companies, scrapping for a

piece of the fintech pie. To him, this

is dangerous. Trading technologies

are now on shaky ground. They could

become, he says, the next big bubble,

as a lot of the firms are not going to

make money for years and simply

won’t be able to survive. “I’ve been in

the business for 25 years and I’ve seen

many crises unfolding,” he says. “The

European Exchange Rate Mechanism

(ERM) crisis, the dot-com crisis, the

2008 crisis: When you have business

models that are only focused on creat-

ing growth and scale, but don’t make

enough money to pay the bills—that

will create another crisis.”

He says that while all of this is part

of the “game” and an integral part of

the creative process within a capitalist

system, it is unrealistic to believe that all

the people investing in trading technol-

ogies are going to make a good return.

He does, however, hope that startups

succeed. “It is super important for the

world for startups to win, to disrupt

the normal way of thinking, and try to

create value for their clients,” he says.

Looking forward

Fournais wishes the same for Saxo

Bank, his baby. He might not remain

in his seat for the next 25 years—“50

years at a job is probably too long,” he

jokes—but he wants the firm to remain

ahead of the industry. “I believe we

are at a tipping point because we have

been transforming and the world is

transforming with globalization, regu-

lations, etc. There are many things that

are changing,” he says. “When I think

about the next 25 years, I want us to

create an even bigger direct footprint,

but also add many more partnerships.”

And while he doesn’t seem to be

overly fond of giving advice, as “no

two people are the same,” he does

have a clear message for every aspiring

CEO: “There will be many days that

will not be fun and where there may

be difficulties, so if you don’t have an

underlying urge and passion to do it, it

will be difficult to keep going. If you

are that person, you’re not going to last

for 25 years.” W