Andrew Edwards, CEO of Saxo Capital Markets explains why the industry needs to digitise and automate.
Andrew Edwards joined Saxo Bank in December 2017, and has since then served as the CEO of Saxo Bank’s UK entity. Andrew has overall responsibility for running an efficient, compliant, and prudent business, by constantly improving productivity, strengthening the Saxo brand as well as enhancing the quality of the firm’s employees within the UK organisation. Prior he spent 14 years at ETX Capital, the last position as CEO. He started his career at City Index as head of the US equity desk.
What do you think will be the long-term impact of Covid for the industry?
We are a digital trading and investment platform and there is no question that Covid-19 has created a significant amount of volatility and volume. This tested the scalability of the platform because although we built it to cope with increases in volume, it is one thing to test its resilience in artificial circumstances and another when it is real time. However, we were not significantly challenged and were able to continue support our clients. We also saw the time as a real opportunity to optimise the platform.
What lessons will be learnt?
In terms of lessons learnt, we did not have to change anything because we were already a global digital and automated platform so had the scale needed to handle the greater volumes and volatility. We also had data centres because of the provision of low latency we provide so were able to provide prices to customers whether it be in the US, Asia, UK or Copenhagen. We were also able to move to a remote operating model because our team in London, for example, was already used to talking to people via video tools in different locations. We have seen, in fact, an increase in productivity although there were some people who took longer to get used to the new norm but that was more due to the social aspects of working in an office.
What strategies did Saxo implement to keep the organisation working and to meet customer’s needs?
As a CEO of a subsidiary, there has not been any difference. Our job is to continually think about what can go wrong, to look at the risks, make sure the tech can hold up and build a good framework. We have regular internal audits that are highly valuable and will challenge us. A good governance structure can be timely and costly when you are building a business, but you realise its importance and how it helps you survive with these types of events.
I have read that you believe risk management should be a stronger focus for the industry. What do you think people should do going forward?
Risk management is more important than ever and it has always been a big part of our strategy. As a bank we have capital requirements to meet but I think companies outside the regulatory space also need to think more about balance sheet management because there will be further spikes over the long term due to the Covid-19 situation. We continually assess our cash reserves and I think this should be the case across the industry.
In general, the bank is often described more as a fintech player than a bank. What has been the strategy behind that?
The strategy that our founder, Kim Fournais, implemented over 10 years ago was to transform Saxo into a digital and automated company. I think he was quite visionary in that he saw how margin pressure and competition was changing the industry. He also realised that human behaviour was changing, and that people wanted to take greater control of their investment decisions and interact online as they were doing with every other aspect of their life. They expected to have a bank account and be able to transact instantaneously as well as having a lot of information at their fingertips across all asset classes.
We built a global digital investment platform that works for professional, retail and institutional clients and enables them to scale their business. However, we are also a bank and have built safeguards as well as a governance structure that meet the requisite capital and regulatory requirements.
I also see Saxo recently signed a deal with five Danish banks to white label. Are partnerships important?
We recently signed a white label partnership agreement with Sparekassen Vendsyssel, Sparekassen Thy, Middelfart Sparekasse, Frøs Sparekasse and Jutlander Bank to access our trading and investment solutions. Traditionally, banks have wanted to build and control their own value chain but the mindset is changing because of cost pressure and the time it takes for products to come to market. We have the full range of partnerships with robo-advisers to asset managers and brokers and all the way through to the traditional banks.
How is and will AI and machine learning change the industry and your organisation?
There are many firms that talk about it and invest capital but do not see the outputs. However, because of the nature of our business, AI has always been at the top of our agenda and we have quite a big initiative. Some of it is used to build new applications but more importantly, AI and data is being used to better understand customer behaviour and the tools and services they want. You need to attract new clients and retain existing ones but to do that you have to be able to improve their journey and experience.
Looking ahead, what objectives and opportunities are you pursuing and what do you see as challenges for the bank and industry?
The after-effects of Covid-19 will be challenging for firms who do not have scale, automation, digitalisation or the right governance structures in place. They will struggle to survive if they rely on manual processes. For us, we see an opportunity to grow organically by offering great services at a sensible price for new and existing customers. We will also be pursuing similar partnerships to the ones we struck with the five Danish banks.
As for acquisitions, we are currently integrating the Dutch stock brokerage company BinckBank which we bought last year. However, once that is finished, we will as ever be looking at other opportunities.