Finastra: Fintech can boost trading on TTSE

INDIVIDUALS could find it easier to invest in the TT Stock Market (TTSE) and to trade foreign stocks, due to innovations in financial technology (fintech), an official from one fintech firm told Business Day on his recent visit to TT.

Finastra is a global firm whose fintech services help individuals access the stock market and help banks carry out investments and other financial management roles. Business Day met Finastra's Peter Lawlor, senior business development specialist, at a recent networking reception for local bank executives at the Maraval residence of UK High Commissioner Harriet Cross.

Lawlor said, "We provide software across several different verticals – treasury, capital markets, payments and lending. What I represent is our treasury and capital markets business."

Treasury management involves a company’s daily cash flows and larger-scale decisions regarding finances.

In a capital market, suppliers such as banks and investors provide funds to businesses, governments, and individuals in exchange for securities like bonds and stocks.

Lawlor said Finastra provided the enabling financial technologies.

"Our focus in TT is to bring software to help with wealth management and treasury, giving these firms the software to enable more people to invest in the markets. That's really the software we provide."

Lawlor said such software enables the average investor – in the middle market to high net worth – to access the TTSE, plus regional and global stock exchanges/equity markets.

"If you're a cab driver here in TT and you want to buy a share in Massy Finance, you'd go through your broker but you'd use our software.

"The broker would use our software to offer that (stock) to the retail investor. So if they wanted to do it on a mobile app, if they wanted to do it over the web, whatever they wish.

"Or if it's a high net worth investor they can do it over the phone. That's the software we're trying to promote in TT."

He said two of Finastra's existing clients in TT are First Citizens Bank (FCB) and Republic Bank.

"They're great partners.

"They'd take our core software and put their own spin on it.

"It's a cost-efficient way to get to market."

Saying Finastra software was behind the FCB app, he said that fact saved each bank from having to create its own software from scratch but instead adapted theirs.

"There is no competitive advantage to make your own. There's no economy of scale there.

"The competitive advantage is the relationship that these banks have. The relationships are there, the customers are there, so we want to give them the tools to enable them to do that."

Regarding Finastra's software he said, "Those systems were developed for our global customers – HSBC, JP Morgan, and Wells Fargo – those types of clients.

"It takes a tremendous investment to make that kind of software."

Due to a lack of economies of scale in the Caribbean amid this very high cost, it does not make sense for each bank to try to develop its own software.

Lawlor viewed Jamaica's stock exchange as being technologically ahead of TT's at the moment.

"TT needs to catch up, because the investors are there – your schoolteacher, your construction worker – from $5 to $100, everyone wants to invest."

He said investors require an affordable and very easy-to-use online platform. "If it's hard to use, they're not going to use it.

"The market is here, just like it is in Jamaica, but TT just needs to catch up in terms of its technology."

Asked if TT has any excessive legal or other restrictions on equity trading, in contrast to the liberation that comes from this technology.

Lawlor replied, "What's very interesting is that in TT the laws, the market and the infrastructure exist already.

"I don't see there is any legislative or legal blocking; It (restraint) is really from a technological point, to allow the mid-sized to retail accounts to have access."

He said some investors in TT were forging ahead to see out solutions.

Lawlor advocated fractional investing. "I right now can't buy one Apple share which trades at US$1,500. But fractional investing, I think, is the ultimate goal because it allows people to invest $5 at a time. You will buy one one-hundredth of a share but you will still be a participant in the growth of that company. If it goes up by ten per cent, your share goes up by ten per cent."

He looked forward to TT nationals enjoying such access to buying small stakes in local firms which were household names which they used daily and so wished to participate in financially.

"The stocks are household names like Massy and Angostura, things that people use and touch every single day, things they can get excited about. Maybe their family works there or they have friends working there and they know about it and it is a very recognisable name. They want to invest but right now without the technology to enable them, if they don't have the money to buy $10,000 worth, they're locked out."

He said banks can offer online platforms to their customers.

"The technology allows them (banks) a platform to register the trade and do the confirmation. So if you as a customer sign up for an online bank account and you also sign up for a brokerage account, the software we sell enables you to do all the tracking from corporate action, and confirmation."

The technology would likely be less attractive to banks if they had to build and maintain their own systems.

Lawlor envisioned thousands of TT nationals each being empowered to make small investments such that the sum total would be quite significant.

"There is an ex-pat community for TT of people who live abroad who want to still invest in their local, home market. We saw the same in Jamaica. There are very large ex-pat communities in New York, Toronto and the UK that still want to invest in Jamaica," he said. "I think TT can look at that example."