L'Hebdo: Thursday, May 20th 2010
A massive financial portal Cfinancials already lists 6.9 million financial products and plans to offer 9.5 million by the time it opens to the public.
The Cfinancials management team opted for an American style presentation at the company's launch in Geneva. Its members - Chairman and CEO included - wore identical jackets, bearing the company logo. However, Cfinancials' adoption of American practices extends beyond its approach to public relations. The company, based in Lutry, has openly declared its intention of becoming the Google of finance. The giant portal already offers an impressive 6.9 million financial products and plans to increase this to 9.5 million by the time the site opens to the public at the end of this year, through its partners SIX Telekurs, Thomson Reuters, Dow Jones and Interactive Data. The database already includes some 490,000 investment funds, 480,000 shares, 10,000 hedge funds, 23,000 funds of funds, 440,000 bonds and 415,000 structured products that will be accessible to everyone at no charge, with just a few clicks of the mouse. Money market products, swaps, IPOs, private equity funds and around a million options will also be available. In 2011, they will be joined by 900,000 CDOs and 900,000 CDS-MBSs: the credit derivatives that gained dubious fame as a result of the subprime crisis.
Ease of use.
Share prices will be updated every day after the closing of the New York stock exchange, and new products will appear on the site at the same time as they come onto the market. However, 20,000 financial products are launched every week in Europe alone. Will it be possible for an uninformed public to handle such a plethora of information? The software developers - in a close collaboration with the HEIG (Vaud School of Engineering and Management) - have worked hard to simplify the user's task. On the basis of the real-time demonstration given in Geneva, an identification of the best investment fund in a category, and a comparison of its volatility or performance over different periods to those of similar products, can be accomplished quickly and easily. The Lausanne startup seems unlikely to suffer from seeing itself as a small fish:
There is no reason why we shouldn't do just as good a job as the Americans declares its CEO, Michael Heijmeijer. Provision has been made for five to ten years of investment before the site turns a profit. A ten-year tax agreement has been signed with the Canton of Vaud and Mr. Heijmeijer plans to expand from ten employees to more than 300 over the coming years. Investors in Private Equity, who have a stake in the company, must have appreciated another American practice in the initial composition of the capital structure: the CEO has invested a substantial amount of his own money in the venture.
The strength of information.
The CEO is very aware of the fact that the providing of free information, open to all, will drastically change the value chain of many banks, starting with financial institutions based in Switzerland, his initial target clientele, before moving on to the rest of Europe, the United States and Asia.
Imagine an adviser for a private bank on the phone with a client living in Asia or Latin America. They will both have the same information on the screen in front of them and will be able to decide together on the best investment choices to make. A picture that is likely to unsettle the large numbers of financial advisers who spend most of their time compiling data in preparation for meetings with their clients ... Managers will no doubt be more appreciative of a tool that enables them to rely on the real added value offered by their bank:
Finding and keeping customers through good quality service. The business model forecasts that the free platform will generate revenues through advertising, selling customized versions to banks, highlighting offers from private equity funds, etc. All that remains is to convince the public of the virtues of transparency in financial information. And to accustom them to a two-click process: the first to find out about products on Cfinancials, and the second to buy or sell them through their bank's site.