Invested disruption

An interview with Harry Chemay, Co-founder and CEO, Clover.com.au

Harry Chemay

The financial advisory and funds management industries have been following the same playbook for decades. With governance, fees and transparency facing increasing regulatory scrutiny, and new technologies and a global market creating unprecedented investment opportunities, it was inevitable the existing model be disrupted.

Harry Chemay left the world of ‘big investment’ with the aim of disrupting the norms in financial planning and investment, by co-developing a tech-led platform that abandoned the ‘old rules’ - as well as unnecessary fees and jargon - and rebuilt investing from the ground up. The result was Clover.com.au, an automated investment service built to serve the needs of time-poor, digitally-savvy investors.

What was it about the traditional investing model that you felt needed ‘disrupting’?

There was a time when professional investing was an activity solemnly undertaken by the trust department of financial institutions. It was about service, and a deep sense of fiduciary duty owed to clients, often widows and pensioners, whose wealth was managed.

The sixties heralded a changing of the guards, with managed funds becoming the vehicle of choice for investors wanting a slice of action in the then booming US sharemarket. Funds management became a rapidly growing and highly profitable business, and it has stayed that way ever since. Net profit margins in most major developed markets has comfortably been in excess of 30% on the near $100 trillion under management globally, according to global consulting firm The Boston Consulting Group.

What I find fascinating is that the funds management industry has become so incredibly large without any economies of scale reducing the cost to the end user, in the same way that Moore’s Law has for information technology. Quite the opposite, the average active retail managed fund in the US is more expensive today than its predecessor from the sixties.

When I looked into why this might be the case, it turns out that investing remains stubbornly expensive for individual investors because of the number of agents and intermediaries who are each clipping the ticket as money moves from investor to investment and back again. In short, there’s a veritable swarm of helpers; financial advisers, asset consultants, fund manager rating houses, execution and clearing agents, administrators, registry providers, custodians, fund accountants…. I could go on, but I’m sure you get the picture.

Can you see further disruption on the horizon for financial / investment services?

Some say the last great financial innovation was the introduction, fifty years ago, of the automated teller machine. I don’t hold that view, having seen the financial industry evolve and adopt over the last twenty years. It’s just that most of the innovation has been in middle and back office solutions; enterprise banking platforms, enterprise CRM systems and multi-million dollar re-builds of investment platforms to help financial advisers deliver advice more efficiently.

What has changed over the past five or so years is the increasing use of technology to enhance the user experience. Until recently that was basically an after-thought. Whether a customer actually had an enjoyable experience interacting with a financial service provider was of little concern to the provider. Who’d believe tracking your spending habits, applying for a personal loan or saving for your kids’ education could be engaging, let alone enjoyable?

Where we are right now, with new FinTech startups springing up all over the world and innovative solutions across payments, transfers, lending, wealth and insurance, is just the beginning of a wave of disruption that could fundamentally alter what the financial institution of the future looks like.

Imagine a future where your personal digital assistant sitting on your kitchen benchtop senses your presence as you pour that post-dinner glass of Merlot and asks if you’d like to review finances. It proceeds to collate information from your various FinTech service providers, giving you a snapshot of your net worth and insurances, keeping you abreast of new offers and opportunities, and providing a plain English spoken-word version of the arcane legalese buried in the contracts for new services of interest. That future is not so far away.

What have been the main challenges in educating people about investing online?

We’ve been pleasantly surprised by the level of enthusiasm shown by our users in receiving advice and investing online. The recent 2017 EY FinTech Adoption Index survey indicated that 37% of Australians are now considered regular FinTech users, up from only 13% just two years ago.  Admittedly, these numbers are biased to younger Australians, and to Gen-Y in particular, but it’s fair to say that Gen-Y is much more comfortable investing online compared to previous generations.

That comfort is reflected in our client base, with more than half our clients aged between 25 and 35. Millennials look first online to find solutions that can solve a problem faster, more efficiently and at a time and place of their choosing. Most of the interaction we have with new clients happens after-hours and on weekends.

That’s when busy young professionals have the headspace to turn their attention to their own affairs.

With today’s tech savvy consumer, 9pm is the new 9am, and if you can’t meet their desire for flexible interactions, frankly you’re going to be increasingly irrelevant. 

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Feeding diversity, sustainability, and community

Interview: Ian McKenzie, KPMG Head Chef

Since the beginning of time and the earliest of civilisations, food has brought people together. The preparation and sharing of meals – whether it be around a tribal campfire in the remote outback or a boardroom table in the heart of the city - provides a profound opportunity for people to bond and connect, share stories, debate ideas and to defuse differences.

Food service is also an opportunity to embrace wellbeing, celebrate diversity and champion sustainability, and few know this better than professional services firm KPMG. With commercial kitchen facilities at Barangaroo that would rival those of any international five-star hotel, the organisation takes meal preparation and food service very seriously indeed.

“As an organisation, we believe KPMG is a reflection of the general community itself,” says Ransdale Dinger, National Client Experience Team Leader, KPMG. “We are an international company, which means our people are incredibly diverse, as are our clients. However, we feel some things are universal – great hospitality and service, celebration of community, and the provision of nourishment, and our goal is to use thesethings to bring all people together.”

With a team of approximately 2,500 in Sydney, and just over 7,000 nationally, the KPMG community is a mirror of modern Australia, and the organisation relishes its role as a responsible corporate citizen in every aspect of its operations. One of those is in the preparation and service of meals to its teams and clients. On any given week, the kitchens within its Barangaroo office at International Towers, Tower Three, prepare an average of 500 fine-dining lunches and dinners, cater to hundreds more for breakfasts and casual meals, bake thousands of muffins, and deliver an endless supply of fruit and beverages.

“The sheer volume of food we prepare each week means we have a genuine opportunity to make a difference to not only our own community at KPMG, but the greater community too,” says Ian McKenzie, Head Chef. “We work very closely with our community of farmers and growers, not only so that we can source the very best, seasonal produce, but also to minimise waste and food miles. We adhere to a paddock-to-plate and nose-to-tail ethos, which helps us to deliver an experience that is as sustainable as possible, and that is also very much focussed on the health and nutrition of everyone we serve.”

Currently, around 80 per cent of all waste from the KPMG kitchens is recycled or repurposed. An achievement like this doesn’t happen by accident. By taking control of the supply process – for instance, sourcing sustainably grown, whole fish and preparing them in-house, using the bones to make stocks for soups and other dishes, Ian and his team have been able to dramatically reduce the amount of food waste, as well as the organisation’s environmental footprint. A Waste Management Induction process, hosted by Lendlease and International Towers management, also provided valuable insights into how the industry-leading, recycling and repurposing facilities within the Towers work, enabling all involved with food preparation at KPMG to work together toward a common mission, and introduce processes to ensure they were working as sustainably as possible. This includes a highly disciplined approach to recycling, as well as other initiatives, such as supporting National Recycling Week, promoting multiple-use coffee cups, and working with organisations such as food rescue charity OzHarvest to distribute surplus meals.

Ian, who has cooked for CEOs, dignitaries and royalty all over the world (he was once the chef on the Royal Yacht and cooked for Lady Diana), also understands his unique position to influence the wellbeing of the community he serves. “The way people eat has changed, and continues to evolve,” he says. “People are much more conscious of the role of diet in their overall health, so we try to support that – and even drive that – through our kitchen. For example, we’ve replaced many of the biscuits we used to bake as team snacks with fresh fruit and nuts; we’re serving less carbohydrates, making cold-pressed juices and we recently established a close relationship with Bell & Brio from within our Barangaroo community to make our bread, using pure ingredients and amazing, whole grains. We even adopted a cow from the dairy in the Camden Valley that supplies our milk. The milk is bottled at the farm and delivered straight to us and, on a clear day, we can even see the dairy farm from our office at International Towers. It doesn’t get more local than that.”

Community responsibility at KPMG isn’t confined to the dining table. Outside the kitchens, the organisation has a robust program of events and initiatives, and uses every opportunity to engage with its own community to support a range of causes, from distributing white ribbons to its service teams in support of ‘White Ribbon Day’; purple neck ties for ‘Wear It Purple Day’; and hoodies in support of NAIDOC Week, to even decorating the coffees they serve with icons relating to national causes and community initiatives to raise awareness and start conversations.

“It’s all about experience,” says Ransdale. “If we can improve the life of a single person through our actions, then everything we do is worthwhile. If we can improve the lives of all in our community and beyond, then we have achieved something incredibly special.”

Disrupting the market

Interview: Rosie Kennedy, CEO, OnMarket


OnMarket is a unique, crowdfunding and venture advisory business that is helping democratise finance for investors and bring new, early-stage funding to startups and small, scalable businesses. The company recently completed its 100th IPO and introduced the world’s first App for crowdfunding IPOs, and was one of the first to receive the new crowd-sourced funding licenses in January 2018.

We spoke to Rosie Kennedy about how her traditional finance background led her to help build the OnMarket business.

As a professional, and now an entrepreneur, you have a wonderful mix of experience across traditional finance, financial governance and disruptive fintech. What are the highlights?

I began my career in the money market, then ran the government bond trading desk for what is now UBS.

My next major role was heading up business development at ASX, where my focus was on trying to allow retail investors to invest in fixed interest securities, or debt securities, because Australian investors are traditionally very equity-focused.

I went on to work at ASIC in the area that supervises exchanges. I also helped simplify the prospectus regime for debt issuers – again hoping to free up the debt market so retail investors had an opportunity to participate.

Then you met your co-founder at OnMarket, Ben Bucknell, who was trying to do something very similar in the equity market?

Yes. My passion came from being intimately involved in the bond market, and seeing the importance of diversification of portfolios. It was clearly apparent that retail investors were not being given the same opportunities to diversify their portfolios as institutions. Ben had the same vision in the equity market.

Initially we licensed our intellectual property to ASX, to build ASX BookBuild. This system was built within ASX’strading platform and was a tech-driven solution to improve the pricing on equity issuance by listed companies and improve participation for investors.

As this was a B2B model, we really needed some firms in the big end of town to grasp the opportunities arising out of digital disruption in financial markets. But remember, when we were launching ASX BookBuild, it was before the word ‘fintech’ was in common usage. The reality was that there were a lot of powerful, vested interests in the existing process, and it was not easy to get support for an innovative new approach.

Ironically, that lack of support drove us to develop OnMarket, which is a B2C service on desktop and in the App Store. It’s simple, and a far cry from what we were originally doing, but it seems to solve a real problem for investors (by giving them access to discounted IPOs) and companies (by providing a cost effective way of reaching investors).

What companies do you think stand out in the crowd-financing area?

We’ve had a few firsts. We closed Australia’s first equity crowdfunding offer, Revvies, in March 2018. And we’ve completed the largest crowdfunding deal in the world in terms of the number of investors. The company is called DC Power. They got 15,000 investors, and previously the largest number of investors globally was about 6,200.

One of our more interesting offers is The Cup eXchange (TCX) – which is a sustainable, coffee cup business which is solving the disposable cup conundrum. This offer opened in November 2018, and the minimum raise was covered in the first seven days.

It’s a subscription model where consumers are given two cups and they exchange those cups via scanning. Each cup has an identifier, and they scan the cups for credits. Once the coffee is finished, you pop the cup back to that particular café, or to another participating café.

That cup can be used by any participating café, and it never finds its way to landfill because if the coffee cup is ever damaged – which is unlikely because it’s made in a durable way that is very sturdy – it’s crushed down and made into another one.

It’s on trial in Sydney and Barangaroo, and in Melbourne as well. And they are the first-to-market with this product – there is no reason it can’t go global.

Does a crowdfunding raise also help with marketing and awareness of a business?

Definitely. The smaller companies can also use this process to engage their whole stakeholder chain – from employees, to the suppliers and the customers who really embrace the product and engage with the whole process – it’s a nice way of tying all the stakeholders in. For example, we completed a successful crowdraising for PT Blink – a technology company that is revolutionising the construction process. The key benefit for that group was getting referrals from customers. People saw their story whether they invested or not. As a result, large building companies got in touch with PT Blink to use the product.

You expanded your business to Tower Two at International Towers in 2018. You were previously based in Bligh St in Sydney’s CBD, what was behind the move?

We were looking to scale our business – and the tenant model at International Towers was beautifully configured for that kind of progressive growth.

Also, OnMarket is very much in the innovation business and the incredible strength of the innovation community at International Towers was a big attraction for us. We were drawn to the powerful community of enterprise and growth companies and the partnership approach International Towers takes with its tenants.

I think it’s a great benefit that we’re able to work together in such a collaborative environment, especially on our floor. As an example, with The Cup eXchange I spoke to fellow tenant partners, the Green Building Council Australia about relevant contacts in the sustainability area. They connected me with a terrific person at one of the large accounting firms, who has since put us in touch with a facilities manager, and as a result they’re about to sign a large partnership deal.

...which in an enterprise world is very fast-tracked?

Unbelievably. That all happened in 3.5 weeks. That’s a classic example of the working environment, but also of the collaborative nature of the people here. It’s certainly early days, but the camaraderie we’ve already experienced is fantastic.