Thought Leaders in Financial Technology: Infima Founder and Chief Scientist Kay Giesecke (Part 4)

Sramana Mitra: Do you price per analyst or some other way?

Kay Giesecke: We have a matrix for the pricing scheme. One layer of this is size of the company. If you have an asset manager like mutual fund, how big is the asset under management? That’s one factor. Another one would be the use case. Are they using it for research purposes? Are they using it for trading purposes? Are they using it for reporting purposes? We have a per use case charge. The more use cases, the higher the annual charge. It’s a subscription model, typically with multi-year contracts.

Sramana Mitra: Do you want to do another use case?

Kay Giesecke: They are all tied around this type of problem. There’s the sell side which is the trading desk at a financial institution like a bank. There’re many other smaller firms that are not as much in the public eye but do exactly the same thing. The portfolio manager talks to their counterparts at these sell side organizations to sell securities. Another use case is helping the trader dealing with the buy side portfolio manager to support that workflow. In other words, identify interesting opportunities in the market that they can then propose to their portfolio manager clients, build up inventory, and identify positions that they should sell. It all centers around decision support and being able to identify good opportunities versus ones that are not attractive and should be avoided.

Sramana Mitra: What kind of average deal size do you experience?

Kay Giesecke: In terms of subscription fees?

Sramana Mitra: Yes.

Kay Giesecke: It starts at $50,000 and can go up to $700,000.

Sramana Mitra: You said that you are doing one part of what you are capable of doing. What are some of the other areas in which you plan to expand into?

Kay Giesecke: It’s a big open space. We are only active in one part. It’s a big space still. As we scale, we have to look at other business opportunities in this space. Adjacent spaces, there’s corporate. There’s municipal and consumer. Whenever you have loan or credit, you’ll need to understand the future behavior.

Sramana Mitra: Whether it’s auto loans or credit cards.

Kay Giesecke: Yes. It can be a student loan or the city of Palo Alto. It can be a company taking out a small business loan. It can be a big corporation. Statistically, it’s the same type of problem. That means that we can use our mortgage approach as a template to expand into these other verticals. This is going broad.

Sramana Mitra: Mortgage-backed securities are very well-known and well publicized because of all the calamities that we’ve experienced in the financial crisis. The other kinds of loans like the auto loans or student loans, do they have the same kind of securitization behavior?

Kay Giesecke: Consumer loans are often bundled into these asset-backed securities. It’s exactly the same type of mechanism where individual loans are bundled up into one security that’s then bought and sold by investors. That’s one thing. That also exists in the corporate space. That’s called the collateralized debt obligation. Also they got a little bit of a negative connotation during the financial crisis. More work is required to understand these types of securities.

This segment is part 4 in the series : Thought Leaders in Financial Technology: Infima Founder and Chief Scientist Kay Giesecke
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