When a legacy broker decides its customers want fractional shares, the request usually arrives as a feature for the app. Laksh Gangwani, Chief Growth Officer at ViewTrade, uses it to explain the difference between what is, and more importantly what is not, infrastructure. It starts small, the order management system cannot take fractions, so it is replaced. Then the firm’s risk management will not allow it to hold those positions on its own books, so that has to change. Then the custodian, which sits at a bank, turns out not to support fractional holdings either. “Everything starts with a front-end feature request,” he says, and it ends as an end-to-end transformation.
That chain of changes to affect a seemingly small outcome is the distinction he has built his recent keynote around. Everyone now describes themselves as infrastructure, in the same way that a few years ago every SaaS vendor claimed to be end to end while covering one step of a ten-step workflow. “Technology is not infrastructure,” he says. “Technology is just technology.” Infrastructure, in his definition, is the ability to affect the whole chain, or at least a significant portion of it, and build around it, covering tax, regulation, operations, market data and risk management as well as the code. His benchmark is AWS, which he counts as infrastructure because customers can build entire applications on it; servers and compute on their own would only be technology.
ViewTrade provide the technology and the brokerage services needed to launch a trading platform, from the front end through to clearing and custody, in a single package. Gangwani says a typical launch without a service like ViewTrade would take eight to ten vendors, and that ViewTrade have been operating for around 28 years and serve more than 300 customers in over 35 countries. He puts assets under administration at around $50 billion, up from roughly $10 to $12 billion when he first started talking to the company, shortly before joining four years ago.
Viewtrade’s approach in Thailand was a grtea example of the difference between technology and infrastructure . ViewTrade spent a year working with the Association of Thai Securities Companies to have Thailand’s KYC standards recognised by the US Internal Revenue Service, the first step towards Thai brokers obtaining Qualified Intermediary status. The approval, announced in April, lets Thai brokers file US tax forms in bulk rather than for each client individually, which ViewTrade estimate will save the industry around 442 million baht a year, about $13 million, in processing costs and late-filing fines. Nobody had pursued it, he says, because nobody wanted to pay for it, so ViewTrade paid. They sold no software in the process, and in September signed their first Thai customer.
Being bootstrapped makes that selectiveness possible. ViewTrade are profitable with no external investors, he says, which lets them decide that a market does not need them yet rather than chase logos for a board. His test is whether the ecosystem will be better with ViewTrade in it; if it will only be marginally better, ViewTrade do not belong there.
The distinction is not always welcome. Many of the firms in any fintech audience now describe themselves as infrastructure, and when he told a keynote room that the two words are not synonyms, he says, “I actually felt like I took oxygen away from everybody in the room.” A customer asking for fractional shares will only ever see the button in the app. ViewTrade have spent the last four years building the infrastructure that sits behind it.
The article was originally published in Finance X (refer page number 52 and 53).
