Fintech disruptor Saphyre makes smarter trading simple

Fintech is a challenging arena that innovates at an extraordinary pace, posing difficulties even for those with years of industry experience. The convergence of the financial world with emerging, transformative technology is rightly shrouded in language that is often difficult to decipher.

That’s one of the great things about speaking with Stephen Roche and Gabino Roche, Jr. – the twin brothers behind fintech juggernaut, Saphyre. They use metaphors and refreshingly plain language, that even a journalist can understand, to explain how forces such as AI are fundamentally changing the global financial system.

Of course, this is also important when explaining the benefits that Saphyre can offer clients and partners – and they are clearly doing a great job of that as more industry heavyweights join the ‘Saphyre Endeavour’.

“Firms have a concern about being left behind in today’s hyper-competitive financial services landscape,” explains Gabino. “That's why it’s important that publications like FinTech share the advances that we are making with tools such as AI, and the firms that are adapting this technology, so that we can fully convey the direction that financial services are moving in.” 

“There are a lot of technology vendors who pay lip service to solving the pain points that Saphyre’s proprietary platform finally solves. Stephen and I love to tell our clients, ‘Here are the keys, you can drive the car today – not in 6 months, not in a year to get things into place’. We resolved to make Saphyre’s platform turnkey whether you are a global asset manager, a boutique bank, or a multinational custodian. When you adopt our technology, you can drive today – and you will realise the benefits. That makes the product real for an audience that tends to be skeptical of new technology.”

So, how exactly is Saphyre transforming the landscape of financial services? It’s a question that the Roche brothers tackle on a regular basis. So much so, that they have a short and a long version ready to pitch.

“What Saphyre does is instantly set up new and existing funds securely between external financial institutions, so that they can be ready to trade quickly, while eliminating post-trade issues,” says Stephen.

“Synchronising reference data in the pre-trade space eliminates much of the existing post-trade work, or redundancies, and provides critical groundwork for the move to T+1 in North America by May 2024.”

Saphyre's functionality for a client starts in the pre-trade space, before a trade even occurs, driven by intelligence rooted in more than 105 patents. For example, if a Fortune 500 company is setting up a new pension fund, the legal entity associated with that fund may need an investment management firm (many of the world’s largest are Saphyre clients). They also need to communicate with a custodian, who needs to then communicate with broker-dealers. It’s an intricate web of interfacing that is necessary for the whole machine to run.

Saphyre’s platform connects them all together to track that onboarding process; the Know Your Customer (KYC) protocols, the tax, legal, and compliance work – as well as the operational setups including things like order management systems. It’s a proprietary system that is unrivaled in an industry where most of this process was historically held together by a disparate patchwork of emails, spreadsheets, and faxes.

All of that helps firms to get ready to trade quickly and – with certain markets, currencies, trading instruments and asset classes – that speed is a very important, powerful benefit to these financial institutions. 

A significant benefit to this up-front work being done in the pre-trade phase is that it takes around 70 to 75% of the work out of the post-trade, too.

“The analogy that I like to give is that you should be treating trades the same way as air travel,” says Stephen. “You set up your security precautions before any threat occurs, use a black box, add AI intelligence, some automation – and you can ensure your trades land in the destination while eliminating most of the issues in the post-trade.

“Investments are currently being done in post-trade. In other words, they are in the business of putting together crashed planes and trying to get them to fly again. We're in the business of not having planes crash – ever. “ 

Certain industries are known to be laggards when it comes to embracing and adopting new technologies, and you could be forgiven for thinking that finance was not one of those. However, many processes are still in the relatively dark ages when it comes to digitalisation.

Gabino and Stephen both share anecdotes of some financial organisations being stuck in a time warp. This rocky horror show includes the use of faxes (remember those?), spreadsheets, and emails. This is not representative of the entire industry of course, but it does highlight how Saphyre’s strategic relationships like FXall are using the platform to harness an entirely new approach.

Announced in February, the strategic alliance between Saphyre and the London Stock Exchange Group’s (LSEG) FXall business aims to digitise account onboarding for FXall clients through Saphyre’s AI technology. 

“In the old days, you'd have to call up the banks to get the currency rates for different currencies,” says Gabino. “A platform like FXall actually draws from multiple liquidity providers to give you the best price. This is significant as it proves that Saphyre is now directly linked to trading activities, which is the bread-winning side of the business for a lot of financial institutions.”

Since that announcement, a growing number of other EMS platforms have started new formal discussions with Saphyre. Saphyre’s ability to serve multiple asset classes brings another value-add to its clients that was previously unmet.

Traditionally many platforms are exclusively focused on certain asset classes. If a firm wants to do a certain type of trading and processing, you have to use certain solutions associated with that asset class – creating a messy network of multiple platforms within a firm’s framework.

Agility is one thing that Saphyre prides itself on, and if you want an analogy, you are not going to be disappointed.

“We move much faster than the generally accepted pace of things, " says Stephen. “We're like a speedboat doing several runs around a large cruise ship or oil tanker.”

Market forces are also, in a way, playing into the company’s hands – with turmoil in the US banking sector, ongoing geopolitical tensions, and inflation spiking globally, to name just a few pain points. In periods of uncertainty, technology and innovation have a serious role to play, and a solution like Saphyre could prove instrumental.

Saphyre has been nominated for numerous industry awards, and Gabino has emerged as a consequential fintech influencer.

They were nominated for Fintech of the Year by Global Custodian magazine and won the highly coveted award in May 2023. They have also been featured by Forbes and the Wall Street Journal, while being regular faces on the cover of FinTech Magazine and keynote speakers at FinTech LIVE.

“Saphyre quickly became the dominant player in a market that was starved of true innovation, which is very important for us,” says Stephen.

It’s not all plain sailing of course, and while Saphyre has grown exponentially in a short space of time, there are still challenges to overcome. The tactical solutions that Saphyre provides are plain to see in today’s financial environment. However, the financial industry’s historic aversion to adopting cutting- edge technology is also well known.

Right now, the firms that understand the strategic benefit are realizing the first mover advantage. Although much of the investment being made by institutions today is focused on post-trade. Saphyre’s entire premise is built around the concept of solving these issues from inception, in the pre-trade first.

With significant investments made in post-trade solutions, Saphyre is trying to bridge the gap – to get leaders thinking about the pre-trade.

Stephen says there is a major opportunity to show and validate post-rate solutions using pre-trade data, and that Saphyre is working on an exciting securities lending solution right now.

“We're in the B2B space now, but this will also be repeatable to B2C. It's going to be very interesting. We are 90% there on setting that up. That will be something to look out for in the coming months, and it will be very exciting for this space, because that's a huge addressable market that hasn't been solved yet,” adds Gabino.

It all sounds like Saphyre’s stock is rising – despite economic volatility that would keep many financial executives up at night. But every crisis presents an opportunity and Gabino believes that the silver lining of today’s uncertainty could be perhaps the greatest boon for fintech firms yet.

When reflecting on what he thinks about when getting out of bed in the morning, he gets enthused by the opportunity ahead that his team sees.

“Do we have our infrastructure in place with the right players to show how we can help them navigate these conditions in the market?” he says. “Or if we haven't, how do we get those firms to quickly adopt us so that we can help them. 

The account transition issues are ongoing in the market. Can a bank remember all the account information, data, and documents and can we digitally help assist clients on both sides of the angle – the banks and depositors do this seamlessly and quickly? The answer is absolutely yes! These are the things that actually motivate us to wake up each morning.”

Stephen added, “People adopting our technology in advance of these kinds of crises will benefit from it. People who don't, will struggle, and would only then realise the change they need to make after the fact.” 

“We work harder, smarter, faster, to change the face of the finance industry because this is something worth striving for.”