Fintech on Friday: Bambu shoots for the stars

Back in 2015, Ned Phillips, a UK expatriate who arrived as a backpacker in Asia in 1990, began to get itchy feet. He had designed, built and marketed successful trading platforms for brokerages, investment banks and stock exchanges. His employers had included the E-Trade brokerage in Hong Kong and Credit Lyonnais in Singapore. But now he longed for something “more stimulating”.

His friends, diagnosing a mid-life crisis, suggested branching out on his own. “I tried consulting, but did not enjoy it,” recalls Mr Phillips, co-founder and CEO of the Bambu robo-advice group in Singapore. “I saw these kids in their 20s launching fintechs and decided that’s what I want to do.”

But with neither youth nor start-up experience on his side, he found himself in a cul-de-sac, until he met with an old friend over lunch. “He said to me: ‘Ned, what are you worried about? You were in fintech in the 90s, before these kids were born.’ I said, ‘No, that was electronic trading at a brokerage.’ He said, ‘Yes, that was the fintech of its day.’”

At this stage, he was introduced to Aki Ranin, a Finnish entrepreneur in his mid-30s, who became his business partner. Feeling inspired by new ideas and rejuvenated through memories of freewheeling youthful successes, Mr Phillips  began to call friends in the finance industry for his first fundraising round, before approaching more serious institutional bankers.

Bambu eventually raised $15m for the 2016 launch, having persuaded the fund manager Franklin Templeton and clearing house Apex to bankroll its nascent robo-trading business. Mr Phillips believes there are “much bigger cheques” still available.

In addition to robo advice, Bambu’s product offer includes a white labelling solution, an API library of “building blocks” for wealth managers and a tool for relationship managers, offering a proprietary algorithm to discover investment opportunities from “alternative” data.

Increasing demand

Currently, Bambu is on 300,000 end-users, aiming for one million before 2021 is up and a longer-term goal of up to 10 million. Mr Phillips expects the Covid crisis to trigger a whole new wave of digitally-led investors, seeking both information and a broader range of investment options.

“When we started five years ago, I would call people telling them they needed a digital wealth solution, it wasn’t an echo chamber, but we didn’t hear a lot back,” he recalls. Today the clients are approaching him instead. The big names he has signed up in Asia include HSBC, Standard Chartered and BCA in Indonesia.

The B2B wealthtech firm employs 70 staff, boasting customers in North America, Europe and the Middle East, as well as Asia, but the robo revolution is still in its early days, says Mr Phillips, recalling frequent speaking slots at fintech conferences.

“Everyone would claim that robo was already overcooked,” he says. “Yet when, I asked a typical audience of tech guys how many of them had used a robo, only two of them would put up their hands.”

This low market penetration, combined with increasing digital adoption, further fuelled Mr Phillips’ ambitions. “I used to build stock exchanges, with stars in my eyes, dreaming of an IPO,” he admits. “Today, I don’t have those dreams anymore. I want to build a wealthtech firm that will be the global leader, even though I know its’s going to be a long journey.”

Private banks

Despite having launched a successful start-up and being involved in the Asian financial services industry for the best part of 30 years, Mr Phillips has had surprisingly few conversations with regional private banks as a potential customer.

“I must not be on their radar yet,” he says with a smile. “When I sell Bambu and a pot of gold appears at the end of the rainbow, I am sure they will all show up. They are much more pragmatic, they know start-up founders are not on their level yet.”

Most of these firms in Asia deal with larger family offices, rather than smaller start-ups, he adds. But his recent success is beginning to attract attention. “We are just starting to get calls from investment and private banks,” he says. “We have not used their services previously and done all the fund raising ourselves, hustling, doing the rounds. But when we are looking for bigger tickets, we may need to speak with them.”

Managing his own family money, like many investors in Asia, Mr Phillips has built a portfolio of direct holdings in other start-ups. “I am a huge believer in entrepreneurship and capitalism,” he reveals. “I have not necessarily been wildly successful in picking the right founders, but have given money to a whole range of businesses. Some of them were great, but others could have done better. So my friends started teasing me and saying: ‘Why don’t you just do it yourself, if you think you know so much?’”