Based on the revolutionary technology of blockchain, we are looking into a new evolution of the investment and capital markets industry. Asset digitization is a new trend that has been emerging in the blockchain world, aiming to remove inefficiencies in the financial services market.
There has been a lack of innovation and digitization in the capital market systems, and we sat down with Florian Matthaeus Spiegl, the Chief Operating Officer of FinFabrik in Hong Kong, to explore his journey from the traditional capital markets industry to the new modern digital space. FinFabrik, a start-up focused on bridging the gap between the traditional financial markets and the digitization of assets, has come a long way, helping institutions to digitize illiquid and alternative assets.
FinFabrik: From its establishment to its third anniversary
As FinFabrik is reaching its third year since its establishment, we wanted to understand more about the journey towards the creation of the fintech company and the ideas behind it. FinFabrik is focusing on developing technology and on reshaping the traditional capital markets industry.
“In the start-up world, we started out with the initial motivation to change how capital markets work on the technology side,” said Spiegl.
Spiegl, along with the co-founders of FinFabrik, had vast experiences working in the traditional financial markets and capital markets sector, and they thought that “there is a need for better systems, and that was really the initial impetus of starting FinFabrik.”
When asked about the personal motivation behind the company, Spiegl said, “From a personal level, a major motivation was to be in a more dynamic, interesting environment and to work on exciting things. For us, it was a very important motivator. Of course, it was also seeing a huge opportunity because wherever there’s a problem, there’s also the opportunity to fix it.”
Filling the gap in capital markets
There has been a lack of innovation in capital markets systems, in contrast to other sectors. “This is why we’re focused on asset management and private markets. In other areas of financial services, digitization has been a hygiene factor for some time. In asset management, that’s not yet the case. I looked at that and said, I’m going to fill that gap. I’m going to go after that opportunity. That was a major driver behind it,” said Spiegl.
There were a lot of unsuccessful milestones where goals were not met, as mentioned in co-founder, Alex Medana’s posts. Spiegl added, “We tried hard to reach our goals, but didn’t always make it. It’s part of what it is at the core of being an entrepreneur, never giving up and trying again, and we speak very openly about it.”
The platform CrossPool is a significant milestone that has been achieved recently, as it has become market-ready. The first assets on the platform have been issued, subscribed by primary investors, and traded in secondary market transactions. “We’re now entering a phase where the market is interested in how the digitization of workflows may change their business. More institutions dealing in private markets are actively reaching out to explore digitizing some of their processes or specific assets, and trading operations. These are important milestones that we’re hitting now, as we’re turning three as a company,” explained Spiegl.
Start-ups could use more funding
FinFabrik was selected to be part of the incubation program at Cyberport in Hong Kong. Spiegl stated, “For us, it was more about the brand effect, that was certainly there, the network that we could build and the support from the broader community.” Spiegl believes that Cyberport has provided great exposure for FinFabrik, with emphasis on the individuals that helped to connect the company with investors, potential clients, which was necessary for the firm’s early days.
FinFabrik was also recently accepted into the Enterprise Support Scheme (ESS), which is a major funding initiative under the Innovation and Technology Fund in Hong Kong, designed to invest in research and development for technology start-ups. Spiegl explained that the ESS is one of the most prestigious applied research programs in Hong Kong, “so we’re proud actually to have been accepted into it.” FinFabrik has received a research grant after a diligent process with the evaluation commission deciding that it was a potentially value-adding product for innovation in Hong Kong as a financial services hub.
Spiegl further commented about the funding that goes into these programs for start-ups. He stated, “it is certainly supportive of innovation. One recommendation for those programs – just put more money to work to help entrepreneurs take the risk to truly innovate.”
The regulator is your friend
Spiegl sits on the FinTech advisory board of the Hong Kong Securities and Futures Commission (SFC). The SFC is the regulatory body in Hong Kong, overseeing the regulation of securities and futures markets in Hong Kong.
“I’m honoured to be called on the (FinTech) advisory board representing a start-up, alongside colleagues from major corporate innovators like WeBank and Ping An. One of my aims for serving on the board is to bring a perspective on the immense opportunities in the digitization of assets and the market infrastructure for Hong Kong as a financial services hub,” said Spiegl.
He commented, “A lot of people would be surprised how well informed the SFC is and especially the teams in SFC who are looking into these kinds of topics. There is certainly progressive thinking and the willingness to explore.” In an established jurisdiction such as Hong Kong, regulations will take time to become solid as the regulatory body must understand and observe thoroughly and can only gradually adjust the rules. In his view, the SFC is “pro-business,” and he further added, “the regulator is your friend.” The SFC has been supporting businesses to build proper organizational structure, processes, and have rules in place that protect not just the clients but also the business.
Spiegl further commented on the situation in digital assets, “in the long run, you will not win in a market where your competitor is regulated, but you are not. I think the SFC communicated quite clearly around their view on digital assets, essentially saying: ‘if it looks like a security, it’s a security. There are rules for securities. Stick to the rules’. The most recent example is the release of a circular detailing of how asset managers should handle digital assets. Clarifications like this are important guidance for businesses looking into digital assets and are useful for establishing a robust set up in this new space.”
This article was originally published in Blockchain.News.