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NewTech Friday: Kidbrooke – reducing workload of wealth managers and boosting customer engagement 23 July 2021

Fredrik Davéus is the co-founder and CEO of Kidbrooke. He spoke with Efma about how his company pivoted from consulting to tech and discovered its true mission in the process. 
What led to the creation of Kidbrooke?

Kidbrooke was founded in 2011 as a consulting company. I was moving back home to Sweden after almost seven years of living and working in the financial industry in London and had been offered a contracting role within a Solvency II project at one of the large Swedish insurance companies.

Shortly thereafter Edvard Sjögren, once a fellow student at the Royal Institute of Technology, joined and given the high demand for consulting services within financial risk and quantitative finance in general, we decided to try to grow the company.

Fast forward to late 2018 and the company had taken on two additional partners, Erik Eriksson and Lars Larsson, and grown to about 15 people and was on its way to an annual turnover of about $2m. At this point, a classic valley of death, where the company was too small to bear proper overhead in terms of sales and marketing but too large to easily staff all consultants using the personal networks of the founders, a few dark clouds started gathering on the horizon.

The outsized demand for risk and compliance consulting services was coming down to more normal levels since many of the big regulatory initiatives from the EU were being bedded down after decades-long implementation phases. Kidbrooke had also grown a lot during the previous 12 months or so but had not managed to build out the sales and marketing bandwidth to match the increased inventory.

At the same time, the focus of the bulk of the projects Kidbrooke was involved in started to switch from purely internal matters of the customers, typically large banks and insurance companies, such as asset liability management or capital requirements, to the digitalization of end-customer journeys related to financial advice or financial planning.

These factors led to the decision to pivot the company business model from selling advice by the hour to building and selling software as a service. The decision was also inspired by the fact that Kidbrooke consultants often had ended up designing and building large applications together with the customers’ internal software development teams which they then struggled to support and maintain once the initial projects had been completed. There was a general feeling both with us and the customers that perhaps it would have been better if we would have built the software internally and then sold it to the customer as more of a standardized application.

The decision to pivot was also inspired by what later was expressed more clearly in the company vision, namely a feeling that there is a general deficit or lack of supply of high quality, transparent and truly useful financial decision-support. Even more so for the broader segments of the market that is not in the HNWI or mass affluent segments.

Could you present Kidbrooke’s offer?

OutRank allows financial institutions to create engaging, seamless and consistent customer and advisor journeys in a fraction of the time and cost that it would take to develop them from scratch. It provides simulation-based probabilistic cash flow modelling capabilities that significantly reduce the workload of wealth/relationship managers and enhances customer engagement in both hybrid and purely digital channels within the wealth management businesses.

Depending on the underlying business model, OutRank technology can act as a core calculation engine for digital self-service journeys, or as an enhanced financial decision-support tool for human advisors. In the case of self-service providers, OutRank can entirely automate production of the financial advice or guidance. In case of hybrid and human-driven models, OutRank can help to make customer meetings more engaging, visually intuitive and informative.

OutRank consists of three modules. The economic scenario generator utilizes discrete time series stochastic models to generate realistic economic scenarios. The balance sheet simulator supports bringing even the most sophisticated financial profiles into the future, supporting a holistic “big picture” view of the customers’ finances, including mortgage selection, pension planning, short-to-medium term investments and other life situation-based use cases. For instance, customers will get advice on their pension planning while also considering their mortgage situation and overall financial health in the same context. Finally, if required within self-service journeys, the financial decision maker allows for selection of the portfolios that suit the needs, and the financial and risk profiles of the end-customer, in compliance with regulations such as MiFID II or IDD.

The solution can consistently generate realistic probability-driven economic scenarios and apply these scenarios to evaluate any given balance sheet, transaction by transaction, into the future. The cloud-native OutRank is built for performance, scales very well across different workloads and is highly customizable. Since input data is always a potential challenge, there is built-in support for predicting or projecting inputs such as an employee’s most likely salary curve, or existing employee state and occupational pension capital. Furthermore, to cater to wealth managers’ demands regarding compliance, OutRank can power both regulated advice and guidance capabilities depending on the regulatory frameworks of the countries of our customers’ choice.

OutRank’s holistic capabilities provide high-quality financial decision support for those who historically have been excluded from high-quality wealth management services, the mass affluent customers.

What's coming next for Kidbrooke?

Firmly grounded in our vision of a world where everyone can make educated financial decisions, we continue to work hard to get our software out to as many as possible to try and really make a difference in the financial lives of people. Of course, we plan to continuously develop OutRank to capture more tax regimes as we expand our operations to more countries and to support more financial planning use cases. We are also currently working on adding climate change scenarios to our economic scenario generator to help our customers to plan the future of their clients depending on various combinations of the severity of temperature increase and the efficiency of mitigation policies. 
 
At the moment, most of our focus is in Sweden and the UK but we plan to expand our operations further in Europe and have already begun to build relationships in Hong Kong and Singapore. We are always open for collaboration and are happy to discuss complementing your value chain with advanced financial analytics. Currently, we have partnered with Microsoft, Axians, Refinitiv, additiv and Tieto and are also in the process of discussing cooperation with a few more vendors in the WealthTech space.