Startup In­no­va­tion Story

BRING BACK THE TRUST TO THE FI­NAN­CIAL MAR­KET WITH THEMARKETSTRUST

Silicon Luxembourg - - CONTENTS -

HOW COULD BANK DE­CREASE THEIR IM­PAIR­MENT LOSSES AND TAKE AD­VAN­TAGE OF ARTIFICAL IN­TEL­LI­GENCE, BIG DATA AND MAR­KET ANAL­Y­SIS? WE SITTED WITH EVANGELOS PAPADOPOULOS, CO-FOUNDER OF THE LUX­EM­BOURG-BASED STARTUP THEMARKETSTRUST TO LEARN MORE ABOUT THE REAL-TIME RAT­ING SO­LU­TIONS THE TEAM IS BUILD­ING.

WHAT'S YOUR SO­LU­TION ABOUT?

Each year, bank non-per­form­ing loans rep­re­sent 4% of the to­tal vol­ume of loans. This means that in 2016 alone, the bank in­dus­try lost about $1040 bil­lion! The main cause of these in­ef­fi­cien­cies is the im­ple­men­ta­tion of in­ef­fec­tive credit risk as­sess­ment pro­cesses, in­clud­ing out­dated method­olo­gies, as well as to the ad­vent of ex­treme eco­nom­i­cal events. At Themarketstrust, we are build­ing the first real-time rat­ing agency of the world where rat­ings are pro­duced in near real-time by us­ing ad­vance mod­els that are de­signed by a team of sub­ject mat­ter ex­perts. Us­ing ar­ti­fi­cial in­tel­li­gence (AI), big data an­a­lyt­ics and mar­ket news anal­y­sis, and com­bin­ing quan­ti­ta­tive and be­hav­ioral mod­els, we com­pletely automate the quan­ti­ta­tive and qual­i­ta­tive as­sess­ment of credit risk on any class of fi­nan­cial in­stru­ments. In this way, we are ad­dress­ing the need for cost ef­fec­tive, un­bi­ased, ac­cu­rate, timely and pre­dic­tive rat­ings. In so do­ing, we are solv­ing the asym­met­ric in­for­ma­tion prob­lem as well as the is­suer & payer con­flict of in­ter­est and pro­tect in­vestors by send them early warn­ings sig­nals on fi­nan­cial mar­ket crash. Us­ing our so­lu­tion, banks could de­crease their im­pair­ment losses by at least 10%.

HOW DID YOU MAN­AGE THE PROJECT'S TIME AND BUD­GET?

The com­pany was in­cor­po­rated in May 2014 at Lux­em­bourg. The ma­jor­ity of the shares are owned by the com­pany's founders, En­ri­cos Manas­sis and Evangelos Papadopoulos. Our mar­ket size is es­ti­mated at 104 Bil­lion US dol­lars where we are tar­get­ing 5% of mar­ket share within the next 7 years. To sup­port our growth and ex­pan­sion to NY and Asia, we plan to reach out to ven­ture cap­i­tal in­vestors and le­gal en­ti­ties over the next 3 years with the ob­jec­tive to raise 15 Mil­lion US dol­lars.

WHICH TECH­NOL­OGY DID YOU TRUST WHEN BUILD­ING YOUR SO­LU­TION?

In a few words, we see Mi­crosoft as the most com­plete, in­te­grated and ma­ture set of cloud in­fra­struc­ture. From of­fice au­to­ma­tion to Ma­chine Learn­ing and IOT, all the stacks that a com­pany would need to cre­ate and op­er­ate their prod­ucts, as well as run­ning their op­er­a­tions are present in the cloud of­fer­ing of Mi­crosoft.

As well the op­er­a­tional ex­cel­lence that a com­pany needs to demon­strate, stems from the op­er­a­tional ex­cel­lence of Mi­crosoft cloud in­fra­struc­ture. Fi­nally, we see the re­gion seg­men­ta­tion of the cloud in­fra­struc­ture as fa­cil­i­tat­ing in ad­dress­ing the reg­u­la­tory con­straints of the var­i­ous ju­ris­dic­tions where we need to op­er­ate and pro­vide our ser­vices.

Con­cern­ing the de­vel­op­ment realm, we found that Visual Stu­dio suite as well as the new Ma­chine Learn­ing Stu­dio suite are very im­pres­sive and help us to stream­line our de­vel­op­ment process. Re­gard­ing the ap­pli­ca­tions land­scape: Of­fice 365, Onenote, Share­point help us to im­prove re­mark­ably our in­ter­nal col­lab­o­ra­tion as well as the Mo­bil­ity.

ANY LEARNT LESSONS YOU WANT TO SHARE?

Fund rais­ing is still a very dif­fi­cult ex­er­cise for all star­tups. There­fore, I will ad­vise to se­cure fund­ing that cov­ers 2 years of ex­penses be­fore start­ing a startup. There is also a new re­al­ity, Fin­tech is dead!

In­deed, due to the ex­ist­ing legacy in place and com­plex new reg­u­la­tion frame­work to be im­ple­mented, the fi­nan­cial in­dus­try is look­ing now only for en­ter­prise ready so­lu­tion. On the other hand, in the be­gin­ning, a startup can build at best a Min­i­mal Vi­able So­lu­tion (MVS) which will re­quire at least one or two year(s) ad­di­tional de­vel­op­ment ef­fort to reach an en­ter­prise grade readi­ness level. This is why in­vestors pre­fer now to in­vest only in com­pany that bring new tech­nol­ogy that fa­cil­i­tates the de­liv­ery of reg­u­la­tory re­quire­ments (Regtech). Last, the ac­cess to pub­lic na­tional fund­ing is still a very com­plex ex­er­cise for all star­tups. Con­cern­ing the Lux­em­bour­gish seed in­vestors, many of them find that cur­rent tax leg­is­la­tion does not en­tice and pro­tect them enough. For in­stance, Italy, Swiss, UK, France and Bel­gium seem to of­fer them a far bet­ter pro­tec­tion and fis­cal lever­age.

Re­search & In­no­va­tion Team, Vene­tia Gk­ouli, Dr Kras­simir Kostadi­nov and Prof Wim Schoutens

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