• Saxo Bank started by developing platforms for traders and individual investors
• Its next big move will be an investor platform that offers a better experience at a low cost and enables consumers to invest in themes as well as stocks and other products 
• Acting in the client’s best interest and delivering products customers actually need are the foundations of ensuring trust in financial institutions

When Saxo Bank started out 26 years ago with $70,000 in capital and one employee, it was competing on product, price and service for traders, wholesale clients and investors. The business was to be a facilitator, Saxo Bank CEO Kim Fournais explained, and the mindset was to be close to clients. That was a challenge, however, as “banks were not client-oriented and had huge spreads, so we couldn’t get a decent price.”

            Saxo quickly developed a new model to out-compete the banks. After starting out as a phone-based foreign exchange (FX) and futures service in the 1980s, it employed a programmer in the 1990s to take full advantage of the internet. “We rethought how we can we fully utilise that,” Fournais said. “In April 1998, we launched the first platform for FX. We added asset classes, products, tried to digitise more and more. What we are about (today) is a technology stack and a global set of business processes.”

            While investors and traders have different mindsets and need different tools, the same systems behind the scene power solutions for both types of clients. “We have open APIs that empower the platforms,” Fournais explained. “Hedge funds and family offices want Saxo Trade. My mother wants a simple platform. It’s the same thing behind the scenes.” 

            The service today, then, is a multi-asset platform for products including equities, FX, commodities, derivatives, futures and options. “We still have a digitisation agenda,” Fournais said, which now includes AI and big data. And technology is so important that about half of the bank’s 1,600 staff are in pure technology or development.   

            “What we’ve done,” Fournais said, is to “come to global financial markets, take the best from the best, and work with specialists” such as J.P. Morgan, Blackrock and Morgan Stanley. We are a facilitator, to democratise investment with the lowest cost and complexity, with the highest scalability.”

            A key next step will be rolling out an 'intuitive' investor platform, which it plans to launch in Denmark in December and roll out to other markets such as Singapore soon thereafter. “You can invest in themes, stocks, bonds, mutual funds, ETFs,” Fournais said.  

            One big benefit is lower costs. Investment management costs are similar in Denmark and Singapore, he noted. A recent report in Denmark showed that if individuals save 1% a year in investment costs, they can retire four years earlier or have a lot more money. “That, to us, is the value. People don’t necessarily understand a percent. Four years, they understand. It’s freedom, life value. People prefer to spend it for themselves rather than for the banks.”

            What Saxo doesn’t do is to give advice,” Fournais noted, even though he believes it has some of the best quants working for.it. What it uses those quant skills for instead is to improve service levels. “In the old days, you had to go to the branch or call someone. It’s expensive, not scalable. We’re about to change the service model. If you’re a client, you’ll see AI-generated messages just for you. We know your risk appetite, news you read, your portfolios, what you sold. It’s not a lack of data - it’s how to navigate the data. We can give relevant and timely information. You can access global markets in 25 languages and trade in any cycle. We’re trying to change the service model.”

            Another way Saxo is improving its model is through partnerships. “We have a partnership with Microsoft,” Fournais said. The firms are jointly working on cloud migration, innovation, and enabling cross-selling of CRM tools or multi-asset trading and investments solutions. “In the old days,” he said, “they wanted to sell software. There is a new way of thinking at Microsoft - clients are valuable partners. Microsoft is seeing clients deliver meaningful software solutions to their clients. It’s win-win. You can give wholesale clients access to CRM in the cloud, so the ecosystem becomes much more agile.”

            Building customer trust is key to growty. One challenge Fournais believes the financial industry now faces, however, is that it is more focused on building products and selling them. “In the good old days, my word is my bond. Now, trust is more important than ever. Trust needs to be earned.” To build that trust, he said, “you need to keep delivering over time, create win-win. Our model is focused on the client, so we create long-term win-win with better products, prices and service. We take the point of the partner, act in the client’s best interests.”

            “When you have a business model like this,” Fournais opined, “it allows cost (to go) down, more freedom for clients. You keep delivering, innovating. Being a bank is not just creating trust. It is making sure your virtues, upon which your business is built, are for honesty and integrity. When there is an error, be just in the way you deal with things. It goes back to culture, the virtues on which the company is built. Banks have the trust. They will not continue to have the trust if they cost people four years of their lives. That trust may change in favour of less-incumbent players. There are many things going forward where the established industry won’t hold onto that trust.”

            What is also essential for building that trust, Fournais said, is leadership and culture. “Without leadership and culture, trust won’t happen.” Saxo has created a one-page foundational document that shows “why we matter, for whom, where we come from, our virtues. In the communications that we do, how we act, how we deal with problems, that’s where you have to show the values. If you made an error, honesty is a virtue. You have to deal with it in a fair manner. It goes to leadership, and the culture we practice every day. It’s easy to say. The test is how you run your company. The world is changing from being something where you need to make money, to how you make money, how you build value.”

            Along with offering lower costs and better service, then, Saxo Bank believes that its culture of integrity and acting on a win-win basis are key competitive advantages that will enable it to power ahead in the coming years.