Adam French started out trading derivatives at Goldman Sachs in the summer of 2007. During the course of his first year, in the run up to Lehman Brothers’ collapse and the subsequent crisis, he was at the forefront of some of the most volatile markets in recent memory.
“Every day, there was a new, huge challenge. It felt like the world was going to end from week to week – it was some education,” he says. “By 2014, when I’d transitioned across to commodities, there was zero volatility. It was more stable, but I was starting to get a bit bored.”
Seven years into his trading career, having made it to executive director at Goldman Sachs at 28, French decided to move on.
The plan was to get into fintech. Along with several other colleagues from Goldman, French started an online wealth manager - Scalable Capital.
Florian Prucker, a VP, Patrick Pöschl, an equity derivatives trader, and Erik Podzuweit, a German banker, all quit Goldman to co-found Scalable Capital two years ago. Since then, they've hired Simon Miller, who was formerly head of base metals trading at Barclays to lead business development and Peter Gaubatz, a former global markets salesman at BNP Paribas.
“Fintech is changing. You don’t just need technical expertise, you need an understanding of the regulatory environment. Our time at Goldman taught us that, but large financial services organisations just don’t innovate fast enough,” says French. “You also need capital and support for the idea. Having Goldman Sachs on your CV certainly opens a lot of doors.”
Scalable Capital now has 10 people in London, largely front office financial services professionals. There are a further 20 people in Munich focused on technology. While London likes to paint itself as the fintech capital of the world, talent is easier to find and cheaper in Germany, says French.
“We always planned to launch in Germany to gain access to the European market, but London is the most expensive city out there for tech talent,” says French. “Munich is still a start-up location and has high quality technology talent for a relatively low price.”
Scalable Capital automatically reallocates the weighting of particular asset classes within a client portfolio depending on their stated risk appetites. As markets change, certain asset classes become more or less risky, but most online wealth managers keep weightings constant, says French. This is where the intelligent technology comes in at Scalable Capital.
Traders moving into fintech is now such a common phenomenon that it rarely raises eyebrows. But French says that trading doesn’t equip you with the skills to manage a fintech start up and the learning curve is steep.
“Obviously it was a big risk leaving a stable, high-paying job, but over the past two years I’ve had to learn how to manage a business, how to develop a product and – most challengingly – how to attract talent. We have a big network of investment banking professionals, but it’s still incredibly hard to recruit,” he says.
Photo: Rawpixel Ltd/iStock/Thinkstock