Building the future of financial services through collaboration and innovation

By Inigo San Martin, Director, IDEON Financial Solutions

A few years ago, we realized the majority of consumers in Spain were exposed to a risk they knew very little about and had no way of eliminating it. Interest rates on most loans, whether home mortgages or business lending facilities, are directly linked to Euribor. In other words, when Euribor goes up, consumers pay more for their loans and vice versa. Corporations have been managing this risk for many years, through the use of derivatives contracts entered into their banking counter-parties. However, these transactions were not accessible to consumers or small businesses. IDEON’s first solution, Rateguard, was developed to specifically address this problem. Rateguard allows banks to offer interest rate risk mitigation products to their retail and business customers in an economic way by covering the whole life cycle of these products from design to document management. This front to back and fully automated solution to create, distribute and manage financial risk hedging products, including the complete document cycle was installed in more than ten top tier financial institutions in Europe.

A truly customer centric deposit solution

Following the same idea of democratizing existing banking products to all segments CHOICE Savings & Investments was developed. This software allows banks to offer in an efficient manner the ability to deposit solutions where the customer can personalize the complete economics of their account in real time at the point of sale. Traditionally, personalization of this type has only been available to high net worth segments due to the many manual processes and restrictive costs that offering customization entails. Through the use of CHOICE software, personalization is possible for any segment in any type of deposit product, traditional or market linked.

Allowing customers to partake in the design of their savings accounts, greatly enhances their overall banking experiencing. For banks, in turn, offering personalization reduces the pressure to always offer the highest rate therefore positively impacting bank margins, avoiding rate shoppers and attracting long term relationships.

Making supply chain financial management more efficient

Another solution developed by IDEON team for financial institutions is LICUOS SCF, based on the LICUOS technology, which allows banks to offer a Supply Chain Finance solution with a multi-tier approach, including suppliers at the Tier 2, Tier 3 level and beyond. LICUOS SCF allows its partner banks to generate new business and commercial opportunities with existing and new customers whilst optimizing internal rating models for credit risk admission and monitoring. The economic sectors that are currently showing a greater interest in the LICUOS SCF solution are Automotive, Retail (both food and textile), Pharmaceutical, Energy, Tourism and Transportation.

LICUOS itself, a joint venture between IDEON and AVS, is an online B2B payment platform where businesses can compensate and pay their commercial debts. LICUOS´ patent-pending technology identifies and generates the most convenient and efficient A/R and A/P netting and payment proposals for businesses. As Lisa Pollack explained on the Financial Times Alphaville Operation sovereign debt net, that multilateral netting would allow sovereign debt cancellation among countries: “The EU countries in the study can reduce their total debt by 64% through cross cancellation of interlinked debt, taking total debt from 40.47% of GDP to 14.58% […] France can virtually eliminate its debt – reducing it to just 0.06% of GDP.”

B2C versus B2B models

But not only does IDEON develop solutions for financial institutions. Various business lines have been developed to benefit consumers directly. Through its offices in Madrid, Spain and New York City, IDEON’s ultimate objective is to improve people’s and businesses financial life and this can be achieved through both B2C and B2B models.

One example of a B2C business created by Ideon’s team is Fintonic, an online/mobile personal financial management tool that already has 100,000 users in its first year of existence. Users are able to see in a single page all their financial positions (loans, credit cards, checking accounts…) regardless of the financial institutions where these are held. Additionally, users can set up budgets and alerts to make sure that they stay on track of their spending objectives.

Tradeslide, another B2C business by IDEON, caters to a very specific population – foreign exchange traders. This tool increases the overall transparency in the FX market by categorizing traders according to a set of proprietary algorithms.

One of the main problems in the post crisis era is the lack of financing from banks for small and medium size businesses (SMB). Many have been suffering from this situation for more than three years now. SUMMA Investment Solutions, another idea generated by the IDEON team, is a non-bank financing facility for SMB´s who have outstanding invoices. SUMMA has established a fund whose investment strategy consists of acquiring directly from SMB short-term commercial invoices.

Partnering for innovation

Innovation and collaboration are two of the pillars of IDEON´s core strategy. IDEON seeks to conduct innovative ideas through collaborative projects with financial institutions, businesses and financial technology entrepreneurs. These projects are implemented through both IDEON itself and its affiliated companies, examples of which we have seen in this article.