Prophis Technologies is First London-Based FinTech Sandbox Company

We are excited to announce that Prophis Technologies, with a risk management application for financial institutions, is the first London-based company to join FinTech Sandbox. This marks an exciting point and begins to bring the FinTech Sandbox vision of becoming a global, virtual community one step closer to reality. We popped across the pond to London last week for a chat with the Prophis team about what they do, how they do it, and how they anticipate using the resources and tools the FinTech Sandbox program provides to accelerate their development.

Prophis Technologies was Born of the Financial Crisis

Prophis Technologies was founded in 2011, and stemmed from a unique insight its founder Charles Pardue and executive Dorothee Fuhrmann had. Charles and Dorothee have both had extensive careers in finance, and following the financial crisis in 2008 began to do more risk advisory work for large financial institutions, resolution agencies and central banks.

Founder Charles Pardue taking a client call at the Prophis offices, located in the Level39 Accelerator in London’s Canary Wharf

They found many institutions either didn’t have the information they needed or couldn’t review all of the information they had to make critical decisions about financial risk and exposure in a timely manner. This left executives at financial institutions to make decisions on “gut feel” and limited information. While intuition and experience can be powerful decision-making tools, financial institutions are by nature data-driven organizations and optimal decision making requires data-driven insights about risk, exposure, and markets as well as experiential inputs. The Prophis team saw an opportunity to marry judgment developed over time with data-driven insights to build Proteus, a next generation business intelligence tool, with a focus on risk analytics.

Enabling Users to Spend Time Analyzing and Mitigating Risk, Rather Than Aggregating Data to Find It

Prophis Technologies began with the hypothesis that current database systems are not the best solution for helping financial institutions track and manage their portfolios and the associated risk. Prophis’ technology is about automating risk monitoring and notifying a human so that humans can use their intuition and insight to explore, analyze, and mitigate risks rather than sift through tremendous volumes of data just to identify it. There are emerging technologies that are much better suited to enabling rapid analysis of incredibly large data sets with a massive number of descriptive variables and dependencies.

CTO Dorothee and Team Member Rohit reviewing the graph database design for a specific financial instrument

At its core, Proteus is a product that fundamentally changes how organizations manage, organize, and analyze data using a tool called a graph database, provided by California and Sweden-based startup Neo Technologies. This type of database is the same type of concept that underlies risk analytics at leading investment banks. Effectively, a graph database structures traditional row and column datasets into separate pieces of information where the relationships between those pieces are just as important as the pieces of information themselves. For analysts who have spent years running Excel macros to cobble spreadsheets together, Proteus simplifies the collection and aggregation of data and enable building of relationships between elements of data that previously couldn’t be linked in an elegant manner. For senior managers, Proteus provides an active dashboard, unlocking the stories that the data wants to tell.

Putting it All Together

So why does this matter? Banks and financial institutions are facing more regulatory pressure and margin pressure than ever before. Instead of throwing teams of smart people at problems, institutions need to reduce expenses and improve the value they deliver. In addition, there is a growing gulf between data and information. If consumers can quickly search Google for information, or find the best product at the best price on Amazon, that same capability should be available internally to institutions. Previously when a bank making commercial loans would ask about exposure to a specific country — say Argentina — the analyst would go collect data, analyze it in Excel using the data available — perhaps the country the debtor is registered in — and provide an estimate of that exposure. With Prophis’ new tool, the analyst can see not only loans provided to Argentine companies, but also exposures other companies in that loan portfolio have to Argentina through their subsidiaries, loans they’ve made, or other business partnerships that might exist.

With this much richer connected dataset, the analyst can now fully depict the exposure of the loan portfolio in terms of both absolute exposure and secondary exposure that was previously obscured by the limitations of traditional databases. The difference between these two numbers is often tremendous, and in today’s interconnected world it will be critical in helping financial institutions better manage risk and exposure to risky assets.

Why the Sandbox

Prophis Technologies has built an amazing tool, and is currently revenue positive, so we wanted to understand why the FinTech Sandbox was a logical next step in their development. The key opportunities the Sandbox could provide include:

  1. Relationships with Data Providers: Being “vetted” by the Sandbox provides a degree of validation, and helps small startups build relationships with data providers that are more accustomed to working with large institutions. In their first week with the Sandbox, Prophis has already met with Thomson Reuters, a leading data provider, which is something that would have taken months had they tried independently.
  2. Standardized Contracts: FinTech Sandbox provides standard contracts between startups and the current set of nine data partners, which are very transparent and fair to both parties. Using a standard contract is very helpful for small firms like Prophis who don’t have an in-house legal team.
  3. Cost: For a startup, reducing costs makes a big difference. Data is a big recurring expense — not that Prophis feels providers are overcharging in any way for what they’re providing — but the company won’t be an end-user of the data, so it doesn’t make sense to pay for data services. The value of what Prophis is doing — connecting lots of different sources of data — is much easier to demonstrate to potential clients when they can use actual market data.
  4. Access to New Opportunities: Prophis team feels London is incredibly well-positioned to lead the FinTech revolution with accelerators, access to finance, access to talent, and other great resources. However, startups in London still struggle to sign clients to pilot projects and contracts. Ultimately, the US is the largest market for financial services, and being able to access this market will be a game-changer for Prophis. Leveraging the close-knit and collaborative ecosystem in Boston, and the great advisory team at FinTech Sandbox, will help Prophis expand in the US.

We hope you’ll join us in welcoming the talented Prophis Team to FinTech Sandbox!

Written by Meltem Demirors for FinTech Sandbox

About FinTech Sandbox

The FinTech Sandbox is a Boston-based nonprofit that helps FinTech startups around the world build great products and applications. We appreciate that the cost and access to data are major challenges for FinTech startups, and we brought together some of the world’s largest data providers and financial institutions to solve this problem. Learn more at http://www.fintechsandbox.org

About Prophis Technologies

Prophis is a small, focused team of software developers and risk advisors. We seek to create software that takes advantage of the latest developments in data management and manipulation, visualisation and analytics to create lightweight solutions that can be implemented without a material burden on the enterprise. We also design with an anticipation of change in regulatory environments, financial products and analytical techniques, meaning that we can keep up with new developments without the need for re-tooling. Learn more at http://www.prophis.com/