In this Founder Spotlight, we met with Rajesh Amin from 2RSQUARED for a deeper look into innovation in the Wealth and Asset Management sectors and the challenges for a SaaS company disrupting the industry.
Tell us about yourself, your background and your company?
I’m Raj, the CEO of 2RSQUARED. My background is in quant trading and portfolio management. I've run businesses at Goldman Sachs and Brevan Howard and I've been a lead portfolio manager.
The SaaS company, 2RSQUARED, was founded in 2018, enables or gives a digital pathway for asset and wealth managers to create customised products for their clients across the full spectrum of liquid asset and wealth management products, which extends beyond just portfolios of funds and direct indexing, but covers all the investment strategies that are available through ETFs and mutual funds as well.
So why did you get started with 2RSQUARED?
I experienced a need for personalisation, from individuals and institutions through the last 15 years of my career. The industry had really struggled to put that together because they're so involved in the day to day business and the technology that's typically being used is kind of legacy.
In order to actually provide this solution, you have to jump out of the corporate world and really do it as a startup so that you can have a fresh look, use new technology and really focus on that as the actual problem set that you have to solve and not get distracted by your day to day P&L requirements.
You have been running for 5 years, what are the main challenges you’ve faced?
Our challenge is very specific to our business or what we've had to develop. The technology that we built is not standard in the sense that you can bring in existing software components to build - It's actually very proprietary, very heavy, very deep tech, which doesn't really fit what most people think of as a fintech vertical.
So our challenge has been how to finance and build it out before you can prove market fit. We spent about four and a half years building, which for most investors if you have been running for four and a half years in fintech without a client, you have a problem.
Now you’re in a position to go to market, what are your challenges there?
If you are doing any B2B activity, the challenge there is penetration, getting those first clients, it’s very hard. The tech won't sell itself even if it solves an exact problem that's well recognized by the industry.
There are a lot of hurdles in terms of getting adoption, so you have to do a lot of research while you're building the product. Come up with a target list of clients that you think are high probability and then plug away with a lot of resilience and a lot of thick skin, because probably 1 in 20 will actually get moved somewhere if you're lucky.
What do you think is causing the challenges in adoption of new technologies in the Wealth and Asset Management space?
The industry is having to run simply to keep up with the regulatory requirements that have been thrown at it. So the biggest hurdle is really down to bandwidth and attention span. There isn't much room for the firms themselves to innovate because of this, but that also gives an opportunity to startups because they actually need to outsource that innovation.
Integration requirements are also a massive hurdle. I think one of the things that you have to be able to do to be successful is to minimise the amount of effort that a client needs to actually test out and try your product.
How has the Wealth Management industry changed in the past few years? Is it much different from pre-pandemic times?
I actually think that the opportunity is greater now because the boom in tech came after Covid-19. The pandemic changed the way that wealth management understood how it had to service its client, but it's a long process. So independently of what's happened with people's net wealth, the industry has taken two or three years to actually start moving in terms of the digitisation process.
Now in terms of the wallet capability, markets are not performing as well. I think that means that wealth managers have to offer a better product for the revenue that they earn because you can no longer just sit and expect a rising tide to lift all boats.
How do the industry changes reflect in a business like yours?
Most of the digitisation focus that I've seen in WealthTech comes in the client onboarding process and understanding the client's objectives. Soon everybody will have that, then how do you differentiate? It has to be in your investment product. One of the key ways of doing that is through designing something that works for the client and their specific objectives, which is where our solution comes in.
You left the corporate world 5 years ago, what is it that you love about running 2RSQUARED?
The thing that I've enjoyed the most about working in a scale-up is the variety of problems which are different every day that require you to figure out a solution in the most optimal way. I'm working with people who are very clever and you have to be able to learn new skills, new capabilities and you do a ton of things rather than just one thing.
Now, there's also the other aspect, which is to some extent controlling your own destiny. You're always serving a client and serving an investor, but you decide how you do it. A corporate environment can be more constrained, whereas you have much more flexibility in terms of a startup and the willpower to continue is up to you.
What's a valuable piece of advice you've learned through growing your business that you'd like to pass on?
I think we potentially fell into the trap of thinking we have a phenomenal technology that we knew solved many industry problems based on our experience, but certainly underestimated the hurdles with adoption.
So the advice would be, don't assume you have the perfect product or assume it fits all the problems. You have to think of the issues that will keep you from signing a contract, and think about those issues in terms of how you design your product.
For example, minimise the integration requirements and so on. But also, don’t forget to weigh in your go to market, sales and human resources requirements to be able to address those issues. Some of those problems will be technical, while others will require “people solutions”.
And finally the question we always ask: As a CEO, what keeps you up at night?
What doesn't? Who’s the competition, Who's innovating, How am I going to get the next client, How do I avoid running out of money, the usual challenges of a startup!
If you'd like to connect with Raj or the GrowthBuilders team then get in touch! We are happy to feature founders on our spotlights to share their experiences and learnings.