For us in Finalis, we are quite familiar with our CEO and co-founder Fed Baradallo’s ideas and facts, of vision and strategy—as many of us routinely hear from him in the course of a given day's work; and, as a company, we gather (online) for weekly Product/CEO calls, in which Fed leads a discussion and Q&A session on topics covering the length, breadth, and depth of the Finalis experience. And we know well of Fed’s uncanny way of taking complex ideas and expressing them in a way that even non-experts immediately grasp, internalize, and understand. Here’s this example from mid-February, early in an interview Fed had with IBS Intelligence’s Gaia Lamperti:
“And so I left the law firm in August of 2017 and embarked on this journey to digitally transform the private market deal execution process. That ultimately got us to Finalis, which is the first-of-its-kind fully cloud-based investment banking back-office service as a platform—the value proposition including a regulatory affiliation solution that’s white-labeled, as well as a fractional compliance team support… and we wrap that whole experience with software, which serves as the basis for everything we are planning to do next.”
In that interview and others, including a recent one with Nasdaq TradeTalks, the world outside Finalis is beginning to see and hear the emergence of an industry thought-leader redefining how things work in the securities brokerage and investment banking space.
The strategic thinking and outright moxie which has propelled Finalis, the startup, into the heady realm of paradigm-shifter and industry disruptor is becoming clear. Through these media exposures over the past couple of months, Fed's voice and vision has rang out, and eagle-eyed industry observers will surely have taken notice. In her interview, Lamperti asked about IB industry trends, to which Fed responded:
“The first point I would make is that many of the trends we are observing take place in the investment banking sector are not just limited to it. That is to say, the pandemic has been an exogenous shock that has accelerated trends that were already underway, impacting every industry vertical. And what we’re seeing in investment banking is just one manifestation of that. A clear trend is the challenge many of the large bulge-bracket banks are facing, in recruiting and retaining top talent; a critical gap has started to emerge, forcing record-high bonuses and payout structures at these banks.”
For anyone explaining how innovation in the dusty domain of regulatory compliance works as an opening act in this fintech startup’s game plan would be a daunting challenge. It is, on the face of it, an audacious attempt to rewrite the rules in an unglamorous—but vitally necessary—corner of the investment banking space. Fed conveys all of that with consummate ease. Perhaps it's because he had given it deep and incisive thought in the three years before launching Finalis in April of 2020—not incidentally, coincident with a horrendous global health crisis that, we can now see, is changing the course of contemporary history, in a black-swan sort of way.
And what, exactly, is at the heart of this rule-rewriting? Nothing less than the democratizing of the investment banking industry, according to Fed. His vision posits this happening in the two fundamental ways that Finalis proposes: via technology, in the cloud-enabled, back-office regulatory compliance “plumbing”; and via the establishment of a platform or exchange, one empowering a whole new swath of middle-market independent investment bankers, giving them the leverage and opportunities once the privileged domain of a bulge-bracket investment banker. And the explanatory structural context? This key insight of Fed’s, on generational change:
“One of the trends that we at Finalis are playing into is the increased desire for investment bankers—especially those in the tech-savvy, millennial generation—to be independent and to work on the basis of their own trust and industry credibility. What we unlock at Finalis is being able to give these investment bankers the kind of leverage value that they might have benefited from if they had been at Goldman Sachs or JP Morgan—but doing it in a fully-virtualized and cloud-based environment where we’re able to deliver very competitive commission splits across the board.”
Fed has articulated all this and more—to our team in Finalis, and to our clients and affiliates—to a degree astonishing in its scope and originality, underscoring the fact that the vision is extraordinarily ambitious, to begin with. And it’s also rather startling to realize that this is coming from a largely invisible niche of the investment banking world, albeit one that undergirds all successful deals: regulatory compliance. Paradigm-shifting has been the domain of visionaries whose outsize, Promethean assertions are largely ignored—until their revolutionary notions morph into practical breakthroughs that, seemingly overnight, become normative, or the accepted way of seeing and doing things.
This has marked the kind of thrilling, edgy conversation within Finalis over the past two years since its launch as a startup in April of 2020—from the foundation of one visionary ex-deal lawyer’s thinking and intellectual journey over a span of several years prior. It is one that is now spilling beyond the company’s boundaries, and into the wider conversational streams of the investment banking industry. Lamperti’s last question had to do with what we can expect for the investment banking sector in the coming year, to which Fed replied:
“I think we’re on the cusp of a wave of exciting innovation in investment banking. And clearly, we in Finalis believe we’re part of that story; but the wider demographic trends are going to drive it as well, simply because investment banks, especially at the bulge-bracket level, are struggling to find and retain quality talent. They’re under an immense amount of pressure to identify opportunities, not just for process efficiencies—which are important—but also for automating and streamlining the creation of the investment banking products that in-house analysts and associates were historically tasked to complete."
The delivery of investment banking products are increasingly in the hands of independent bankers, many of whom have bought into the Finalis founder’s vision and are now the company’s affiliates. If Fed’s lucidly-articulated strategic thinking is on the right track—and we at Finalis surely believe it is—those in the mainstream of investment banking will soon have to sit up and take notice, as a new generation of dealmakers outside the orthodox confines of the industry begin shifting the very ground under their feet, reshaping this particular landscape.
Stay tuned. There is going to be much more to this unfolding story, conveyed in the illuminating words and voice of an emerging thought-leader in the industry.