Swiss fintech company Avaloq eyes Asia, global expansion

Francisco Fernandez, founder and group chief executive of Zurich-based Avaloq, says the company has global expansion plans and hopes for a stock market listing, possibly in Hong Kong

PUBLISHED : Sunday, 22 October, 2017, 5:03pm
UPDATED : Sunday, 22 October, 2017, 11:16pm

Zurich-based technology company Avaloq, which provides cloud-based solutions for more than 150 international banks worldwide, plans to expand further in Hong Kong, mainland China and the US in coming years before seeking a stock market listing, according to its founder and group chief executive Francisco Fernandez.

The company’s clients include HSBC, Barclays, Deutsche Bank, DBS and financial institutions including Citic Bank and Agricultural Bank of China.

“We plan to have an initial public offering in three to five years. Before that, we would like to expand our footprint to mainland China and the US, which are two very important markets,” Fernandez told the South China Morning Post in an interview at his company’s headquarter in Zurich.

He did not confirm if Hong Kong would be its listing destination but said the city is an important market in Asia.

In Asia, Avaloq has 30 banking clients, including 14 in Hong Kong, and two in Australia.

“We take Singapore and Hong Kong as hubs to handle the regional business in Asia where we want to expand further,” he said.

Fernandez’s parents were Spanish but his family immigrated to Switzerland when he was a child. After graduated with a master’s degree in information technology from the Swiss Federal Institute of Technology in Zurich, he joined a bank in the 1980s which inspired him to set up Avaloq in 1991.

“When I worked at the bank, I had the impression that the banks need help. Banks invested in their technology system in the 1940s, and many technologies have become outdated and very slow over the years” he said.

He set up Avaloq initially with four others to write software to enable banks to do their transactions faster and cheaper.

Fernandez secured Switzerland’s central bank, the Swiss National Bank, as one of the company’s first clients.

“The central bank also needs good software for its operations. I knew if the central bank of Switzerland is willing to use our products, other banks might follow,” he said.

As expected, other banking clients joined quickly. Other financial institutions began outsourcing to his company after the 2008 financial crisis as they needed to cut cost and meet new regulatory requirements.

The start-up has now expanded to more than 2,000 staff worldwide. It reported a pre-tax profit of 36.3 million Swiss francs (US$37.11 million) in the first six months of this year, up 257 per cent more from the same period in 2016.

Fernandez is positive about the outlook.

“A bank does not like to outsource back office operations to another bank because they are competitors. But Avaloq is not a bank. This is why these banks are willing to work with our platform,” he said.

“Banks are facing more regulatory and cost pressure nowadays. Customers are also more demanding, they expect quick services and want to use their mobile phone to do all bank transactions,” he said. “Avaloq helps the banks to provide reliable and fast services to the customers.”