When regulation ruined banking I quit my MD job and ended up in fintech
By 2013 Tanmai Sharma seemed to have a well-rounded banking resume. He’d worked in sales, structuring and trading; he’d worked globally; and he’d made MD at Deutsche Bank. But there was a problem: with investment banks increasingly burdened by regulation his job had rapidly gone from exciting to boring.
Drastic action was called for – Sharma quit the sector with no clear career goal in mind. Just a few months later, however, he’d hit on an idea that would lead him to start up his own fintech firm in Singapore.
Sharma says his entry into banking back in 1993 was equally as unplanned as his exit. After graduating from the Indian Institute of Management, he left his first job, at computer giant IBM, after just three months. “I suppose IBM really oversold the role, so I joined the Indian management training programme at BNP – as it was called then – and ended up on the trading floor doing FX sales. But it wasn’t a well thought through move, I had applied to zero banks on campus. I took it because I just wanted a half decent job.”
After a stint in FX sales at ANZ Sharma moved to Deutsche Bank in 1997. “The Indian market was liberalising and Deutsche was ahead of the field. I was working in derivatives, mainly currency swaps, but then in 2000 the Reserve Bank of India, without much explanation, practically shot down the market. I thought if I stay here I’ll always be at risk from bureaucratic decisions.”
Sharma transferred to Singapore and then to senior structuring roles at Deutsche in New York and Hong Kong. “By 2007 I’d already got experience in sales and cross asset class structuring so I wanted to complete the circle and give trading a go. A role opened up trading hybrids and credit derivatives and for a while I had a blast.”
Banking becomes boring
So why call time on trading? “By 2013 my sector was becoming overregulated and I could also see that the bank would need to restructure itself in the near future, as it’s recently now done. What I signed up for at the start of my career had become vastly less interesting,” explains Sharma.
He adds that in wake of the global financial crisis banks became “increasingly inward looking”. “For example, a client gave us a massive and completely above-board trade to carry out which in the past would have taken us five minutes to decide that we could do it. Now it went to various committees and we took three months before eventually deciding. Trading just wasn’t as fun as it used to be.”
Sharma took up Deutsche’s version on an 'honourable discharge' – when your age plus tenure at the bank amount to 60 years (and you’ve been an MD for sometime) you can leave with few strings attached and still keep your accumulated stock. “When I was 45 I also had 15 years’ service, so I ticked the boxes. But I left without a real plan, aiming to play a bit of golf and trade my own cash.”
But he didn’t stay on the golf course for long. “Throughout my banking career the constant was that I loved solving complex problems where I could find a monetisable solution. I looked at how private banks were giving information to clients and I thought it was far too complicated and inefficient, a simpler solution was needed. If I could solve this, then clients would definitely pay. I’d never worked in private banking, which I think helped me take a fresh look at the problem.”
Sharma’s Singapore-based start-up Mesitis has now developed products which convert the raw investment statements of wealthy private banking clients into an electronic format. “The average high net worth person deals with five to 15 financial institutions and outside the US most of their statements are sent in the ancient PDF format – giving them 100 to 300 static pages of paper or PDFs a month to ignore or deal with by hiring staff or a wealth manage,” he says.
“We simplify this deluge of data from different banks, by extracting information and insights from raw data, showing for example why and how your net worth changed over any period, or why and how your performance differs from any benchmark. We are primarily a decision-support system for our clients, focused on letting them see the wood from the trees. While you can drill deep down into the data, most people like it simple. One client has 21 accounts and wants to see just five key figures on our system. We have noticed that while advisors may want pyrotechnics online and request most complicated features, their clients often just want that really simple but insightful one page of data.”
Now that Sharma has 65 customers signed up (others are in the pipeline) and has sold the product to a few banks, he needs to add to his 30-strong workforce and hire another 20 to 30 new staff in the next six months. “We need operations people with banking experience – they aren’t that hard to find in Singapore because banks have been offshoring these jobs. We also need developers but so does everyone else – they’re hard to find locally – so we’re basing almost all of these roles outside of Singapore.”
Advice for starting up in fintech
Sharma says the ease of doing business in Singapore makes it an ideal location for fintech start-ups like his. “But I’d never advise anyone to launch in fintech with the aim of getting bought out. Your business plan shouldn’t be about finding a VC, it should be about how to monetise your business by generating cashflows. Are there enough inefficiencies in financial services to potentially feed all the start-ups? Yes. But not all these companies will be innovative enough to actually succeed.”
“Things like global custody, big ticket capital market transactions and M&A banks will always do well, but fintech can do better when it comes to providing information – like my company does – and also in lower-value transactions like payment systems where banks aren’t efficient enough. Overall I think we’ll see fairly peaceful co-existence between banks and fintech in the future, with some stress at the margins. It’s companies like Visa, MasterCard, Western Union and SWIFT I’d be more worried about.”