What is really great about fintech, is that it is here to solve problems. That is the ultimate premise. Take broken things in financial services, and turn them into something much better. But can investor risk assessment be fun? That seems like a tall order. I do not know if you have ever done a mandatory investor profile assessment, but it’s not what you would describe as “fun”. However, as per the “mandatory” bit, it is a requirement. Banks and investment managers would typically use a dull questionnaire. Can you change that and make it better? That’s when Neuroprofiler comes in. Where behavioural finance meets fintech. We have asked a few questions to Julien Revelle, CTO and Co-founder of the fintech startup.
Tell us more about Neuroprofiler. What is your elevator pitch?
In short, Neuroprofiler assesses investor profiles. That is thanks to behavioural finance and gamification in line with the latest financial regulations. The European Union’s MIFID II on one hand, which is the revision of the Markets In Financial Instruments Directive. And on the other hand, the Swiss Financial Market Supervisory Authority (FINMA) LSFin, also known as “Loi sur les Services Financiers“. Our modular approach allows us to cover several key touch points along the customer journey of an investor (risk profile, ESG preferences, financial education, etc.). That is in order to create an engaging user experience for a wide spectrum of users, from Millennials to senior investors. We have a global outreach with clients across the large landscape of the financial services industry. From private and retail banks to asset managers, insurance companies, and fintech.
What is your background? Why did you start Neuroprofiler?
I studied statistics and machine learning at the French National School of Statistics (ENSAE) and mathematics at the University of Cambridge. After that, I started working in family offices and investment funds. Being passionate about data science and finance, I wanted to build something related to these domains. I then met Tiphaine Saltini, an expert in Behavioural Finance. She was working in a private bank and the combination of our skills enabled us to create Neuroprofiler.
Now, let’s get in the weeds of it. Do you think that MIFID II is still fit for purpose in a post-Covid world? Will we see MIFID III soon?
Regarding client suitability assessment, MIFID II is going in the right direction. In a world so diverse and volatile, it is crucial that investors’ preferences are duly captured and replicated in their investment portfolio.
The ESMA published guidelines in 2018 about the use of behavioural finance to better assess the investment preferences based on a scientific methodology.
Moreover, in March 2021, MIFID II is evolving to take into account the ever-growing need and demand for ESG or sustainable investments. It is now incorporating an ESG appetite score during the client suitability assessment. We strongly believe in the future of ESG investments, and we think this ESG score is a first important step.
Can you tell us more about your new ESG profiling product? What’s your view on ESG’s place in the investment decisions nowadays?
Our ESGprofiler solution uses behavioural finance and gamification to accurately assess the Environmental, Social, and Corporate Governance (ESG) preferences of an investor in order to recommend suitable financial products. We analyse 3 dimensions of ESG preferences: the general appetite for ESG, the impacts (thematics) the investor wants to have in his investment (e.g. preservation of natural resources and the promotion of diversity), and finally the sectors that the investor wishes to exclude from his portfolio (e.g. tobacco and weapon industries).
Our ESGprofiler can also be used as a survey tool to help the asset manager build data-driven ESG strategies.
Since the Covid-19 crisis, the appetence for ESG products has boomed thanks to a very good financial performance. This is for us a long-term tendency, as millennials are even more keen on impact investing than their parents.
Any plans for the future or product roadmap you want people to know about?
While we bring continuous improvements to our existing line of products, we are launching two new products.
Firstly, a behavioural prediction module to help financial advisors better understand their customer investment behaviours and be able to take a proactive approach. For example, if we have detected that a particular investor is likely to overreact to losses, we can warn the advisor that this client may need a phone call if the financial markets suffer a large drop.
Secondly, a cross-selling module for insurance and credit products. Thanks to our behavioural finance algorithm, we collect cognitive data that can help us recommend suitable insurance and credit products according to their investment profile.