CloudMargin positions for growth in US and Asia

London-based fintech CloudMargin is pursuing a program of geographical expansion, product development and recruitment after closing a $15 million (£11.8 million) funding round supported by Deutsche Boerse and other investors.

“Our platform is on the verge of becoming a systemically important piece of market infrastructure,” chief executive Stuart Connolly told Global Investor. “The meeting of margin calls is such a core part of our clients’ business, and our platform needs to remain stable, secure and not miss a beat.”

CloudMargin plans to invest 70% of the new funds in R&D and scalability, with the remainder going to client support.  In terms of product development and enhancement, the fintech will pursue an ambitious product delivery roadmap with a focus on client-usable functionality, Connolly said.

“There are probably 20 different platform features and updates that are going to be developed over the next six months. There are a lot of new enhancements to our user interface, so that’s about an improved user experience, and there is also richness of functionality that allows clients to enhance their operational process to become way more efficient.”

The three primary investors in the capital raise are Deutsche Boerse and CloudMargin clients Deutsche Bank and Citi. According to Connolly, the investors will now have an “important voice” on CloudMargin’s board as firms place a strategic priority on adopting Software-as-a-Service based cloud technologies amid the operational challenges of Covid-19 volatility.

A portion of the capital will support expansion in the US and Asia, where the cloud-based collateral management solution provider already has a presence.

“Space-wise, we will look for some small office facility in Singapore, and we will add to the headcount,” Connolly said, estimating that CloudMargin will add four new hires in Asia and six in the US.

“We needed to make the investment in Asia to deal with the volume of demand we have," Connolly added. "The investment is really to our client service support model, so increasing the size and the scalability we can bring to our Asia operation.

“To some extent we had underestimated Asia’s desire to be an early mover in the shift to new technology. It talks volumes for the strength of the IHS Markit franchise in Asia. They are the sales channel that we operate through in the region, and their franchise is strong and deep.”

Tilman Fechter, head of banking, funding and financing at Deutsche Boerse’s Clearstream, CloudMargin’s post-trading services provider, described CloudMargin as a perfect investment opportunity for the group.

“Its innovative and agile technology brings crucial momentum to all players in the collateral management industry, from the largest investment banks to small and medium-sized buy-side institutions,” he said.

“Joining forces between established trusted players and a flexible start-up like CloudMargin is essential to future-proof the business for all market participants.”

In April, CloudMargin appointed David White as chief commercial officer to implement its expansion plans in the US, Europe and Asia Pacific region. Armando Hernandez joined in January as executive director, head of North America, to lead efforts to grow CloudMargin's footprint in the US.