I’m delighted to bring you another of our profile pieces here on FinTech Profile. We have a unique voice recognition technology company, Fonetic, that is being used on trading floors at a number of the world’s most high-profile financial services organisations. Answering our questions is CEO, Juan Manuel Soto.
Our questions are in bold.
Let’s get started — over to Juan.
1. Who are you and what’s your background?
Juan Manuel Soto. I got into the FinTech sector though my engineering background – more specifically I am an Industrial Engineer of ETSII Bilbao (Bilbao School of Industrial Engineers), a Master of Science in “Robotics and Advanced Manufacturing Technologies” at the Cranfield Institute of Technology (UK) and MBA at INSIDE – Universidad de Deusto. My main interest and area of expertise is within the speech analytics space but from a business perspective, I have a broad experience in general and operational management and have held senior management positions for companies such as Robotiker, KEON (IBV Corporation), and InfoSpeech.
Building on my knowledge and experience of contact centre operations, I founded InfoSpeech, a company specializing in voice portal and IVR solutions in 1999. It was in 2006 that I launched Fonetic, a company with a solution specifically developed for the complex environment of the trading floors. This soon gained traction across other sectors and very quickly attracted the capital markets divisions of BBVA and Santander, globally, as the first two customers in the Finance Sector. In 2013 the International Division of Fonetic was launched, headed up by Simon Richards, CEO of Fonetic USA. Joined by Karen Winter, Sales and Marketing Director of EMEA, the division’s objective is to focus on introducing the highly sophisticated specifically developed analytics solution for trading floors in the finance sector to the US market.
2. What is your job title and what are your general responsibilities?
As CEO, I am responsible for leading the development and execution of Fonetic’s long term strategy with a view to creating shareholder value. The role also means that that I am ultimately responsible for all day-to-day management decisions and for implementing the company’s long and short term plans. I act as a direct liaison between the Board and management of the Company and communicate to the Board on behalf of the management. I also communicate on behalf of the Company to shareholders, employees, the authorities and other stakeholders.
3. Can you give us an overview of your business?
BUSINESS: Fonetic is headquartered in Madrid, and has also launched offices in New York, London and is fast growing in Latin America with plans to open a site in Asia Pac in 2015. Fonetic works with its many Enterprise level customers directly and via its growing strategic specialist partner community.
SOLUTION / PRODUCTS / SERVICES: Fonetic provides solutions for Customer Service Centers across many industries and a Compliance solution for trading floors in Financial Institutions. The Customer Service solutions encompass Human IVR (Interactive Voice Response) and Business Analytics. For compliance and risk officers, Fonetic’s solution helps them to understand what is happening on their trading floors both in their country and around the world.
Processing millions of hours of voice recordings and text data, the Fonetic solution not only provides incredible insight and peace of mind, but ensures that the banks can do a number of things that are impossible without technology.
These include full trade analysis, single and multiple trade reconstruction, and proactive fraud prevention. The integration of biometrics into the solution also enables banks to accurately cite traders and counterparties in conversations. The benefits are pretty obvious – not least that banks can now really understand their levels of exposure to risk by looking at the facts, but also that they are compliant with new legislation; Dodd Frank Title VII and, when it comes, MiFIDII. Although the majority of banks are trading the same products with the same counterparties, there are unique differences to each bank that need to be taken into account during deployment. This ensures that the solution is tuned to each customer to capture their key areas of interest. However, as Fonetic had been working in the trading floor environment since 2006, banks benefit from many years of experience around the unique language and slang that is used extensively in this sector.
UNIQUE SELLING POINTS: The Fonetic solution uses advanced Direct Phrase Recognition to process and analyse the bank’s calls, email and texts, in addition to utilising ‘Large Vocabulary Continuous Speech Recognition’ transcription technology (LVCSR). All of Fonetic’s competitors’ products utilise transcription only where there is as much as a 50-60% loss of data – effectively meaning that the banks can only analyse half of the story. Conversely, independent tests show that the Fonetic solution is five to nine times more accurate than its competitors’ products showing that it is the solution most fit for purpose in this application. The solution is source independent for voice recorders and all text sources, which is particularly useful where a bank has a mixed estate. Other analytic solutions don’t offer the same flexibility. As the solution is available in up to 84 languages, including symbol based languages, such as Japanese, it is also the most advanced.
MARKET REACTIONS: For many years analysts have held the view that the technology to date has not performed well enough for this highly complex and demanding sector. If we look at transcription (LVCSR, speech to text or phonetic), we would agree. However, with the introduction of Direct Phrase Recognition software, banks can now achieve the levels of accuracy that mean they really can find the 1% of what concerns them on their trading floors, the proverbial needle in a haystack. In the main, the banks that we have engaged with have shared with us that they are under a great deal of pressure from the regulators and are very open and willing to test what we have. We are involved in a high number of proof of concepts that are now moving along to a pilot phase which allows banks to really test the technology in a production environment with excellent results.
4. Tell us how you are funded.
Fonetic is privately funded
5. Why did you start the company? To solve what problems?
I first become involved with IVR in 1999 when the technology and market were in their infancy. Things were very different back then with all of the challenges that breaking technology faces. Opening people’s eyes to what was possible with new technology meant helping them to see the world differently. Thankfully we had the support of some very progressive thinkers such as Telefónica.
On a regular research and development trip to America, I was introduced to ground breaking speech analytics (Direct Phrase Recognition) and instantly saw how this technology would help business leaders to improve their P&L, reduce churn and be able to get closer to their businesses than ever before – that was really exciting and something I wanted to explore further.
First, I talked to our most progressive customers and embarked on the first pilot project that would change the landscape of Fonetic forever. Now, over 15 years later, Fonetic has been in this market from the very beginning, working with world-class leaders to deliver the very best in voice IVR and speech and data analytics.
In this market, delivering the best depends not just on robust technology, but the accuracy of the results for the customer. Accuracy is achieved by building richness around the business language from which the best results come, results you can trust. This process takes years of working with businesses day in, day out, building and adding to the language to be able to deeply analyze it. There is no shortcut for this process, and because Fonetic has been doing this for many years, the company is years ahead of any competitor in this field. It’s quite simple – when we produce results that you can trust, we become a partner that you trust – and that’s what we’re looking to achieve.
6. Who are your target customers? What’s your revenue model?
We have Enterprise customers in Finance, Energy, Insurance and Telecommunications that include Voafone, Orange, Movistar, Direct Line, Mapfre and Endesa. For trading floors we work globally with BBVA and Santander.
“We in BBVA selected Fonetic as our provider for implementation and delivery of our Trading Record Keeping Compliance solution into our Bank in 2009, For which received an award from the Financial Times – The Banker in 2012. Fonetic delivered and executed on this solution extremely professionally and continue to enhance the product and service level they provide to us. I would recommend my fellow Banks to work with Fonetic on their compliance needs.”
7. If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
If I had a magic wand the finance sector wouldn’t have such difficulties and costly problems and could focus entirely on what they are there to do. However, when we combine human nature, the vast amounts of data that are being produced and the enormous pressure present in business today we must be pragmatic about how these problems came about in the first place.
8. What is your message for the larger players in the Finance industry?
I would echo William Langford, global head of compliance architecture and strategy at Citi “worse than not knowing, is having information that you didn’t know you had. Let the data tell me my inherent risk and exposure. The challenge is knowing – where does it sit, how can I get my fingers on it and is it the right data?” And I would add that the time has come for banks to use technology and innovation for more than just cutting the cost of errors and reducing operational risk, and must now look to understanding and changing behaviour.
9. What phone are you carrying and why?
I am carrying a Samsung Galaxy phone. The usability is great and it’s well integrated with our office systems.
10. Where do you get your industry news from?
I receive daily newsletters from FT and Waters Technology. I find both of them very informative and interesting.
11. Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
We can see a great deal of interest in single platforms which link disparate data or unstructured data together, draw out correlations and create a more holistic picture with the information. Also the pressure around big data, and although that’s not the market we’re in, we are in the business of processing vast amounts of data very quickly so that the speed of analysis is not hampered. Size of data, speed, accuracy and scalability are the key trends we see emerging in 2015.
Thank you for taking the time to answer our questions Juan.
If you’ve any suggestions for other hot FinTech companies (startup, or established ventures) that we should be profiling, I’m all ears. Don’t hesitate to drop me a note at firstname.lastname@example.org. There’s more information on this page.