Does innovation have to be transformative? Is it always disruptive? In an interview with InvestmentNews, our CEO and founder, Tim Bonacci draws upon learnings from the airline industry to explain the transformation that is underway in the structured products and annuities industry. Processes that are currently inefficient and manual have already begun to be automated through the use of technology. These advances will help all market participants by making structured investments more accessible. Watch the video or read the transcript of the interview below.
Matt Ackermann: What does it mean to really innovate especially in fintech? I’m joined today by Tim Bonacci from Luma Financial Technologies to talk about this. Tim, welcome!
Tim Bonacci: Thank you.
Matt Ackermann: Tim, what does innovation mean to you?
Tim Bonacci: To me, something that is innovative is truly transformational. I think something that is transformational adds value to all of the constituents through that lifecycle and product. It can change the way we think about a product set or service that we are offering. And I don’t mean disruptive. It’s a well overused term in technology (being disruptive). Transformative is a better mindset to think about how we really add value to all constituents.
Matt Ackermann: Do you have an example of something like that?
Tim Bonacci: Sure. You always hear a lot of the recent examples when people talk about innovation and transformation – as in rideshare programs such as Lyft and Uber, but I think a better one is actually the airline industry. If we all think about how we order and buy tickets today compared to 20 years ago, it was a fairly painful process [back then]. You had to pick up the phone and call the airline or travel agent and then get a paper ticket in the mail. It’s so different that we don’t even remember what it’s like now. There was a concern about how technology was going to commoditize or disrupt [the airline industry], but it really did not. Airlines are stronger today than in the 70s, 80s, and even 90s before that technology. If you fly frequently – which I do – it’s very rare that you’re on a plane and that the seats aren’t completely full. What I think we found is better access to information and a better way to consume airline travel is increasing ridership overall.
Matt Ackermann: Tim, when advisors sometimes think about innovation they are thinking about how it’s going to disrupt their practice. But what is Luma doing to really innovate when it comes to investing?
Tim Bonacci: If you think about advisors, they are trying to improve their practice. And what Luma is really trying to do is improve adoption and access to this product category for advisors. There is only about 10% of advisors that use structured products today and the reason for that is they can be difficult to access, difficult to trade, train, get performance reporting and get lifecycle tools. Luma provides information that makes it very facilitated for them to utilize and have their clients benefit from structured products in their portfolios. We have a very customizable platform that matches to their existing workflow and lets them adopt this product set in a very facilitated way and helps their clients and their overall portfolio objectives.
Matt Ackermann: It creates that seamless experience like when you buy your ticket online for the airline.
Tim Bonacci: Absolutely. It’s probably hard for us to remember doing that, picking up a phone, but that’s still some of today, and in previous years, how you got structured products which was a spreadsheet, email and telephone process. And we are now moving that automation much more forward.
Matt Ackermann: Amazing. You guys are really transforming the way people think about investing in structured products. Thanks so much for joining us today..