24 Apr Vincent Fraser’s International Ambitions in Les Affaires
The Laval-based financial services provider Croesus, which designs wealth management solutions for major Canadian institutional clients, recently set foot in Switzerland. Vincent Fraser, the company’s president since March 27, intends to develop the company’s international expansion.
Les Affaires: Your services are used by approximately 55% of all wealth management clients in Canada. Europe also seems to be a promising market for you, and perhaps the United States as well. Where will you start?
Vincent Fraser: At Croesus, due to our industry, any international venture requires adapting our solutions to local regulations. We conducted studies that showed two European markets were interesting to start with, Switzerland and England.
Shortly after Brexit, the company decided to opt for Switzerland. Our clients are the largest banks. So you can imagine that we don’t have much leeway. Our sessions must be highly controlled, secure, and highly performant. Without this, our clients would turn to generalists or larger companies less specialized than us.
We opened an office in Geneva. We started hiring local teams to help us support our clients. We’re in a minimum viable product logic, meaning we need to meet the minimum market requirements. Then, eventually, the solution will also evolve with our clients.
Switzerland is not the easiest market, but if we can succeed there, we can then expand our presence in Eastern Europe. We believe we would have all the capabilities.
As for the United States, we are in full exploration mode. We participate in trade fairs.
But the American banking market, unlike Canada’s, is highly fragmented, highly deregulated. So, while this presents opportunities due to the market’s vastness, it also requires significant investments to refine a strategy.
We’re in an exploratory mode, but for me, it’s part of the mandate, part of what we’ll want to do in the next five years, that’s for sure.
Les Affaires: Croesus has been around for 37 years, has 210 employees, 160 clients, and its tools manage funds totaling $1.7 trillion. Where do you see the company in five years?
Vincent Fraser: We have a very efficient business model, where the solutions we offer are in Software-as-a-Service (SaaS) mode. Well, not entirely, but over 98%, our infrastructures are in data centers.
We are transitioning to the cloud, but we are going at the pace of our clients.
The more wealth, assets under management, advisors, positions in portfolios, API interface usage increases, the more the company grows.
Currently, we are growing at a rate of 5% to 10% annually, more or less organically. We hardly lose any clients.
Now, to answer the question, I believe all the ingredients are there to achieve a growth rate of over 10% annually continuously. That’s the commitment I’ve made to the board. So, we want to accelerate growth.
I want the company to have a bit more visibility, even to be an example to other tech companies in terms of our innovation capacity or even our social involvement.
Then, there’s what the clients want. We want to enable our clients to simplify their application portfolio and processes. There’s the possibility of moving a little faster on our methods, but especially on strategic elements we could integrate as consolidators.
Les Affaires: Speaking of your role as a consolidator, you mentioned organic growth, but few acquisitions. What’s the plan on that front?
Vincent Fraser: In Croesus’ history, they made an acquisition in 2019 (softTarget), which brought us significant technological assets like portfolio rebalancing.
I mentioned earlier this scenario where increasingly our clients decentralize portfolio management, and we want more optimization. That brought us an asset that we integrated, redeveloped, and aligned with our own architecture. It was a good acquisition.
Croesus is a company where the shareholders are founders and key employees, and it has no debt, no external investors, in a wish for long-term sustainability.
That’s what’s expected of me, to define a slightly more accelerated strategy. First, I’ll make sure to deliver the 2024 plan, but my attention regarding acquisitions will be much more on the next five years, to identify the right long-term financial partners.
I’m fortunate in Quebec to have, and I focus on Quebec, long-term institutional investors who are not investment funds.
I won’t make acquisitions just for the sake of increasing our revenues. Transactions must bring added value to our clients and fit into our product development roadmap.
Les Affaires: Precisely, when you talk about the product roadmap. Do you have any ideas for commercial approaches that could be quickly added to Croesus’ products and have an immediate impact on value for shareholders and clients?
Vincent Fraser: It’s too early to say. I’d like to be able to answer without a shadow of a doubt. I haven’t had the chance to see the performance of our sales team.
What’s certain is that our growth by acquiring new clients isn’t at the expected level, and I could never reach my goals if we rely solely on the growth of our existing clients. I’ll pay a lot of attention to this in the coming weeks, months.
Already, what we’re doing in Switzerland forces us to have these reflections, to build our marketing strategy.
Les Affaires: You must still have a good idea of the features you’d like to add to the platform you currently offer?
Vincent Fraser: I’ll say I have ideas. I’ve had courtesy calls with all our major clients, and in the coming weeks, I’ll also meet with them.
It’s good to have a technological vision, products, and so on, but the market, for me, starts with our clients too. I need to confront my ideas, to really turn them into convictions, to then see the changes we’ll want to make and the features we’ll want to add.
I haven’t had the chance yet to have those very open and frank discussions with our clients, so I’m wary of my initial observations.
Les Affaires: What’s the importance of product development for Croesus?
Vincent Fraser: We have 150 people in our R&D team, and we even have an “innovation lab.” We have a team of 10 people with PhDs doing work in artificial intelligence (AI), quantum computing, etc.
This means we have a team completely disconnected from operations or the normal development cycle, looking at all the possibilities in applied research to bring additional performance to our clients and our platform.
I don’t know many companies of this size, at least in Quebec, that can rely on an “innovation lab” like we have within Croesus.
Whether it’s AI or other applied research, it’s really the organization’s mission.
You know, we envision the future by offering a platform where AI will accompany portfolio managers to ensure they have more efficient tools and can offer better added value to their clients. We need to show how we can enable them to perform well, manage fees well.
We’ve started to have some initial products or ideas, solutions that we’ll integrate into our products. However, it’s important to understand that we operate in an industry that is excessively regulated. It’s a bit more restrictive than if we were operating in other sectors.