- Cloud9 Technologies announced a $17.5 million investment led by UBS with involvement from previous investors JPMorgan and Barclays.
- The fintech has been helping Wall Street set up traders to work remotely during the coronavirus pandemic.
- Lee Fulmer, head of the innovation lab for UBS Investment Bank, told Business Insider that the pandemic accelerated an investment UBS had already been considering.
- Gerald Starr, Cloud9’s CEO and cofounder, told Business Insider the company’s business has grown by 50% since March 1, adding 4,000 new users.
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A fintech that’s helped financial firms’ trading teams adjust to working remotely just nabbed backing from another big bank.
Cloud9 Technologies, a cloud-based platform that allows traders to work anywhere without the need for a physical trading turret, closed a $17.5 million investment led by UBS that included involvement from previous investors JPMorgan and Barclays.
The investment is a long time coming for UBS Investment Bank, which had been looking at Cloud9 for the past five years, finally choosing to test out the technology in 2019 and pilot the product on its London trading floor towards the end of the year, Lee Fulmer, head of the innovation lab for UBS Investment Bank, told Business Insider.
Fulmer said the bank envisioned the platform as a way to get more meaningful data about how traders and sales people interact with customers. As talks were beginning about potentially making an investment, the coronavirus hit, further validating the platform.
“I think that was the key pivot moment for us, where we thought this is not only certainly mature enough as a technology, but also instrumental to our own innovation,” said Fulmer, who is joining Cloud9’s board as part of the investment. “We want to have a seat at the table. We want to be able to help direct the product development.”
Cloud9 had already gained attention from some big banks year ago, initially drawing investment from JPMorgan in 2015, followed by Barclays in 2016. But as Wall Street has been forced to work from home, attraction towards the fintech has exploded.
Gerald Starr, Cloud9’s CEO and cofounder, said the company’s business has grown by 50% since March 1, adding 4,000 new users. In April, Starr told Business Insider the company had onboarded 28 new clients.
And while the flexibility Cloud9 provides is a major benefit, Fulmer sees potential around the data that can be collected from the cloud-based system. While physical trading systems have proved resilient despite being initially developed decades ago, there is only a minimal amount of information you can pull regarding usage.
From tracking who initiated the call down to seeing the direction the conversation is going based on who is talking more, Fulmer said he sees lots of opportunities with the tech.
“The data that you get that provides you insight into your patterns of behavior for your clients and your staff members is huge,” Fulmer said. “This, to me, is actually meaningful in terms of understanding the interaction between us, our counterparties, our brokers, and our clients.”
However, when some of that rollout occurs remains to be seen.
Fulmer said he couldn’t comment on whether Cloud9 would be the only platform the investment bank would use in the future. While the bank is confident in the shift from physical to virtual is inevitable, considerations still need to be made about how to manage an overhaul of current technology.
“If you were to ask me where I see this going, I don’t see this as a science experiment. Let’s be very, very clear; I do not see this as something we would want to step back from post-pandemic, because if that were the case, why would we have invested?” he added.
The stickiness of the product will be a key consideration in the coming months, as Wall Street considers its return to physical offices. While Cloud9 has proved to be a successful alternative during some of the most volatile markets in history, the question remains whether customers will look to continue to use it or return to their old turrets when things return to normal.
Michael Elanjian, head of digital innovation at JPMorgan’s CIB and a Cloud9 board member, told Business Insider the remainder of the year will be critical for the fintech to further prove out the value it adds to customers.
“This is the inflection point,” Elanjian said. “My focus in the next 6 months is ensuring Cloud9 capitalizes on the opportunity in front of them.”
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