Michael Bach Atlanta is the fund manager of the long/short hedge fund Scirage Capital. In early 2007, Michael began to test various theoretical securities trading strategies that he had developed. After two years, the result was a successful analysis system for stock trading strategies that generated exponential returns. This ingenious mathematical process is what compelled Michael to establish the hedge fund that is known today as Scirage Capital. Michael Bach Atlanta’s ability to develop complex mathematical models and analytic acumen was originated when he attended North Carolina A&T State University in Greensboro, North Carolina, majoring in both Mechanical and Architectural Engineering.
Building a new financial services company, or any company, is challenging. Michael Bach Atlanta believes that the potential upside is worthwhile – particularly within financial services – but the roadblocks make success difficult to attain. When we started Hedge Fund Scirage Capital we were relatively new to financial services and knew there would be many hurdles before we could see our vision through to completion. But the magnitude of these hurdles has often surprised us. As Michael Bach puts it “if you knew all the challenges ahead of time, you would think twice before even starting.” Michael believes that drafting a new financing company is very difficult and he give some top notch advices through which new companies will have an easier way in building the company and avoiding the mistakes which they did.
Michael Bach Atlanta says wherever there are profits; there are regulation and government oversight. Financial services companies face a strict and complex regulatory landscape that is constantly changing. We identified a good rule of thumb: when a company gets paid, handles personally identifiable financial data, or attempts to move money, you will find a corresponding regulation. We also found that the best way to navigate the regulatory landscape is with the help of expert legal counsel. There is no denying that regulations need to exist in order to protect customers. But many of them are outdated or don’t support the latest technologies (often the very ones you are looking to advance). For example, if you want to hold and transmit money in any way you will need to comply with money transmitter laws. And because these statutes are state-specific you will need the capital, patience and support of a competent legal team to file the necessary paperwork and keep your compliance current in every state your customers live. Similarly, lending laws vary by state in the US, as well as being dependent on the amount lent.
New financial services companies, says Michael Bach must not invest a large amount. It’s not trivial to meet all the regulatory requirements of a large bank partner, but if you can, it will help get you access to money services significantly faster. The existing banking infrastructure allows these startups to create accounts, process payments as well as execute other money transactions the same way a FDIC-insured bank can. The actual list of regulatory and compliance concerns are extensive. Want to handle credit bureau data. It’s much more difficult to bootstrap your way to success in the financial services industry than in other industries with less strict regulations.
When we founded our company, recalls Michael Bach Atlanta, we expected that technology would make it easy to accurately gather financial data. We could help people access their data then automate important financial decisions using new technologies. The reality is, the available data must be painstakingly combined and processed in order to ensure it is as accurate as possible.
If you are helping your customers with financial decisions, they will rightfully come to expect accurate and up-to-date information from your product. Michael Bach Atlanta says to get this right, your company will need to carefully integrate a variety of (possibly conflicting) data sources: transactional data directly from online banking accounts, credit bureau data, payment data, behavioral information and other user inputted data
Customers haven’t heard about you, why should they trust you with their money? Michael says, “Recently, I wrote about building trust as an online financial services company because it’s something we’ve worked hard to maintain from the very beginning. Trust cannot be established overnight; it requires constant effort. The earlier you connect directly and authentically with customers, the better the chances of establishing trust even if you make missteps along the way.”
This list is by no means exhaustive but, Michael Bach Atlanta says, “I hope it will help others as they attempt to tackle new financial services companies and products. The important thing is to know that there are specific challenges inherent to financial services companies – and they cannot be brushed aside casually or dismissed as minor hurdles. These are significant barriers to entry that require substantial time, capital resources and persistence to overcome” Michael believes helping people accomplish their financial goals is different than helping them connect to friends, play games or share photos on their phones. There is a higher standard for security, reliability and trust, as there should be. Your challenge as an entrepreneur is to meet that standard while solving a real problem for real people.