Meet the finalists: Australian Money Market

Q. Can you tell me a bit about the origins of Australian Money Market and how it was established?

A. Prior to our establishment in 2007, a lot of financial advisers had their clients’ cash funds in what was called securitised assets, which were supposed to be AAA-rated but weren't or didn’t end up being so. As a result, there was a big push for those clients to get their money out of those assets and into term deposits with banks.

At the time, there weren’t many services supporting this push, so one of my business partners, Tony Hartley (who used to run a dealer group of financial planners called Madison Financial), came up with the idea to develop a platform. I was in the right spot at the right time. I had time to help build and run a new business. So, along with current chairman Ugo Di Girolamo, we built Australian Money Market (AMM).

Q. What was it like establishing a business at the height of uncertainty during the global financial crisis?

A. We were lucky in a couple of ways. There was definitely a need for our offering in the market at the time, and there was already an industry servicing this market. Financial advisers were earning commission for facilitating the transfer of client funds into term deposits with banks. This practice was banned as part of the Future of Financial Advice (FOFA) reforms a few years later, but the presence of an industry meant we didn't have to introduce the concept to banks and go through all the associated compliance.

My business partners also had existing relationships with the adviser network, which would become the target market for AMM. Through Tony Hartley’s connection, Madison Financial became our first client. This helped us get the business off and running and prove the offering worked.

Q. What are some of the challenges the business has faced since inception? How did the business manage major fluctuations in term deposit rates?

A. When we first started, term deposit rates hit a high of about 8.8 per cent during the Beijing Olympics in 2008. But then it was one way traffic down to 0.15 per cent. So, demand was steady for the first seven or eight years. People were still happy with the rates they were getting, and we could provide a service that made it easy to move between banks and get the highest rate.

I will say, however, we probably dropped 20 per cent of our funds under management (FUM) during the height of the COVID-19 pandemic, because rates were so low. But one of the good things about our business is we don't really lose clients, we might lose their money for a while, but they’re still set up in the system. As soon as rates came back up, clients come back. We've got back that 20 per cent, and more in the last year and a half.

Q. What strategies did the business employ to offset losses during extended periods of low interest rates?

A. We did a couple of things. Firstly, we started to offer managed funds on our platform in response to a growing need identified by our adviser network. We developed the idea of offering lower risk spectrum manage funds. That business decision has been fairly successful, and helped during the low-rate period.

We also used the time to adjust to new regulations to ensure compliance. When the Australian Securities and Investments Commission (ASIC) introduced the target market determination (TMD) and all the extra work around it, we had to build our site to handle a lot of those requirements and volumes when clients came back.

Q. How has AMM managed the influx in volume following the recent increases in term deposit rates?

A. Our service is automated, so for about 70 per cent of the deals, the adviser hits a button, and all the client funds just flow through to the bank.

Compliance processes have been challenging. The client onboarding process is particularly complex, given the amount of questions we need to ask and the amount of information required — it’s very rigorous. I think it's settled down a little bit now, but we still have our issues regarding compliance.

Q. Can you tell me more about how technology supports your offering and how it improves business efficiency?

A. The automation technology assesses data in the system to determine whether there’s anything wrong with a deal or if there are any deficiencies. When a client decides to pay some money with a particular bank, it will only allow the transaction if everything's perfect. The technology automatically fills in the correct forms for that client, including all the anti-money laundering (AML) documentation, and sends it over.

We now have API (application programming interface) linkages with three banks, so rather than sending them a paper-based or PDF-based application form, we just access their system and the term deposit is opened immediately. We are pressing on to do that with a bunch more banks, just to make our lives easier.

We’re also spending a lot of money and a lot of time getting our ISO 27001 accreditation to shore up our information security framework. We now need that to be part of the whole advisory infrastructure. Macquarie Bank, for example, is requiring us to have the accreditation because we're one of their largest data partners.

Q. What’s next for AMM? What are your future plans?

A. We’re focusing on making our system robust enough to handle the volumes and handle the extra compliance coming down our path. We’re also ramping up the managed funds side of the business. We’ve gone from having about 20 managed funds on the platform two years ago to approximately 100 now. AMM is also preparing for the National Payments Platform (NPP), which is going to change the way we deal with banks.