Fintech Company MDOTM Makes the Leap to America

For many Italian startups, landing in foreign markets is a complex and difficult phase to achieve. This obstacle limits the growth and evaluation of even promising companies. The few unicorns in Italy confirm this. To date, only Satispay and Afterpay have reached $1 billion in valuation. For this reason, the opening of a new office is important news. Even more so, if this location is on the other side of the Atlantic. As it is for MDOTM, an Italian fintech company that applies Artificial Intelligence to the management of investment portfolios.

As Tommaso Migliore , CEO and co-founder of the fintech, confirmed, after the capital increase of over 6 million euros at the end of 2021, the development plan is aimed at the New World. « Our goal is to consolidate our presence on the American market . For the United States we were looking for a person of great depth who was not just a commercial or technical figure.”

The choice fell on Peter Zangari , former managing director of Goldman Sachs Asset Management and professor of economics at Drew University. “We needed someone who had an understanding of technology and Peter Zangari is the right figure: he has a doctorate in economics and met Markovitz, who in our field is a rock star like Bono of U2.” The intention is to build an entire team around Zangari, to make the American one become an MDOTM headquarters.

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Global finance, local challenges for MDOTM

Connected financial markets push fintech towards a global dimension. The competition rewards those startups that get there first and best. Getting off to a good start is essential. Continue quickly, vital. Overcoming national borders is not just a question of financial resources, human resources or linguistic barriers.

Countries like the United States offer a head start over the European Union or Asia due to the number of potential customers. Different laws and regulations are one of the main barriers, which can slow down expansion abroad and make development more complex. Especially in Europe, where the single market is not always a guarantee of uniformity.

“Compared to the United States, Europe and Asia have the same problem: each country is different from the others. Even in the European Union there are too many regulatory and tax differences. And this is why American startups arriving in Europe often do not obtain the desired results. Just as Spain is different from Germany and France, Hong Kong is not Japan, nor Singapore or Taiwan,” explained Migliore.

Founded in London in 2015, MDOTM was created with the idea of an international startup

The choice of the two founders, Tommaso Migliore and Federico Mazzorin is not surprising. Starting from one of the world’s financial hubs was an almost obligatory choice for those who turn to investment funds and portfolio managers. «Our main office is in London, even if it is not the largest». Added to this are the offices in Milan and New York, which are under construction, and one in Switzerland.

“Our clients also have offices in London and New York. We are a Global Company, with an international culture, offices, team and shareholders, and this certainly benefits us.”

Thus exposed, growth on foreign markets takes on a new aspect. If the localization advantages are clear, the point is to exploit synergies and resources between locations. As with MDOTM, the Italian offices also benefit from the expansion. “Our employees come from twelve countries. Even here in Milan we manage to attract foreign talent: we have just hired an Iranian and a Russian. And this, in my opinion, is also a good signal for Italy.”

Global company means presence in the field, as Migliore said: “To operate in the B2B market you must be “boots on the ground,” with the flag planted and the nameplate on the office. Ready to meet people. You can’t do it remotely on video call. It is a business that still requires dialogue and a human passage.”

AI at the service of finance

After the ChatGPT exploit, understanding what MDOTM does is easier but no less fascinating. Sphere, its platform, helps investment professionals improve risk and return management. In one sentence, it makes managers’ jobs more effective and efficient.

Sphere combines analytical and generative AI. The first configures the optimal portfolios given the risks and returns chosen by the managers. To do this, it analyzes a myriad of historical market, macroeconomic and fundamental data. The result is forecasts for each individual stock, which the user can customize, along with portfolios. Generative AI, thanks to integration with ChatGPT, explains the chosen investments and improves reports for investors.

As Migliore illustrated, “One of the trends of 2024 will be the conjunction between two types of Artificial Intelligence: analytical and generative. With this approach we allow users to better understand the analyzes that Sphere produces. This way, we can have him comment on the analysis results, explain the forecasts and why the portfolio rebalances automatically. Much of the financial industry is based on evaluating the impact of an event on prices and portfolios. Wealth and asset management have the task of explaining what is happening and why the portfolio has moved in a certain way. Here, suddenly, they have a disruptive technology that supports them in all of this.”

The consequence is clear. Carrying out and explaining more complex analyzes allows you to tackle greater complexities, manage a greater variety of portfolios and increase the level of customization for investors, also considering the ESG requirements of sustainable finance.

The secret is partnerships

If AI is added value, the human side remains at the center. Both in interaction with the machine and with other human beings. As Migliore stated, “Partnerships are the winning approach of fintech. The success of fintech was not so much the disruption, the elimination of intermediaries: very few business models have been sustainable with that logic. We fintech companies build technology with very high added value and partner with incumbents. It is the SaaS logic, Software as a Service, that allows this co-evolution. MDOTM continues to develop and grow this technology. Incumbents can have advanced technology at lower costs than internal development.”

The next steps for MDOTM are clear. “We want to focus on Europe, where we are growing well, and on the United States, which is the challenge ahead of us. We also have customers in South Africa, which we manage in connection with the UK,” said Migliore.

Such an expansion may require additional resources: “It is still early to decide but we are looking forward to a future operation on the foreign market. MDOTM is an international company and our strategic objective is to have international partners.”

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(Featured image by Pexels via Pixabay)

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First published in StartupItalia. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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