Dr. Jens Bartenschlager, CEO of Fidectus, began his career in the energy industry and stayed in the space for more than 15 years. He started off as a consultant in a small management boutique and got into energy trading very early on in his career before he took over the lead for energy & utilities at PwC Switzerland. He maintained his focus in this part of the value chain, managing projects for a mix of big and small energy traders across Europe over time. Coincidentally, his job at the time was to implement what he does nowadays at Fidectus in a more basic way. As such, he really wanted to figure out what else there was to automate and what kind of innovation was actually missed in the deal trade life cycle.
Over the counter (OTC) energy trading is any kind of deal that relates to electricity, gas, emissions, green certificates, renewables etc., occurring outside of exchanges happening between two parties. This accounts for more than 60% of all the volume being traded in the energy market in Europe today. In this market, many of the processes are old fashioned, very manual, excel based, with emails going back and forth. When it comes to the point in the deal life cycle where the energy is physically delivered and you want your money based on the complex terms you agreed to, there’s a lot of manual work that has to be done. This entire process, post-delivery until you receive your money, can take up to 51 days with high risk exposure.
At Fidectus, they solve for this problem by automating the entire post-trade life cycle by making it possible to occur in almost real-time. This means freeing up cash, getting rid of all those manual steps, and reducing credit risk. “When you have cash just sitting there, tied up for days, it can be problematic because you want the cash pumped back in the business. By making a small change in process, you can now unlock your cash, as well as mitigate your credit risk,” said Chris Sass, EVP sales and marketing at Fidectus. On top of that, they also do multilateral netting which further unties huge amounts of free cash flows that were tied up in illiquid working capital before. “With our technology, companies can better manage their OPEX, risk and free cash flows,” shared Jens, “we not only automate it, we help our clients to get the former back office and finance function to be of strategic relevance again.”
Fidectus is shaping the industry’s next-generation Post-Trade community. It offers a platform as a service with Settlement and Netting. According to Chris, “the beautiful thing about coming with Fidectus is we built it on modern architecture. If you look at the back office in the energy industry, it is not known as being the most progressive with their technology. In Europe, we’re seeing 10 to 15 year old technology being used and they’re trying to extend it’s life because that’s what they know and it’s in their comfort zone, but it doesn’t give them the flexibility or create ecosystems so they can do more. Jens already knew this as a business problem, and we wanted to solve it with the best technology. We wanted to create a cloud based service with micro service architecture for scaling. You can add new services without interrupting layers that work and with no integration costs. We wanted it to be super easy for our customers to get onboard, something the older legacy design couldn’t do.”