Belfast Telegraph

Banking clients frightened of future outside EU, admits First Derivatives boss Conlon

By John Mulgrew

The founder of Newry software company First Derivatives has said a number of big name bank customers are concerned what effect leaving the EU will have on so-called 'passporting' in the financial sector.

But Brian Conlon insisted his firm could still weather the storm of Brexit as he revealed it had partnered with the multibillion-pound UK Business Growth Fund as part of moves by First Derivatives to expand outside its traditional financial markets.

The company, which reported pre-tax profits of £7m for the first half of last year, will work with the fund, which boasts a £2.5bn balance sheet, to target other markets with its Kx technology.

Mr Conlon, who set up First Derivatives to analyse fast-flowing data from banks and financial institutions, told the Belfast Telegraph: "We have been working with capital markets for quite a long time.

"The technology we use is pretty much used by all the main players in the market.

"We figured to move outside of finance... we're looking for partners - the main experts in those industries."

The listed company's customers have traditionally been Wall Street banks.

Mr Conlon said the partnership meant it could utilise its technology in markets it has not ventured into without committing a large investment.

He added: "We know nothing about robots. If we can work with experts who have an idea, we can bring our knowledge of how to get to market.

"We have a successful company which has grown from a small to a larger business.

"(But) we don't have the same deep pockets as, say, Google or (entrepreneur) Elon Musk."

Mr Conlon said the expansion had some altruistic element. "There is some altruism as well," he added. "If we can encourage other local people to make the leap, to grow a cluster of expertise here... that's something we want to achieve as well.

The First Derivatives founder said the move to diversify was not based on any instability in the financial markets caused by the vote for Brexit and the volatile political environment in the US following the election of Donald Trump.

"We have been moving down that route for a few years," he said.

Mr Conlon said the company had benefited from the strength of the dollar, while some of its customers would benefit from any new low taxes introduced by Mr Trump.

He said the firm, which has offices in London, New York and Hong Kong, was resigned to what Brexit might bring.

"We just have to deal with what happens," he said. "It's a landscape which is a lot more uncertain than before. There may be some issues with freedom of movement... they are impacting everyone. We are there and we are going to do our best."

He said passporting would be the biggest source of uncertainty. "A lot of our clients are banks with London and New York bases," he said. "The passporting situation is raised at senior levels (in big financial institutions) we are talking to."

A move outside the EU may mean banks no longer have the freedom to provide services from a home base to a customer in another country.

But he said many of the big banks "can deal" with what happens once Article 50 is triggered.

Belfast Telegraph