Crypto markets can swing widely in a matter of hours, and many investors still trade on gut feeling. Quantofi is using AI and the same kind of data tools big institutions rely on to help people decide based on data, not emotion. Colm Gaughran, CEO of Quantofi, explains what democratising fund management means for an everyday investor and why he says traditional fund managers face a “Kodak moment”. He also discusses the company’s partnerships, how fees and costs could fall, and his outlook for crypto after the US midterms.
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Bringing Institutional Style Data and AI to Everyday Investors as Crypto Swings
Your mission is to democratise fund management. For an everyday investor in the US, what does that mean?
It is about giving you the power to invest your money where you want. It is about taking risk and reward back into your own hands, and allowing you to have the latest technical analysis on your phone, delivered in your language and your currency, for any asset class you choose, and then make your own investment decisions based on that.
For decades Wall Street has kept the best investing tools for big institutions. What has changed, and what still needs to?
Consumers have changed. People are more educated and more informed than they have ever been, and they have a phone that lets them receive services. They are used to getting what they want, when they want it, as with food delivery. What needs to change is financial services. The large institutions need to listen to their market.
If regular investors get the same tools, what happens to the traditional fund manager?
Traditional fund managers have an obligation to evolve like every other business on the planet. It is their Kodak moment, their BlackBerry moment. They need to decide whether they will give customers what they want, when they need it, at the correct price point. Right now the larger institutions have an imbalance. They take the reward and share the risk, whereas the individual investor gets paid only after all the risks have been taken by them.
Fund managers have always charged high fees. Can technology bring costs down for someone with a 401(k) or a brokerage account?
There is a range of fund options available to every American, from high fees to low fees. The challenge is to ensure the fees you pay are commensurate with the service and the returns you get. We want to make sure the low cost options give you the best technical advice and are available for the asset class you want, so you are not paying for the entire infrastructure. Look at how Revolut challenged the traditional banks in Europe. Customers are not paying for the big high street bank or the big corporate office. At Quantofi we have the opportunity to deliver a bespoke fund management product on your phone, where you only pay for what you need and use.
Why did you start with Crypto.com, and could this expand into US stocks?
They shared our vision for democratising technical analysis, and they have the infrastructure and the deep liquidity pool to allow their customers to benefit from our analytical tool. However, the product itself did not start with crypto. It is based on a traditional equity model and covers six asset classes. The reason I am in New York is that I am excited to announce a new US partnership that brings 1,700 US equities to America on Quantofi, right in your pocket.
You are based in the UAE. How do investors there compare with investors in the US?
Europe has a fragmented reporting system, and it is quite difficult to get capital for digital assets at the moment. Uncertainty prevents innovation. The UAE is the closest to a new America. It is where smart investors get the latest technology, access to capital at the correct prices, and a regulatory and safety framework, but also the freedom to trade what they want, when they want, in the currencies they choose.
What is your outlook for the US crypto market after the Binance news and the election results?
Going back to July we saw a number of positive signals in the crypto market, and a huge run up since then. About ten days ago I made a negative reversal call on Ethereum, and soon after, the four other majors followed. We saw a clear indication before the election and before the recent uncertainty with Binance, which is unfortunate, but Binance responded exceptionally well and I think the industry has seen that. There is more work to be done. We see at least another 5 to 10% pullback across cryptos, stablecoins and meme coins. But longer term, crypto is a store of value. Humans have decided that, in the same way our ancestors decided that gold, or grain through the winter, would be a store of value. Financial services and regulators need to accept that it has supply and demand, behaves as part of the same economic cycle, and needs to be included as an asset class. People should have the option to take profits, and not panic over a 5 or 10% pullback, which we would not do here on the floor of the stock exchange. We would see it as an opportunity to buy. So short term there may be pullbacks, but long term it is a good opportunity.