Iain Dunstan

Rubik Financial Limited (ASX: RFL), a leading technology company delivering innovative banking, wealth and lending solutions to the financial services industry, is pleased to announce it has gone live with MyState Limited (ASX: MYS), a diversified financial services group, on the transformation of their digital channels and customer experience offering.

The news follows Rubik’s announcement of the partnership in mid-May this year demonstrating the speed to market of Rubik’s technology solution, which enables MyState to offer their customers a superior digital experience, including access to MyState’s banking products and services from the device of their choice (desktop, smartphone or tablet) via the operating system of their choice, and at the time of their choice.

Iain Dunstan, Chief Executive Officer of Rubik, said, “The launch represents a very exciting time for both MyState and Rubik. It’s especially rewarding to partner with progressive clients like MyState, one of the first to make Apple Pay and Android Pay available to Australian customers, who understand the importance of digital banking in engaging customers.

“Working together on the new enhanced Internet banking platform and new mobile banking apps, we’ve helped MyState make managing money on the go simpler, and even more secure and convenient for their customers using our leading digital banking solutions”, Dunstan said.

MyState Managing Director and CEO, Melos Sulicich said initial research had pinpointed that customers wanted to engage with an agile and modern financial institution that offered them more access options, and greater ease of use than ever before.

“Customers want banking to be almost effortless when they need it to be, but also very secure. In partnering with Rubik, we now have one of the most competitive and modern Internet banking offerings in Australia”, Sulicich said.

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Iain Dunstan

11.4 per cent increase in overall revenue – a fourth consecutive year of double digit growth

Rubik Financial Ltd (Rubik) (ASX:RFL), a leading fintech company delivering innovative banking, wealth and mortgage solutions to the financial services industry has announced its full year results for the financial year ended 30 June 2016.

Revenue for FY2016 was $43.3 million, an increase of $4.5 million or 11.4 per cent over FY2015, with recurring revenues contributing 73 per cent. Underlying EBITDA for FY2016 was $6.5 million, compared with $4.9 million in FY2015. Operating cash flow saw a return to positive $1.0 million, and net loss after tax (NLAT) was $2.7 million in FY2016, compared to a NLAT of $14.1 million in FY2015.

FY2016 internal research and development (R&D) spend was $3.4 million ($0.8 million of which was expensed). $1.4 million of internal R&D was invested in Coin and Provisio to build additional features and functionality to better service the needs of our wealth clients. Internal R&D of $1.5 million was invested in Rubik Model Bank, with an additional $1.6 million invested in outsourced development and $3.9 million in license fees for this new product. The balance of internal R&D was invested in building out our mortgages product functionality.

Looking back over the past year, Rubik Chairman Craig Coleman commented, “Rubik has delivered on performance expectations whilst also undergoing a period of significant transition and investing in growth for the future. Revenues have continued to grow, resulting in strong EBITDA growth in our underlying business. At the same time, the company has managed to transition to a blended onshore and off-shore development and testing capability, has consolidated its data centre infrastructure and rationalised its corporate structure.

“We’ve achieved this whilst investing in our people and our product capabilities, with a key focus on transforming our products in to integrated solution platforms, providing customers with access to best practice foundations, innovation and scale regardless of their size,” said Coleman.

As the markets Rubik operates in continue to evolve, and in some instances converge, the company has undertaken a change in its operating structure segments from 1 July 2016. Moving forward, Rubik will focus on the areas of Financial Services, Banking, and Collections & International. This change reflects the ongoing transformation of Rubik and its transition from a product focused business to a platform solution focus – with dedicated resources to further enhance its offerings. It also highlights the growing traction of Rubik’s CWX platform, and the chance to leverage this class leading software across the globe.

Commenting on the past year, Rubik CEO Iain Dunstan said that he is pleased with the results. “Building on the previous financial year, which focused on ensuring all key financial measures and strategies were in place, we have steadily improved our financial performance. We have seen not just a stronger year than last, but a heightened stability instilled across the business, leaving us on an excellent footing going into the new financial year.

“It has been personally satisfying to drive significant transformation across the organisation. These changes are allowing us to create and better manage opportunities that improve the underlying base of the business and provide greater shareholder value,” Dunstan said.

“We are well progressed in our strategic initiatives to build and deliver both an innovative and functionally digital rich banking platform and a financial services platform that will allow clients the flexibility to better combine Rubik’s products with third party CRM systems and other third party solutions.

“This approach will enable our client base to efficiently and cost effectively deliver an omni-channel user experience both in banking (across phone banking, internet banking and mobile banking, using any device), and in financial services (where our clients’ customers can engage via web-based robo advice tools, goal specific scaled advice tools or a comprehensive advice engine). It will see Rubik focused on selling client-led platform solutions rather than individual products,” Dunstan added.

Rubik has considerably improved its client focus and engagement. It has retained and reinforced strong long-term relationships with key clients and further enhanced relationships with existing strategic partners.

Among a number of new client contracts and partnerships, Rubik extended its footprint in the Middle East and Asia, with one of the leading banks in Pakistan choosing to implement its collections platform. The agreement sees five out of the top seven banks in Pakistan now using CWX, and reinforces the company’s market leading position in collections software in many Asian and Middle Eastern countries.

Rubik continues to invest in its management team, having attracted exceptional new hires with specialist industry experience across product, account management, sales, marketing and human resources, to support its growth and product vision. In support of its employees, an Employee Share Ownership Plan (ESOP) was rolled out in October 2015.

FY2016 Key highlights

• Revenue up 11.4 per cent to $43.3 million, fourth consecutive year of double digit growth
• Underlying EBITDA was $6.5 million, up 32.3 per cent from $4.9 million in the prior year
• Operating cash flow went from negative $0.6 million to positive $1.0 million
• Net loss after tax of $2.7 million

Overall revenue for FY2016 was $43.3 million, a $4.5 million, or 11.4 per cent increase from FY2015. FY2016 revenue for the Wealth solutions was $20.2 million, a $0.8 million or 3.6 per cent decrease from revenue of $21.0 million in FY2015. Wealth contributed 47 per cent to overall revenue.

FY2016 revenue for Banking solutions was $14.9 million, a $3.1 million or 26.5 per cent increase from revenue of $11.8 million in FY2015. Banking contributed 34 per cent to overall revenue. FY2016 revenue for Mortgage solutions was $8.1 million, a $2.0 million, or 33.8 per cent increase from revenue of $6.1 million in FY2015. Mortgages contributed 19 per cent to overall revenue.

Recurring revenues contributed 73 per cent this financial year compared to 81 per cent last financial year, with the corresponding non-recurring revenues at 27 per cent for this financial year, compared to 19 per cent last financial year. This increase in non-recurring revenues was driven by strong license sales in the CWX product (which is sold as an upfront license and then a recurring maintenance trail) and an increased focus on delivering specialist consulting services to Rubik’s clients.

Underlying EBITDA improved by 32.3 per cent to $6.5 million in FY2016 (FY2015: $4.9 million). This increase was mainly due to an increased focus on service fees and the cost benefits of recently completed restructuring activities. Underlying EBITDA after adding back existing products capitalisation was $5.3 million, a $2.2 million or 71 per cent improvement year on year. This comparison adds back existing product capitalisation of $1.2 million during FY2016 (FY2015: $1.8 million).

Reported net loss after tax for FY2016 was $2.7 million, compared to a net loss after tax in FY2015 of $14.1 million. This net loss is predominantly attributed to depreciation and amortisation charges of $7.6 million and restructuring costs of $1.9 million in the financial year.

Operating cash flows went from negative $0.6 million in FY2015 to a positive operating cash flow of $1.0 million in FY2016, with corporate restructuring, establishment of the off-shore development and testing centre, and consolidation of Rubik’s data centre infrastructure now complete. This increase was mainly due to higher underlying EBITDA measures, partially offset by increased working capital requirements.

Events since last year

Of the significant events occurring since last year, there are three key strategic initiatives that will support the ongoing growth of Rubik’s base business. These include the development of a new digital banking platform, the development of a financial services platform, and the integration of the current versions of CWX and Temenos’ core banking platform.

Development of digital banking platform

Rubik’s major initiative during FY2016 and in to FY2017 has been its development of the Rubik Model Bank. Following its initial partnership with Temenos to utilise its T24 core banking software to build an Australian Model Bank, Rubik extended its partnership with the software vendor during the year to overhaul its existing channel technologies with a renewed focus on user experience.

By integrating Temenos’ user experience platform, ‘edgeConnect’, in its banking operations, Rubik is now able to provide end customers with a powerful and unique banking offering. This includes the ability to access its products and services across multiple customer touchpoints and devices – including desktop PC, smartphone, tablet and smartwatch. The platform will help Rubik clients to remain competitive and relevant by increasing customer loyalty through the provision of the high quality digital banking offering that today’s customers demand.

Development of financial services platform

Where financial services products had previously existed and operated in silos, the Rubik product and technology teams are in the process of taking these products and turning them in to a library of ‘engines’. These engines can then extract data from various third party CRM systems and deliver the enriched data and smart solutions to any user interface, enabling clients to either integrate with their own existing third party technology, or use Rubik’s.

The development of this financial services platform will allow for the delivery of omni-channel advice, resulting in more people accessing advice. The future of advice lies in having a solution to suit every consumer channel, regardless of the advice level the consumer is seeking or the way they want to engage with the business. Rubik believes that access to multiple channels combined with the Future of Financial Advice (FoFA) legislation, will see the rise of web and phone-based advice channels. Rubik will be well positioned with its financial services platform to serve this market.

Integration of CWX and Temenos’ core banking platform

Rubik’s integration of CWX with the current version of Temenos’ T24 platform is well underway. CWX was interfaced into an older version of T24 for a strategic project some years ago. The current project includes the rebuilding of interfaces as well as communication protocols.

Rubik’s ongoing and close working partnership with Temenos, combined with winning additional CWX clients utilising Temenos as a core, means it made strategic sense to rebuild the interface with current software releases.

This development will extend Rubik’s off-the-shelf offering to future clients, both Temenos users and other. The project opens up a substantial market that was only partially addressed by Rubik previously. For end clients, this integration will decrease implementation costs, and provide a deeper level of expertise in working with CWX and T24.

Outlook

“The outlook for Rubik is positive. The company will continue to transition and evolve to deliver on its vision of best in class, innovative fintech solutions”, said Dunstan.

“While customers continue to demand more from their digital experience, our expertise lies in helping them to navigate the complexities and deliver on digital strategy for their clients which in turn drives growth and profitability for all.”

Rubik will continue to invest in its product suite, to enhance features and functionality, not just to meet customer needs and market trends but to exceed them. The company seeks to expand its revenue base both through the retention of existing clients and attracting new clients – ensuring it offers outstanding fintech solutions across its product suite.

Rubik will continue on the path of investing in people. “We offer many highly skilled and dedicated employees the opportunity to work in fintech, servicing some of the country’s leading financial services organisations, and working with leading software products”, said Dunstan.

Commenting on the past year, Coleman, said, “I believe that Rubik continues to make significant progress on all fronts – technological advancements, employee focus, product improvements and client engagement.”

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Iain Dunstan

Rubik Financial Limited (ASX: RFL), a leading fintech company delivering innovative banking, wealth and mortgage solutions to the financial services industry, has partnered with Class Super Pty Ltd, to provide advice technology for accountants who are limited licence holders.

The partnership is a timely one given the change to regulation as part of the FOFA reforms which came into effect on 1 July requiring accountants to obtain the newly created ‘limited’ AFS licence in order to continue giving advice to their clients about SMSFs.

According to Rubik CEO, Iain Dunstan, “As part of Rubik’s omni-channel offering, the Provisio module is perfectly suited to accountants because of its ease of use and focus on tax saving algorithms. The development of an integration with Class Super will enable accountants to facilitate rapid engagement, strategy illustration and advice generation across all common advice topics in the Australian advice landscape.”

“Our clients are asking us to design solutions in different channels from guided to self-directed, that deliver a seamless experience for their end customers. We are committed to a digital future with open architecture, exposing a rich library of algorithms as customer facing APIs and delivering a frictionless service design and user experience for our clients.”

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Iain Dunstan

Rubik Financial Limited, a leading technology company delivering innovative banking, wealth and lending solutions to the financial services industry, has been selected by MyState Limited, a diversified financial services group, to partner on the transformation of their digital channels and customer experience offering.

Rubik’s technology solution, which will go live in August, will enable MyState to offer their customers a superior digital experience, including access to MyState’s products and services from the device of their choice (desktop, smartphone or tablet) via the operating system of their choice (iOS, Android, Windows), and at the time of their choice.

Iain Dunstan, Chief Executive Officer of Rubik, said, “Rubik is all about partnering with banking clients, like MyState, to offer world class products and solutions that enable them to engage their customers in ways they haven’t been able to before. While these customers continue to demand more from their digital experience, our expertise lies in helping our clients to navigate the complexities and deliver on their digital strategy which in turn drives growth and profitability.”

Melos Sulicich, Managing Director & Chief Executive Officer of MyState Limited, commented, “Ensuring MyState continues to give our customers the best possible customer experience is at the heart of our principles. Working in partnership with Rubik on our digital transformation, we believe the ability to offer a consistent digital experience will ensure we’re able to not only modernise our platform, but more importantly provide better engagement between our people and our customers.”

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Ms Chen has over 15 years experience in financial services and wealth management most recently as product manager – XPLAN at IRESS Limited. At IRESS she was responsible for the product roadmap and delivery program of the XPLAN product suite globally. She has also held a series of senior analyst roles at Macquarie, MLC Online and the advice platforms teams at MLC/NAB.

Rubik CEO, Iain Dunstan, said: “Being able to lure excellent talent like Emily to Rubik is a great coup for us and a reflection of where we are at as an organisation. It comes with being able to offer prospective employees the opportunity to work in Fintech servicing the country’s leading financial services organisations.

“Emily’s extensive knowledge of wealth technology solutions will be invaluable in helping us to deliver even more to our clients.”

This appointment follows last week’s announcement that, subject to audit review, Rubik’s first half result is expected to be up more than 20 per cent on previous guidance of $2 million in Underlying EBITDA*. As well as the recent senior appointments of Lanie Conquest as senior institutional account manager, James Jackson as group executive – consulting, and Joanna McCarthy as head of marketing and communications.

* Underlying EBITDA is defined as Earnings Before Interest, Taxes, Depreciation and Amortisation, adjusted for any one-off or non-operating items during the period. This measure is after expensed R&D amounts.

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Iain Dunstan

Ahead of the release of its half year accounts on 25 February, financial services software company Rubik Financial Ltd has announced that, subject to audit review, it expects the first half result to be more than 20% up on previous guidance of $2 million in Underlying EBITDA*.

Iain Dunstan, Chief Executive Officer of Rubik, said the business is ahead of expectations in the first half and also reconfirmed guidance provided at the AGM for a 20% increase in full year FY16 Underlying EBITDA (FY15: $4.9m).

“We’re very pleased with how the first half results are looking, particularly as the growth is coming from both the banking and the wealth segments of our business”, Mr Dunstan said.  “Revenues also continue to grow in line with expectations.  We have strong pipelines across the banking and wealth segments and expect to announce new contract wins in both of these areas in the near future.”

In addition to the first half results update, Darius Coveney, Chief Financial Officer of Rubik, noted that the company has also renegotiated its debt facilities with Westpac.  This renegotiation extends the term of the current debt facilities to January 2019, on an interest only basis.  In addition, Rubik has agreed a further facility with Westpac, which will fund its recently expanded Temenos engagement to provide digital banking products to mid-tier ADI’s.

* Underlying EBITDA is defined as Earnings Before Interest, Taxes, Depreciation and Amortisation, adjusted for any one-off or non-operating items during the period.  This measure is after expensed R&D amounts.

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Reporting to Marc Hraiki, group executive – sales and relationship management, Ms Conquest will be based in the Melbourne office to support key clients and drive new business development.

On the third senior new appointment at Rubik in as many weeks CEO, Iain Dunstan, said “Lanie brings an impressive skillset and extensive experience in helping major Financial Services clients, just like ours, build contemporary financial advice models”.

Ms Conquest’s financial services career spans over 24 years in advice, operations and sales management, most recently as head of sales at Decimal Software, responsible for the sales strategy for key retail banks and superannuation funds. Prior to Decimal she was a division director and Virtual Adviser Network (VAN) distribution strategy manager at Macquarie bank. Prior to this she spent 14 years in a variety of business development, management and distribution roles with Asgard.

Ms Conquest’s appointment follows the recent appointments of James Jackson to group executive – consulting, and Joanna McCarthy to head of marketing and communications.

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Reporting to Rubik CEO, Iain Dunstan, he will be responsible for helping clients better integrate Rubik’s technology solutions with their existing systems.

Prior to joining Rubik, Mr Jackson was a senior manager with AustralianSuper. Before this he spent 15 years with Mercer Investments in a variety of roles in Australia and the United Kingdom.

Rubik CEO, Iain Dunstan, said James’ skills and expertise will be valuable not only in establishing a new growth area for Rubik but in adding value to existing and new clients.

“As senior manager at AustralianSuper James played an integral role in helping drive key investment programs for Australia’s largest super fund. At Mercer, James held a series of roles – including head of sales, marketing and business transformation, chief operating officer for Asia Pacific Investments, and global head of technical products and services – which make him a good fit for the Rubik business.

“We have recognised a significant opportunity in not just providing our clients with the right technology solutions, but also in helping our clients to better integrate them with their existing systems.

“While other service providers have played this role for our clients in the past, as the developers of the software we believe we’re best placed to help clients in this space.”

Mr Jackson’s appointment follows the recent appointment of Joanna McCarthy to Head of Marketing and Communications.

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Reporting to Rubik CEO, Iain Dunstan, she will be responsible for all brand, digital, internal and external marketing and communications.

Prior to joining Rubik, Ms McCarthy was Head of Marketing Communications with fintech start-up, Decimal Software. Other roles have included Global Manager Brand and Content for QBE Insurance, General Manager Internal Communications at NBN Co and Head of Communications for Australia & New Zealand for global consumer products giant, Kimberly-Clark.

Rubik CEO, Iain Dunstan, said the appointment follows a strong first half to FY2016, led by new business wins.

“It’s great to be able to invest in our marketing and communications strategy with a dedicated, full-time resource in Joanna.

“Joanna brings with her a suite of skills that will be valuable in helping drive our business forward and she represents one of many great people hires we look forward to announcing in the coming quarter.”

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Terry Bell

The latest Rubik Financial/Business Health Future Ready VI report* shows an overall improvement over the past two years in the “health” of Australian advisory practices, but there are still some major concerns that need to be addressed.

The Rubik Financial/Business Health Future Ready VI report provides insight into key areas that determine success for financial planners, including profitability, client management, staff levels and turnover, and use of technology.

According to the report, key areas that have improved noticeably since 2012 include:

• Practice revenue (up 29%)
• Funds under management (up 32%)
• Practice profitability (up 15%)

However key issues that need to be addressed remain. They include:

• Key person risk – almost two-thirds (62%) of practices have a single principal in charge, and 43% believe their business could not operate without them. Yet 48% don’t have any key person protection in place?
• Client acquisition – individual client numbers have remained relatively static since the last Report in late 2012, with the average per practice now standing at 863. And while 81% of practices are employing a segmentation strategy, the Report concludes that just 24% are implementing it effectively
• Client communication – regular communication with clients, even ‘A’ list clients, is still sporadic in most cases, while only 30% of practices have sought structured feedback from clients
• Marketing and positioning – 20% of practices still don’t have a website, and only 54% have a social media presence.  Practices report an average marketing spend of less than 1.5% of total revenue.

Terry Bell, partner at Business Health, said that on the whole, financial planning practices have taken steps to improve the way they operate, and have seen the financial benefits of this.

“Nonetheless, some of this improvement can be attributed to the ‘rising tide’ of markets, and practices shouldn’t be tempted to rest on their laurels.

“Issues such as dependency on the principal, and client acquisition and communication, need to be resolved, and practices that don’t get these areas right will find it harder and harder to keep their heads above water.

“For instance, the report shows that practices that seek formal client feedback are, on average, over twice as profitable than those that don’t.

“Likewise, those practices that contact their ‘A’ clients more than 10 times a year are significantly more profitable than those that contact their clients less than five times a year.

“Regular client communication, including maintaining a two-way information flow, is undoubtedly part of the financial success of a practice,” Mr Bell said.

Technology and tailored software provide opportunity for profit

Iain Dunstan, chief executive officer at Rubik Financial, said that financial planning businesses using tailored client management systems and automated workflow management systems are also shown to be more successful and profitable than those that don’t.

“Surprisingly, there are still a small number of practices using paper-based files or spread sheets to maintain client information.  While they may feel that investing in software specifically designed for the industry is expensive, it is clearly a false saving – the report shows that practices that use an automated customer relationship management (CRM) system have experienced a 1179% increase in profit compared to those who are still relying on paper based or Excel spreadsheets.

“Making better use of technology is an area of opportunity for many practices, and can assist them in delivering targeted and scaled advice that meets their clients’ needs,” Mr Dunstan said.

He added that effective use of technology remains the best way to proactively and profitably communicate with client bases, especially larger ones.

“Just over half (51%) of practices reported using personalised mail merges or broadcast emails to communicate with their clients.

“Significantly, 69% of practices state they can set up and track workflows such as making appointments, plan preparation, document signing and business lodgement using an automated workflow management system. However, only 28% reported that their workflow management system is fully integrated, so that their modelling, ongoing management and review processes all ‘talk’ to each other.

“Other surveys undertaken by Business Health show that clients would appreciate more contact from their adviser (assuming its customised and relevant to the client’s specific situation), so there is scope for more practices to take advantage of technology to meet this client need,” Mr Dunstan said.

Other notable findings from Future Ready VI include:

• Over half (55%) of practices are generating at least half their income from fees, compared to 43% two years ago
• While 86% of practices have a regular and documented review process for clients, only 28% provide a differentiated process for the ‘A’ class clients
• A total of 39% of practices have a clearly documented succession plan – while a significant improvement over 2012 results (29%), there is still a long way to go for most Australian principals who, with an average age of around 58 years, can’t really afford the ‘luxury’ of delaying any longer
• On average, each practice has 5.9 permanent people working in the business, up from 4.6 people two years ago.  Interestingly, 41% intend to increase the number of support staff they employ over the next 12 months
• Almost half (42%) of practices have a documented, three-to-five year strategic plan for their business – the highest level recorded since inception of the survey, but still less than ideal.

“This represents a significant opportunity for practices – those that have invested time and effort into building an effective strategic plan are generating, on average, 194% more profit per owner than those with no plan,” Mr Bell said.

“Importantly, those practices that are able to effectively utilise the benefits available through the latest client management programs generate a far higher level of profit per principal, on average, than those who are still managing their business on dated technology platforms.

“The overall conclusion that can be drawn from the report is that the more principals invest in their business – be it time or other resources – the more they will ultimately benefit financially.”

The Future Ready report provides a comprehensive insight into the health of Australian financial planning practices and their preparedness for the future, based on data provided through the Business HealthCheck diagnostic tool.  The latest in the series, Future Ready VI, is based on information from 328 firms that have taken the HealthCheck between December 2012 and December 2014.

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