Paolo Sironi

A thought leader, author, academic, technologist, entrepreneur and IBM Industry Academy member

Summary

Paolo Sironi is a thought leader, author, academic, technologist, IBMer and entrepreneur. Paolo runs Wealth Management Investment Analytics – IBM Thought Leadership, where he leads important research in the fields of innovation for technology, wealth management, robo advisers and fintech in general applied to investment analytics, decision making, retirement and society. Paolo is also a member of the IBM Industry Academy.

Before moving to IBM in 2012, he founded and was the managing director of an investment analytics startup. He is a recognized author on books about portfolio management and FinTech innovation and speaks regularly to the media and industry leaders.

Biography

Paolo Sironi started his career as a Research Assistant at London Business School, London. Joining in 1996 and leaving a year later, he was the main research assistant for statistical analysis (Dr. J. Zimmermann).

In 1997, he became Director of Risk Management of Intesa Sanpaolo, an Italian banking group, a position that he hold for eleven years (1997 – 2008) Working in the Milan area branch Paolo created the Market & Counterparty Risk Management operations (previously “Banca Commerciale Italiana” and “Banca Intesa”), obtaining first regulatory approval in Italy of internal models. He supervised a large team made of financial engineers, technology experts and business consultants. He was running periodic risk meetings with top management and chief traders.

After his experience in banking, he moved on to found his own venture startup in 2008 along with funding partners Sal. Oppenheim Bank and Algorithmics (Fitch ratings). CAPITECTS, his company focuses on outsourcing risk technology and providing innovative “On Cloud” services in the space Wealth Management and Investment Management.

After that, in 2012, he finally joined IBM as a Fintech advisor to selected global accounts and elected IBM Industry Academy member. There he has become a strategic advisor for selected IBM global accounts to originate new deals and leverage – along with client service teams – the full IBM portfolio of opportunities. Paolo is elected member of IBM Industry Academy, promoting brand reputation worldwide as spokesperson for fintech innovation. In this capacity, Paolo mentors CEOs and top managers of financial institutions, as well as key startup entrepreneurs, on a host of business issues related to digital transformation and open banking.

Vision

Paolo believes FinTech has three pillars: 1) innovation in finance, 2) innovation in technology, and 3) innovation in business models. And because he had worked in investment banking before coming to IBM, Paolo has a solid understanding of financial services industry challenges. In fact, Paolo started a FinTech company focused on business model innovations before joining IBM. Now, working for IBM, he is able to synthesize his knowledge of all three pillars into his career, and talk about them to industry leaders.

Paolo felt it was important to systematize the language and the knowledge around the three pillars, so he wrote  three books about them. One was about innovation in investment management methodology, the second was about innovation in financial technology, and the third is about business model innovation within a regulatory framework.

Books

Financial Market Transparency – Essay on Theory and Principles

In this book, Paolo focuses on the history of capitalism. One that is about growth, but the rude awakening of the Global Financial Crisis was a moment of reckoning that highlighted the flaws in our understanding of financial markets. Unbearable accumulated costs hidden by efficiently inefficient price mechanisms caused the collapse and may do so again. Meanwhile, environmental externalities caused by expectations of continuous growth are exceeding planetary limits. Solutions based on self-serving industry supplied forecasts don’t reconcile with economic reality and increase global instability. Only transparency creates a consequentialist ethic that changes our behaviour and reconciles short-term personal needs with long-term development goals to solve these problems. FMT’s breakthrough is in recognising homo sapiens as both rational and irrational while facing uncertainty. This biological approach overcomes both restrictive neoclassical hypothesis of rationality and behavioural finance’s incomplete attempts to nudge investors. FMT proposes novel micro foundations that describe the biological nature of financial markets to increase antifragility. Readers will make better decisions under uncertainty that profit us all.

FinTech Innovation – Robo-Advisors, Goal Based Investing, Gamification

In FinTech Innovation, Paolo talks about how innovation in financial technology has only begun to disrupt the wealth management industry, and is leading to a tectonic shift whereby investors and tech-savvy financial advisors can become the new price-makers in the global democratisation of banking. FinTech Innovation delves deeply beyond simply describing the disruption examining, in detail, the underlying processes to illuminate exactly what is happening and why its happening so that you can engage with and thrive in the new marketplace. Through a behind-the-scenes look at Robo-Advisors and their part in the turnkey, low-cost personalisation of Goal Based Investing, this cutting-edge guide opens a tangible path for using technology to gain a competitive advantage, establish your value as a human advisor and “rewire” investors’ minds to positively engage with investing.

Value Generations for Investors

In the face of new regulatory changes and the rise of Fintech the industry is on the verge of a sea change in financial advice. The onus, which Paolo focuses on on his third book, is now firmly on financial institutions to not only adapt to the transformation but to stay relevant and profitable at a time of unprecedented change. “Value-Generation for Investors” provides a roadmap for the reader: we lay out a model which places the goals and preferences of #investors (on-boarding) at the centre of the value-generation mechanism, enriching the creation of financial #products which create charges and costs (in-boarding). The analysis of #MiFIDII regulation only serves as a canvas to showcase how international best practices, grounded in goal-based investing and probabilistic scenarios, create a new compliant framework to evade the pitfalls of progressively commoditised investment solutions, and avoid disruption to their business by harnessing the “human element” and achieve sustained innovation with digital.

Modern Portfolio Management: From Markowitz to Probabilistic Scenario Optimisation

Here, Paolo delves into what truly matters to long-term investors. As he put it, it is the probability to achieve their personal financial goals through their life cycle (targets of total return or retirement income). PSO provides the principles and quantitative framework to feature the probability of achieving multi-period financial goals as the objective function, within a scenario-based and risk-constrained optimisation exercise. The adoption of Goal Based Investing principles leads to a change in perspective from MPT (Markowitz and Black-Litterman), based on the author’s research and experience in Risk and Wealth Management.

The FinTech Book (Co-author)

The FinTech Book is a primary guide to the financial technology revolution, and the disruption, innovation and opportunity therein. Written by prominent industry experts and startup entrepreneurs in the global fintech investment space, including Paolo Sironi, this book aggregates diverse industry expertise into a single informative volume to provide entrepreneurs, bankers and investors with the answers they need to capitalize on this lucrative market.

References