Get insights into the world of data analytics and financial modeling from Christopher Aliotta, Co-founder and CEO of Quantalytix, in this exclusive interview.
Chris, can you tell us a bit about your background and how you got started in the financial technology industry?
I have a quantitative and technical background and prior to founding Quantalytix, I was a balance sheet manager at two of the largest commercial banks in the United States. As a banker, I was responsible for implementing risk and data management systems, and then later in my career I became focused on valuation and M&A activities.
I have extensive computer programming experience, and my real passion, since childhood, has always been technology. As a banker, I quickly recognized the significant need for more advanced solutions and the lack of innovation when it came to technology. In 2016, I made the decision to leave commercial banking and focus exclusively on fintech, combining my love for technology with the field I had specialized in for many years, finance.
What inspired you to co-found Quantalytix, and what do you see as the company’s mission and purpose?
The industry is starved for innovation and for solutions that have a material impact on their operations. Our inspiration for founding Quantalytix was the need for innovation in the banking industry and making analytics accessible to community banks and credit unions. We sought to provide an alternative to costly development and quantitative teams and to challenge the status quo in the current state of banking technology. Our mission and purpose at Quantalytix are to bring innovation to the industry and provide solutions that have a material impact on our clients’ operations.
How does Quantalytix differentiate itself from other financial technology providers in the market? Please describe the range of financial data and analytics services that Quantalytix offers, and how they benefit clients.
Being able to put theory to practice and having a passion for innovation is how we differentiate ourselves. There are several vendors out there that will claim they understand technology and strategy, but very few have a strong foundation in either, leaving the customer in a position of wanting more information, guidance, and direction.
At Quantalytix the key to our effectiveness is a very hands-on approach to how we work with our customers in order to maximize opportunities for them. We provide effective and relevant solutions that bridge the gap between data and strategy. Our financial data and analytics services include loan portfolio analytics, stress testing, loan loss forecasting, liquidity management, and deposit analytics. These services benefit our clients by providing them with insights into their operations, identifying opportunities for growth, and improving decision-making.
There are countless solutions out there that once you get past the façade, are simply vaporware. As a passionate technologist and someone who has helped banks manage billions of dollars, I expect my vendors to be available, flexible, and most of all relevant. Unfortunately, I have found that most vendors in the space have a legacy mindset.
How does Quantalytix ensure data accuracy and reliability, and what steps do you take to protect client data privacy?
We ensure data accuracy and reliability through effective challenge, repeatability, and automated auditing. We critically examine data and look for any abnormalities or peculiarities, ensuring that the data process produces consistent results. If all inputs are known, there should be no variation in the data (outputs) each time it undergoes a loading process. We perform before-and-after checks to test for quality and provide data lineage that auditors and model validators can understand. To protect client data privacy, we undergo standard SOC2 Type I & II audits and penetration tests, heavily rely on encryption, and provide secret keys for clients to decrypt their data.
Can you discuss any challenges or obstacles that you have faced in growing and scaling Quantalytix, and how you have addressed them?
Our biggest obstacle in growing and scaling Quantalytix was obtaining our first bank beta customer. Initially, we attempted to partner with larger banks, but this proved to be difficult. To overcome this, we focused on non-depository lenders like mortgage companies and businesses that underwrite loans for their own portfolios. This gave us the growing space and resources to build our credibility and reputation.
How do you approach talent acquisition and building a strong team at Quantalytix, and what qualities do you look for in employees?
As a small and lean team of mostly remote workers, we approach talent acquisition by looking for craftsmanship and resourcefulness in our employees. We want our products to be valuable, so we seek employees who are agile in responding to the constantly changing market and build for scalability. We also look for employees who match our culture rather than trying to create a culture.
Can you describe the role that machine learning and artificial intelligence play in Quantalytix’s data analysis and reporting?
At Quantalytix, machine learning and artificial intelligence are just some of the several tools we use to help navigate uncertainty. These tools have a broad application in forecasting, such as simulating balance sheet dynamics under various scenarios. We provide clients with the ability to plug their own models into our platform or for companies who do not have the quantitative resources, we can help build models specifically for them. We help clients understand how to use these tools by emphasizing that they are not perfect crystal balls that can see into the future. At best, they are mildly useful, and at worst, dangerous. This is where we shine in terms of helping our customers understand how to use them.
How does Quantalytix ensure that its technology and services are accessible and usable for a wide range of clients, regardless of their level of technical expertise?
We ensure that our technology and services are accessible and usable for a wide range of clients through our user-friendly platform, which is designed to be easy to use for clients with varying levels of technical expertise. We prioritize user experience and invest heavily in user interface design. Additionally, we provide clients with comprehensive training and support to help them understand and effectively use our technology and services.
What advice would you give to other entrepreneurs who are looking to start a business in the financial technology industry?
Starting a business in the financial technology industry can be challenging, so it’s important to be well-prepared financially for the long journey ahead. The best advice I can offer a fellow entrepreneur is to make sure you have a pilot customer who is willing to work with you, personal savings to fall back on, and a technical founder on your team to increase your chances of success.
Can you share any upcoming plans or initiatives that Quantalytix has in the works, and what you are most excited about for the future of the company?
We are planning to focus more on predictive analytics, which is a major blind spot for many banks. We have invested a significant amount of time in creating foundational elements, such as our data framework and basic dashboard reporting, which are necessary for performing meaningful analytics.
Under these initiatives, we have one of the most flexible and streamlined processes for loading and consolidating data from every major system within banks. We are also excited about our expansion into the Credit Union space and are actively seeking partners in that area. If you know of any institutions looking to benefit from an early relationship, let us know.
How does Quantalytix stay ahead of potential cybersecurity threats, and what measures do you have in place to protect client data?
We take the privacy and security of our client data very seriously and regularly undergo SOC2 Type I & II audits and penetration tests. We also rely heavily on encryption and secret keys that allow the customer to decrypt their data if they want it to remain encrypted even to us.
Awareness and education are the best tools for avoiding cybersecurity issues. As such, our employees receive annual training on cybersecurity awareness, and we maintain a company-wide alert system to notify them of suspicious emails or potential exploits. Additionally, we maintain contact with authorities like the FBI and provide them with information as it relates to potential security threats through their information-sharing portal. Should a cybersecurity event occur, we have ample insurance in place to help remediate and address any of the issues that may result from a breach.
Can you discuss any partnerships or collaborations that Quantalytix has formed with other companies or organizations in the financial technology industry?
Quantalytix is a proud member of the Association for Financial Technology (AFT), a professional group of finance-focused technology companies through which we have met several companies that complement our services. Currently, we have some partnerships and collaborations in the works but cannot discuss them yet since they are in the early stages.
In your opinion, what do you see as the future of financial technology, and how do you see Quantalytix evolving to meet changing client needs and industry trends?
I believe there will be a generational shift in the coming years as current bank leaders sell or exit their businesses and are replaced by a more technologically savvy generation that demands innovative solutions to legacy banking problems. At Quantalytix, we see this as an opportunity to create interconnected systems that meet the evolving needs of our clients. Additionally, we believe that non-depository lenders and fintech will dominate in point-of-sale financing, and we are exploring partnerships with these companies to offer more comprehensive solutions to our clients.