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Bill Capuzzi of Apex Fintech Solutions; Fintech Revolution

Fueling the Fintech Revolution with Bill Capuzzi of Apex Fintech Solutions

The financial services industry has historically adopted new technology at a much slower rate, but change is on the horizon. In this episode, we sat down with Bill Capuzzi CEO of Apex Fintech Solutions, to talk about the process of enabling clients to scale to meet the relentless pace of Fintech, while focusing on increasing access, creating efficiencies, and making a positive impact on millions of people around the globe.

Payments & Fintech Insights In This Episode

  • The global impact of increasing access to investment products and services for individuals in lower income brackets.
  • How technology functions as the great equalizer to eliminate friction in a highly regulated space.
  • The role of cryptocurrencies in the long-term investment landscape.
  • Where the embedded finance opportunity lies in investing in being a “feature” versus a business.
  • And so much more!

Featured on the Show

Episode Transcript

Bill: So when you think about changing the world, it’s pretty cool for us to go from, okay, 2 million accounts to 25 million accounts to 50 million accounts, all of which follow that same exact profile, which is, “undesirables.” That’s changing the world. Almost 25 million people is pretty cool, but we have just scratched the suffix. We have so much room still to go in terms of really affecting the lives of hundreds of millions to billions of people out there.

Heather: Welcome to “PayPod,” the Payments Industry podcast. Each week, we’ll bring you in-depth conversations with leaders who are shaping the payments world, from payment processing to risk management, and from new technology to entirely new payment types. If you wanna know what’s happening in payments, you’re in the right place.

Hey, everyone, welcome to “PayPod.” I’m your host, Heather Bodie, and today, we’re going to be talking about fueling the relentless FinTech revolution. Joining me today is Bill Capuzzi, CEO at Apex FinTech Solutions, a company dedicated to helping their clients innovate in several directions at once with scalable solutions. Bill, welcome to the show.

Bill: Hi, Heather. It’s a pleasure to be on.

Heather: We are so excited to have you today. I wanna start by exploring your career path into FinTech. Tell us all about yourself. How’d you get into the industry? And what led you to this point?

Bill: Well, I will tell you, it is for sure a circuitous path to get to where I am today. So, I had plans in college to go to med school, and as a sort of budding doctor, my major was environmental science. I got out of college. I couldn’t rub two nickels together, and so I figured, hey, let me make some money before I, you know, venture into med school, because, again, the thought of taking on med school is daunting. So, what do you do? You have an environmental science degree, what do you do? You become an environmental scientist.

So, I started my working career as an environmental scientist working for an engineering firm in New Jersey. I quickly learned after about three and a half years of taking groundwater well samples in, you know, freezing cold weather that it was not my calling in life, but still wasn’t ready to go back to med school. So, what do kids do when they’re not really sure what to do? Either they get their law degree or they go for their MBA. So I went and got my MBA a number of years ago, came out of MBA school and paused on the med school route, and then went to work at a company called DLJ, which was an investment bank in New York City. And one of the assets that they owned as part of this investment bank was this little company called Pershing, and Pershing sort of cleared trades in our industry. It’s sort of the ascend, so to speak, of investing. They were sort of behind the scenes, and they opened accounts, they processed, they did tax reporting, and they cleared traits on behalf of the industry.

And I spent almost 10 years at Pershing, and what an amazing experience, amazing firm, amazing leadership at Pershing. And what it opened my eyes to is, like, how messed up our industry really was in terms of the backend. Lots of focus on the front end, not a lot of focus, not a lot of attention, not a lot of effort in sort of modernizing the backend, right? Think sort of an inchworm, right? The front-end moved light years ahead over the course of the last 20 years, the backend kind of sat sort of, and hadn’t moved forward. I left Pershing in 2005 to help found a company called Convergex in New York City. And while at Convergex, again, I had this sort of urge to get back to the backend, the bowels of our industry, and help kind of drive sort of the inchworm forward, so to speak.

And so I tried to buy Apex from PEAK6. PEAK6 owned Apex. And roughly…you know, we’re going on almost 10 years now. I stepped in and asked Matt and Jenny, the founders of PEAK6, if I could acquire the company from them. To make a very long story short, I was not successful in buying the company from them, but they were successful in convincing me to come across and run it. And at the time, it was a handful of clients. It was less than 2 million end investors that we supported. And fast forward to today, we’ll get into the sort of the inchworm moving forward, there’s roughly 250 clients that we support and roughly 25 million end investors.

Heather: Wow.

Bill: It’s a pretty massive growth over the course of the last eight-plus years that Apex has been around.

Heather: Incredible. I love earlier that you said when 20-somethings don’t know what to do, they do what anybody does, go to law school or MBA. I don’t know if everybody follows exactly that path, but I like that those are the two last options.

Bill: Well, and I still have that desire to go back to med school, although my age now…I’m over 50. I guess I gotta give up on that dream.

Heather: Oh, never have to give up. It’s never too late. I thought I was gonna go to med school, too, and then ended up getting a theater degree. So, there are circuitous paths bound on this call today. So, all of that brings us to Apex FinTech Solutions. You initially had intended to acquire and then ended up jumping on board with them as CEO. Let’s get into the details there. How does it work? What makes it so special? What is different about Apex?

Bill: Yeah, so remember, I go back to…I spent roughly a decade at Pershing, and, you know, Pershing supports, you know, roughly speaking the same general, the broad investment industry. You know, I think the big difference with a Pershing or a Schwab or Fidelity is, you know, they focus sort of on the traditional advisory, traditional brokerage firms that support the industry. And the sort of maniacal focus of Apex, you know, the sort of relentless focus for the firm is how do you use technology to drive disruption? And again, having spent 10 years at Pershing, I understood what the challenges were, right?

So, let’s rewind the tape, it’s 2012, and you can’t open an account in less than probably a week, let’s say, between getting the paperwork sent to your house with the yellow stickies on it for you to, you know, wet signature these things and send it back. And if someone re-key that stuff into some other system, you’re talking about, you know, between five and seven days to open an account. And then, let’s assume you can get that account open, you know, and I’m talking about sort of the rest of the industry, then it was…you actually have to have real money. So, people didn’t want accounts that had a thousand dollars in it. So, you know, the next challenge was, like, this investing thing is not for young folks, it’s not for John Q. Public, it’s for people that have wealth.

And then the third part is the way that people interacted with investing was, okay, log onto some website, let’s just say an E-Trade account. You got three different terminals with lots of flashing lights on it and, you know, graphs. It wasn’t accessible to a person that’s walking down the street using their phone, right? So, the focus, you know, to use those as three kind of pillars, the focus for Apex is, how do you lower the barriers to entry? How do you make it such that that experience in terms of opening, funding, trading, managing your investment accounts is simple? And do that purely on a B2B basis. So, to be clear, we are simply business to business. We obviously support, as I said, close to 25 million end investors, but that’s on behalf of the 250 different clients that we support today. And it’s a perfect symbiotic relationship between that institution we work with in Apex. And what I mean by that is, let’s just…I’ll pick on SoFi as one of our partners.

SoFi is amazing at creating this great experience for the end customer. So, they own the desktop, they own the app on your phone, and their job is to create amazing engagement with that end customer. Our job as Apex is to do everything behind the scenes as a sort of proverbial man or woman behind the curtain and bring to life this amazing experience, open an account in five seconds or less with no paperwork, make the funding to pull the money from your bank account into this investing account simple, allow you to buy fractional shares of Tesla that’s trading it for one share more than you have in the account as a whole. Just make that experience happen in a really kinda digital on-brand way. And the end results, as I said, 25 million end investors. The average age is 31 years old, and the average account size is a fraction of what, you know, is an account at Schwab or Fidelity or Pershing, you know, just in terms of the other custodians that are out there.

Heather: As somebody who is not from wealth and has not yet in her life, although I say not yet, accumulated a large amount of wealth because it’s in the plans, I’m deeply appreciative of people in the world who are looking to disrupt specifically the financial services space and serve those of us who, like you said, if you don’t come into the system with money. Some of those barriers need to be removed in order for us to sort of enter and engage in the system. Simultaneously, on the flip side of things, where’s the profit margin in all of that? You know, do you get pushback around maintaining tons of, I don’t know, clients of yours that are maintaining tons of tiny accounts?

Bill: Yeah.

Heather: Can you talk to me about that a little bit?

Bill: Sure. Look, the first part is, and I won’t name names, but whether Schwab or Fidelity or Pershing, you’re talking about thousands and thousands and thousands of employees, right? Apex is a fraction of that, yet we service more clients, more end clients than the three of them do. And how do you do that? You do that with a fraction of the staff. So, you know?

Heather: And a little bit of magic. No, I’m just kidding.

Bill: Well, look, this goes back to what I said in the beginning, which is the great equalizer, you just use technology. So, how do you open accounts in five seconds or less with no paperwork? You use technology, and you’re really smarter around how to manage the rules because this industry is incredibly regulated, the equities, the options, the futures, fixed income world. You know, non-crypto world, we’ll talk a little bit about crypto in a bit, but the non-crypto land is very regulated today. And so, how do you live within this incredibly regulated world and use technology to eliminate all this friction? And as a result, you can make an account that has $11,000 in it very profitable for our customers, right? The SoFis, the Stashes, the Weebles of the world, and also for Apex.

And so, there is a scale component to the way that Apex, you know, from a financial standpoint. The second thing I would tell you is that with the Fed raising rates and Apex acting as a custodian of end client assets, that’s a good thing for our business, and it’s a good thing for our partners like SoFi and Stash because as the Fed raises rates, there is cash in these accounts, and we’re able to generate improved or increased interest income, some of which is passed along to the end customer and some of which is split between us and our partners.

Heather: I was on your LinkedIn profile before we sat down to talk today, and I have to tell you, I love that you say, I think it says, “I’ve come to change the world.” That you’re on a mission. And while that can sound…well, I’m not even gonna put a word to it because…

Bill: Pretentious.

Heather: Well, but I think how dare us to limit ourselves in that…

Bill: That’s right.

Heather: …arena. If we individually believe that we can’t affect change, then what are we doing? So, I’m really grateful for you and I’m grateful that you said that. And now that you’ve walked me through a little bit more how the company functions and how you’re using technology to disrupt, I wanna circle back to that idea of how you see this impacting the globe.

Bill: Yeah. So, I’m proud of the fact that we have close to 25 million folks. Average age is 31, average account size in the…you know, less than $15,000. And so when you look at that, it’s like, okay, these are people that are the undesirables in terms of the big advisory firms, the big brokerage firms. People don’t want these small accounts. And historically the way it’s worked is those same advisory firms, the same brokerage houses say, well, when Heather gets a bunch of money, she’ll come knocking at, you know, Insert Here, right? Goldman Sachs, whatever. And that’s historically the way it’s always worked. It’s like, when you finally become wealthy, you’re gonna sort of raise your hand or pick your head up and say, I need somebody to help me. We’re sort of changing that. And again, back to that symbiotic relationship between us and our partners, the 250 different firms we work with, is how do you help those folks as they start their journey, young folks that are trying to start their investing lives, or folks that are middle America or, you know, sort of John Q. Public that are never gonna be ultra-high-net-worth or high-net-worth individuals.

When you think about the number of people in the world, right, forget the U.S. for a second, but in the world that don’t have a dollar invested in their future, it’s sort of mind-boggling. Let’s just take India for example. Roughly 3% of Indians have an investment account. Ninety-seven percent of the people that live in India don’t have an investment account today. It’s less than 10% of those in China that own an investment account. In the U.S., it’s roughly 50%. Still here, right, this great nation, we have one out of every two people walking down the street in New York today that have not invested a dollar in their future. So, when you think about changing the world, it’s pretty cool for us to go from, okay, 2 million accounts to 25 million accounts to 50 million accounts, end-client accounts, all of which follow that same exact profile, which is, “undesirables.” That’s changing the world. Almost 25 million people is pretty cool. But we have just scratched the suffix. We have so much room still to go in terms of really affecting the lives of hundreds of millions to billions of people out there.

Heather: But you’re on your way…

Bill: We are.

Heather: …and, you know, know in less than 10 in the grand scheme of things short years. What an incredible growth trajectory. It’s really cool to hear. You mentioned we talk a little bit later, but I wanna touch on it now. Let’s talk about what’s going on in crypto if you’re open to it.

Bill: Yeah.

Heather: How is that impacting your business? What are you seeing going on? Give us whatever inside scoop you’re living with. Impart it upon us.

Bill: Sure. 2018, we launched a sister company to the clearing business, that B2B company I mentioned called Apex Crypto. And the concept of Apex crypto was, again, to very simply allow for retail investors, again, on a B2B basis to access the crypto markets. And, you know, I’m proud again that we helped over 5 million people open accounts and start investing in cryptocurrencies over the last few years, and that’s great, right? Again, democratizing investing, right, is kind of the focus for us.

I think the challenge and the frustration for me, and it’s sort of it’s out there for all to see over the last couple weeks with, you know, the collapse of FTX is the core of crypto was decentralized finance, right? It’s sort of this immutable contract that says that Heather owns Bitcoin, right? It’s on the blockchain. And while that’s true, the reality is that this crypto industry as built around that blockchain that core concept of immutable ownership of that coin, has created this massive infrastructure that’s full of bad actors and stuff happening behind the scenes that’s not transparent.

And I mentioned before about the compare contrast to the equities world. There’s a lot of regulation in place over the course of hundreds of years that have gotten us this place that really protects the end investor in buying inequity. None of that is in place today. Very little of that is in place today for cryptocurrency, and as a result, you find yourself really not knowing who to trust, who’s a good actor versus a bad actor, which is sort of ironic that there’s a cry for regulation around this space because that’s…

Heather: Oh, it’s pure comedy, yeah. I mean, that’s the great comedy of all of it, is that we’re like, why didn’t anybody regulate this?

Bill: Yeah. I mean, the sad truth, though, is unfortunately people take advantage of opportunities, some in very pure altruistic ways and some people not so much. And those have played out over the course of the last several months. You know, dating back to the Luna coin blow-up, that sort of had contagion into Voyager and a few of the hedge funds. And then, I think will go down as one of the biggest frauds of all time is FTX. And I don’t think the industry has seen sort of the full extent of the contagion from FTX. I think it’s gonna play out. And again, a lot of…if you really dig into the guts of what happened with FTX, there was no transparency, there was no regulation, and there was a lot of backdoor dealings of things moving back and forth that frankly can’t happen in at least those…you know, compare contrast the equities market.

So, here’s what I would tell you. I think the good news from what’s happened over the last few weeks is that it’s gotten the attention of the regulators. I think that what we’re gonna see is a lot of change, a lot of necessary change vis-a-vis the regulation, at least in the United States I’ll say. And my bet is it’s gonna take the better part of 12 to 24 months for us to get to the other side of our coins of security or not, which coins of securities or not. How do you determine transparency? Is there regulation around the books and records of some of these firms? How is lending happening? What’s permissionable versus non- permissionable in terms of staking coins, lending coins, all the things that happen behind the scenes? So, I’m sad to see how things have played out because I think there’s lots of great people that did amazing things in and around cryptocurrency that are now kind of feeling the brunt of some bad actors. But unfortunately, I’ll tell you, I’m not surprised that we are where we are right now.

Heather: Well, let’s not spend another breath on crypto. Let’s talk about the power of some of these FinTech solutions that are disrupting the space in a way that is improving people’s lives. I wanna talk about what’s on the horizon or a few things that you’re incredibly excited about that Apex FinTech Solutions is working on right now.

Bill: Yeah, it’s a lot of the same, right, which is we’re gonna stick to what’s gotten us to this place, which is continuing to help these disruptors, right, these B2C companies, and find ways to do amazing things for end customers. So, that part I think is in our DNA. You know, there’s obviously lots to continue to do to be amazing at that. So, a lot of it is, hey, let’s just keep doing what we’ve been doing. I think the cool parts, as an adjacency to that are the international markets continue to expand. And when I say international markets, meaning, you know, I mentioned about India or China, Brazil, Canada. How can we take our show on the road? How can we take what we’ve done and dominated? Right? We have roughly 60% market share in FinTech U.S. How do we take what we’ve done into other countries and help democratize there to provide safe, secure, frictionless access to the U.S., stocks, and bonds in the U.S. into some of those countries? So, that’s for sure a path for Apex, and like I said before, there’s literally billions of people that need our help outside of the U.S. So, that’s number one.

Number two is sort of this traditional sleepy advisory world that we find ourselves in the U.S., and I said in the beginning around sort of the high net worth, ultra-high net worth that are supported by big advisors. They also need to become more efficient, those advisors, and again, we use technology to do that. And as, you know, we hit…you know, run into the economy that we’re in, we continue to find ourselves in a position trying to help sort of the more traditional players out there and take what we sort of implemented for FinTech and apply it to the sort of more traditional advisory world. So, a big focus on the traditional advisory.

And then lastly, embedded finance. And this is really interesting. Like, I’m not sure, Heather, exactly how this is gonna play out over the next five years, but the concept of investing being a feature versus a business. And what I mean by that is, you know, think about…

Heather: Yeah, I almost said, “What do you mean by that?”

Bill: Well, so, like, think about… I presume you use Amazon just like I do. I think I get a package from Amazon every day at our house.

Heather: I’m expecting one later this afternoon.

Bill: So, you’re on your Amazon, you’re gonna order a pair of Lululemon pants as an example. And the concept of turning Heather from a consumer into a consumer and a shareholder via that experience. So, follow the scenario where you’re on Amazon, the app, and you buy those Lululemon pants, and instead of you getting some weird points, Amazon points, you get the option of, do you want 2% in Lululemon stock or do you want 2% back in Amazon stock? And so you bought those pants for $100 and you get $2 back in Amazon stock. And again, if you’re anything like our family and how much money we spend with Amazon, that can very quickly 2% over the course of the year add up to something that is not necessarily…you’re not looking to invest, it’s just part of what you’re doing as part of Amazon, and for someone like an Amazon, it’s a way to create a tighter connection with that consumer, and again, turn that consumer into a shareholder, which again, just deepens the relationship between that person and that company.

Heather: Interesting. Do you feel like…

Bill: That’s coming.

Heather: …this is gonna…that’s coming?

Bill: Yeah.

Heather: And the reason we haven’t seen it yet is? I mean, are we talking about, like, the complexity of regulations around microtransactions like that or…?

Bill: No, I’ll tell you, the reason it hasn’t happened yet, and I gotta be careful what I say, it is coming.

Heather: Great. We can be veiled and mysterious. That’s fine.

Bill: I can’t tell you with whom, but I can say we’re working on this with a number of different firms. I think the biggest reason we haven’t seen yet is because, again, let’s pick on Amazon as an example. They don’t come from the world of investing. So, the concept of them saying, hey, we can do that, is, like, no, we’re not gonna open a brokerage account, we’re not gonna be a brokerage company. So, a part of it is that those companies, the e-commerce companies sort of getting exposed to this and getting more comfortable with it.

And then the second side, or, you know, the more important side is that there was no Apex 10 years ago, and what we do has evolved over the course of 10 years. And so, I would tell you, two years ago I couldn’t offered what I just described to you, right, because the technology wasn’t there, or the economics weren’t there. Today, we can do that and make that profitable, where, you know, Heather, you know, over the course of a year has an account that has $794 of Amazon stock in it that sits within the Amazon app. And I can make that happen seamless, frictionless, safely, and profitably for both us and for Amazon. And again, part of this is just the evolution of folks like Apex that are out there.

Heather: Incredible. Oh, I’m excited.

Bill: Me, too.

Heather: Thanks for giving us that little peak, you know, you gave the peak behind the curtain. We can’t see the whole thing, but we could see a bit of it. Well, our time is coming to a close. I wanna close out our episode like we do most of them and ask you a big question about advice. But particularly, I wanna highlight that not only have you had an impressive career but I’m pretty sure you’ve completed two Ironmans, is that right?

Bill: Yeah, a few of ’em in my life

Heather: Oh, a few? More than two?

Bill: Yeah.

Heather: That is incredibly impressive. I mean, it takes…and just the discipline and the focus and the dedication to that kind of training to get to that end goal. As someone who has accomplished all of that, what is the best either business or life advice that you’ve ever received, and from whom?

Bill: Yeah, that’s a great question. You know, I have four kids, and I talk to them all about failing and failing fast. You sort of know when something’s not working, right? So you measure four times, you cut once, but in all those measurements you forgot X, Y, or Z. You end up cutting and you realize that it was wrong. And what I found in my career is that when you try and double down on what you know in your gut is wrong and continue to sort of push forward, it usually continues to get worse. So, something I say to my kids all the time and I talk with my leadership team is fail fast, right? It’s, once you know that there’s a mistake, is, okay, rip the bandaid off, do the about phase.

And then the second part about failing fast is you just gotta make sure you don’t make that same mistake again. So, how do you learn from those failures? Right? How do you actually unpack what happened? And it’s brutal sometimes, because people had passion around this and knew it was gonna work and were convinced it was gonna work, and for those people it’s like it didn’t. There’s ego, and there’s hard feelings, but you gotta learn from failing. And, you know, the old saying is, you learn more from your failures than your successes, and I think that’s very true. And for me, when I look back on my career, the places where I had those moments in my career where I grew the most was from the places where I fell down. You mentioned about the Ironman training, you know, same there, it’s like not every time I go out and run or ride the bike it’s this amazing experience. Sometimes, I fall down or sometimes it’s an awful training, and, you know, you just gotta learn from it, figure out what to do next, and like I said, fail fast.

Heather: I love it. I don’t know if you feel this way, but sometimes I feel like my successes will feel like flukes, like I almost can’t believe they happened, you know? And I had someone point out to me recently, like, well no, if you look back, you worked really, really hard to get to that point. But somehow those successes feel like flukes where the failures feel like absolute, like they can pull the total rug underneath…or wait, out from underneath your whole dream.

Bill: That’s it.

Heather: So, I love that advice so much. Bill, thank you so much for joining us today. If folks wanna get in touch with you or if they wanna learn more about Apex, where should they go?

Bill: For me, I’m on LinkedIn. So, it’s William Capuzzi, C-A-P-U-Z-Z-I. Or come to our website, www.apexfintechsolutions.com.

Heather: Great. Thanks again. I really appreciate you spending today with me.

Bill: Thanks so much. I appreciate being on.

Heather: If you enjoyed this episode and wanna hear more, head on over to soarpay.com/podcast to subscribe on your podcast listening platform of choice. That’s soarpay.com/podcast.

Industry Spotlight

Apex Fintech Soultions

Apex Fintech Solutions is a fintech powerhouse enabling seamless access, frictionless investing, and investor education for all. Apex’s suite of scalable solutions fuel innovation and evolution for hundreds of today’s market leaders, challengers, change makers, and visionaries. The Company’s digital ecosystem creates an environment where clients with big ideas are empowered to change the world. Apex works to ensure its partners succeed on the frontlines of the industry via bespoke custody & clearing, advisory, institutional, digital assets, and SaaS solutions through its Apex Clearing™, Apex Advisor Solutions™, Apex CODA Markets™, Apex Pro™, Apex Crypto™, and Apex Silver™ brands. For more information, visit apexfintechsolutions.com. Disclaimers: https://go.apexclearing.com/social-media-terms-and-conditions