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Financial services is a growing space, one that has multiple regulations and security threats
For the last six months or so, including those leading up to its long-delayed IPO in January, cloud storage company Box has been working on a new strategy, one that would allow it target to specific industries, rather than offering a one-size fits all solution.
It is called Box for Industries, and the company initially outlined three specific verticals it would be targeting: healthcare, retail, and media & entertainment. Now the company has revealed that it has chosen another vertical it believes can be a key growth driver: financial services.
Some of the features that Box will be offering specifically for this vertical include: retention management, which allows those organizations to "comply with record retention requirements set by financial regulators." It will also support "critical use-cases in legal, healthcare, and many other key industries." This feature is still in beta.
The company will also help its customers meet regulatory compliance standards with SEC 17a-4, which requires electronic records to be preserved in a non-rewriteable, non-erasable format, for a specific period of time.
And it will also be offering watermarking through its Information Rights Management feature, allowing shared documents to be automatically watermarked with a user's login ID or IP address, enabling additional protection and traceability of shared content.
The company also revealed that it had entered into working partnerships with financial industry brands including Legg Mason, KKR, Nationwide Insurance, AAA and Guaranteed Rate to help guide Box for Financial Services and keep it up to date on how the industry is evolving.
In a blog post, Box CEO Aaron Levie explained why he believed financial services to be so ripe for these types of tools.
"Technology is playing a central role in the transformation of the financial services sector," he said. "From new digital technologies that are changing consumers' retail and commerce experiences, to new digital workflows for how loans are processed, insurance is provided, and deals are transacted, the entire financial services ecosystem is being driven to modernize,"
They are also "dealing with an ever-increasing onslaught of new regulations, business model complexity, and cybersecurity threats," which creates a situation where businesses have two things happening at the same time: they need to innovate, while also protecting themselves. They need to be able to collaborate their documents securely.
"Legacy information technology that tethers content to on-premise infrastructure or lacks modern security capabilities is no longer an option. As a result, financial institutions are moving to next-generation cloud and mobile solutions," said Levie.
Levie obviously sees great opportunity in this space from the standpoint of the industry simply needing these types of features, it also helps that fin tech is also one of the fastest growing sectors, with the industry raising a total of $3 billion in venture capital in 2013, more than tripling the $930 million invested globally in the space in 2008.
2014 was expected to be another record-setting year for the space, though no hard numbers seem to have been released on that yet.
Financial services seem to be the perfect fit for Box: a growing space, with a big need for the kind of security and regulatory compliance that it can offer. And Box could use the revenue infusion, as it is still not profitable.
In the nine months ending in October 2014, the company made $153.8 million in revenue, an 80% increase from the $85.4 million it made in the same period in 2013. At the same time, the company saw its net losses rise as well. The company lost $129 million in that nine-month period, up from $125 million the year before.
Those losses are primarily being driven by Box's sales and marketing expenses, which added up to over $152 million, up from $124 million in 2013. That is nearly three times as much as it spent on its next highest expense: research and development, which only cost the company $48 million in the same time period.
Shares of Box are currently up 1.17%, or $0.32, to $18,99 a share.
VatorNews reached out to Box to find out more about the financial opportunity it sees in financial services, but the company was not able to elaborate further.
(Image source: box.com)
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Box provides secure, scalable content sharing that both users and IT love and adopt, including 82% of the FORTUNE 500. Box's dynamic, flexible content management solution empowers users to share and access content from anywhere, while providing IT enterprise-grade security and oversight into how content moves within their organizations. Content on Box can also be accessed through mobile applications, and extended to partner applications such as Google Apps, NetSuite and Salesforce. Box is a privately held company and is backed by venture capital firms Andreessen Horowitz, Bessemer Venture Partners, Draper Fisher Jurvetson, Emergence Capital Partners, Meritech Capital Partners, NEA, Scale Venture Partners, and U.S. Venture Partners, and strategic investors salesforce.com and SAP.