The fixed income market is prone to human error and financial loss

The bond market operates in a completely different manner than global equity markets. It is based on in-depth analysis of companies and on credit ratings, maturity, and yields, and trading is mainly done by financial institutions, as opposed to stock trading that is mostly exchange-based. In addition, due to its complexity, the field is much less digital than stock trading and portfolio managers have few options for automating investment processes.

In fact, most portfolio managers who construct bond portfolios are forced to resort to assistance from specialized analysts and complicated tools to produce portfolios that match the investment strategy chosen by their clients. Because of the complexity of the process, building a bond portfolio is much more prone to human error and consequently financial loss.

Eliminate complex and expensive processes

BondIT has enabled rapid digital fixed income portfolio construction using an AI-based platform that incorporates and analyzes quantitative data obtained from the companies’ financial ratios and macroeconomic data, as well as qualitative data via news and other sources that can impact bond pricing, yields, and risk potential.

With BondIT, portfolio managers can produce complex and accurate bond portfolios that optimally meet customer requirements in seconds and avoid long, expensive and complicated processes. The platform is available anywhere in the world and allows customers to purchase any bond according to their preferences after receiving accurate and up-to-date data and subject to availability in the market.

BondIT Operates in the fintech industry, which is experiencing tremendous growth and received a boost during the Corona period. The industry provides access to financial products worldwide, even in places that could not previously have access to advanced services. In 2020, fintech mergers and acquisitions globally totaled more than $280 billion, with more than $2.25 billion in Israel. Israel is one of the leading countries in the field of Fintech and quite a few companies in the field have shown impressive exits.

A company with customers and proven benefits

Large companies across Europe, Australia and the United States already use the BondIT platform to manage nearly $10 billion in fixed income portfolios. This includes 3 of the 5 largest insurance companies in Germany and the largest bond portfolio management company in Australia.

The system streamlines the work of analysts and portfolio managers and saves them long hours of portfolio analysis and construction work. In doing so, BondIT allows its customers to increase the amount of portfolios they manage, without the addition of manpower.

So far, the BondIT platform has shown significant benefits to users:

• A 20.4% improvement predicting rating downgrades as compared to traditional rating companies
• 44% improvement in early detection of bond issues leading to price declines.
• Improving overall portfolio management accuracy by 81% and reduction of manual errors.
• Portfolio managers reported 3 to 10 times more efficiency in their work, i.e. saving manpower, time and costs.
• 100% transparency of the process that allows decisions to be made in accordance with regulatory needs.

Explainable AI

BondIT’s smart platform is cloud-based and consists of 4 main processes. In the first stage, the system collects data from the various markets, quarterly reports, news and more. In the second stage, it analyzes all bond issuer data. In the third stage, the system projects whether the rating is likely to remain stable for another year, or be upgraded, or downgraded. Through this smart system, portfolio managers can make informed and reasoned decisions for their clients or investment committees.

In the fourth stage, BondIT uses the information gathered in the previous stages to construct an optimal bond portfolio in accordance with the client’s investment strategy, all within seconds – compared to processes that can take days without an automated system. After a quarter you can revisit the portfolio and see if it still meets all the settings and strategy chosen by the client and update it accordingly. If there is a gap and change that requires a replacement of one bond for another, the portfolio manager can present to his clients the reasons for the exchange in a transparent manner without being suspected of generating unnecessary commissions.

BondIT makes unique use of Explainable AI technology, which provides transparency in the bond analysis and portfolio building process (as opposed to AI systems that provide an unexplained result) and allows the portfolio manager discretion in making decisions while providing investment committee and regulators the required explanations for every process and portfolio change.

 Business benefits:

• The company has sought-after products and huge customers all over the world.
• The company’s platform capabilities back tested and demonstrated efficiency and success.
• The company’s products dramatically streamline portfolio manager operations reduce human errors.
• Competitors provide solutions that are not completely suitable to the bond market, or that are significantly more complex and expensive.
• Has the ability to operate in bond markets worldwide.
• Complies with the required compliance rules in the industry.
• Simplifies a complicated and complex process in one of the largest capital markets and can become the default solution in the industry.
• The Company is negotiating with a number of financial institutions that are expected to lead to significant transactions.

Looking ahead

In addition to existing clients, the company has completed highly successful pilots with some of the largest financial entities in North America. As a result, BondIT is now facing engagement with several leading financial institutions. This is a great opportunity to join the company as shareholders and investors on the current terms, just before its value is expected to increase significantly with the signing of new agreements in the market.