A Cincinnati-based financial technology firm has gone on a major growth spurt this year, doubling its employment as its business volume has surged exponentially.
Luma Financial Technologies has added about 50 employees in the past year to bring its total employment to nearly 100, CEO Tim Bonacci told me.
The “vast majority” of those jobs are in Cincinnati, based at the company’s headquarters in the U.S. Bank Tower at 425 Walnut St., Bonacci said.
“And we’ve found most of those employees locally,” he said.
Driving the need for all those additional employees is the massive growth Luma has had in providing a technology platform for investment advisers to access and compare structured products and annuities.
Luma makes it easier for investment advisers to access structured products and annuities. Structured products typically link an investment to a market index to provide downside protection and enhance returns. Among other things, Luma helps investment advisers offer the products to clients, compare the various products that are available and track investment results.
Luma now handles $20 billion a year in structured product volume, Bonacci said. That’s a whopping one-third of the entire market. And it’s 10-fold growth from the $2 billion a year it handled just two years ago.
“We’ve had exponential growth,” Bonacci said.
It’s not finished expanding. He expects Luma to add another 50 people in 2021, Bonacci said. And he anticipates the volume the firm handles soaring to $30 billion next year.
“We have a number of clients that have signed that are not yet operational,” Bonacci said.
Part of that growth will come from deals like the one Luma just announced with StoneX Financial, a global financial services network that will use Luma to give clients access to the structured products market.
Luma’s growth to this point has largely come from serving a need for investment firms that has gone underserved, Bonacci said. But he expects future growth to come from the expanding market which it serves. Structured products represent about $60 billion a year in annual volume in the U.S. But in Europe, where the market is more advanced, that figure is about $400 billion a year.
“We should have a significantly larger market,” Bonacci said.
The growth of employees means Luma is “out of space at the moment,” Bonacci said. Many employees are working remotely now, because of the coronavirus. But Luma needs a larger office. It won’t go far, though.
“We’re looking for space now,” Bonacci said. “I’m a proponent of being downtown.”
Bonacci also touts the high quality of Luma’s products. It’s natural he would say that, but Luma just won an award last week for the Best Structured Product Technological Solution at the Structured Retail Products Americas awards. The award recognizes technological innovation, infrastructure and market impact.
“We’re pretty pleased to be a fintech in the middle of Cincinnati and winning these big awards,” Bonacci said.
Bonacci, a former bank executive who worked at Fifth Third and PNC, founded the firm in Cincinnati in 2005 as CD Funding. It made market-linked CDs available to investment pros back then. It later shifted to structured products and he renamed it Navian Capital, which provided structured products and annuities to investment firms. Two years ago he spun off the technology platform as Luma Financial.
Luma received investments from investment banking giants Bank of America Merrill Lynch and Morgan Stanley when it was spun off.
