Start-up of the month: Aleri - from classical music to banking analytics

When someone says they're going to turn a whole sector on its head, greatly improving its efficiency, you could be forgiven for being sceptical. But software company Aleri wants to do just that with banking. Heather McLean paid them a visit...

Sitting in the austere reception room of financial software start up Aleri one can't help but notice it has the hushed aura of a dentist's waiting room - minus the smell of disinfectant and copies of last year's gossip mags. The deathly silence is only broken by the obtrusive whirr of one side of A4 being photocopied by a nervous-looking employee, perhaps perturbed at the sight of a visitor.

The reason for Aleri's tepid atmosphere may have something to do with the suit-wearing industry it has developed a product for. It serves the world's banking giants. Aleri's staff is peppered with Russian mathematicians who took on the task of developing a single box to process and analyse banking data faster than current systems, simply for the challenge of seeing if a hypothetical theorem could become a commercial reality.

A neat looking man with a tidy little moustache steps through the door and introduces himself. This is Alan Hambrook, CEO and co-founder of Aleri and a serial entrepreneur.

Hambrook began his career not in the IT sector but as a classical guitarist at the Guildhall School of Music. He travelled the recital and concert circuit until the age of 25 when he started up his first company, a financial software developer that he sold two years later.

Now Hambrook and his family live in a house with its own recording studio that he runs for artists and friends interested in classical music. Under duress from one of his daughters, the studio is about to release two pop records on the family's label, Mima Records.

Hambrook isn't quite able to explain the leap between classical music and the financial services sector but he says several of his mathematicians were also concert pianists and the like in their previous lives, pointing to a link between the complexities of controlling a sheet of music and turning abstract digits into logical ideas.

Aleri began with an idea of Hambrook's born from his experience in the financial services sector. He noticed that while data volumes in the banking industry were rising faster than they ever had before, the ability to draw detailed information from that data was reliant on technology that had been around in the days when it was acceptable to spend a month finding something out, rather than minutes.

Hambrook said: "Today people are taking relational databases and adding them to online analytical processing technology which gives them a split and slow system. If they had one box, it would have radically better functionality, would be a lot faster and be much cheaper to buy and maintain.

"Businesses operate on much lower margins now but they have to make decisions faster. Our box is a leap-frog in terms of technology and functionality."

Aleri's packaged Software Engine absorbs transactional data from a phone call, an ATM transaction or even trading data from a major bank. It then keeps and analyses it by applying complex logic, allowing a user to mine information from a chosen angle.

The company's Information Engine is due to be released in its entirety in July this year. Since September 2001 Aleri has been running pilots on a limited form of the engine, primarily with Allied Irish Bank (AIB). AIB said time savings on its monthly consolidation reports that used to take 12 hours to process are proof the software works. They now take 12 minutes.

Aleri was founded in 1999 when Hambrook met fellow co-founder Eric Sandler, just after Hambrook sold the Dodge Group in a private sale in 1998. The Dodge Group had acquired Hambrook's year-old second start up (a client-server development company) in 1991 and he later became president and CEO of the larger business.

Co-founder Sandler was a mathematician educated at New York University who was working on high-speed vector ray computing when Hambrook turned up on the scene. Sandler and his team of US and Russian mathematicians had been using vector ray computing to look at memory map files for analytic processing, unusually within the context of real-time transactions.

The idea intrigued Hambrook and he persuaded the six-man team to move into a small garret in Manhattan to develop the idea.

Hambrook said: "You can write anything with a bunch of men in white coats but the challenge is to get it genericised, stick it on a CD and make it available."

The team managed that feat and is now a healthy 150 members strong, all from starting up on a $17m mixture of Hambrook's money and venture capital input.

"Most of the people we employ are highly driven and very deep. We have a number of patents that we feel are deeply profound that put us one year to 18 months ahead of the market," Hambrook said.

Aleri made its first acquisition, mpct Solutions, in January this year. Hambrook was interested in its Atlas suite of financial applications that have been implemented in 38 prestigious banking establishments around the globe, including, ABN Amro, Barclays, Deutsche Bank and LloydsTSB. Hambrook said the product is being implemented in others and hopes to sell to this customer base with Aleri's Information Engine.

On the future of the business, Hambrook predicted: "We will grow the number of Aleri licences to make the company worth $30m this year and in the upper $40m's next year. Our ambition is to become the leader in this field.

"This software has the potential to make us a major player, maybe bigger than we could handle."

This means Hambrook is prepared to sell the business on to a larger company with the right global reach if necessary. He said Aleri will start to make strategic partnerships at the beginning of 2003 for the purposes of marketing and distribution.

And Hambrook's next start-up? He is non-committal. His interests still lie with Aleri, he says. However, he has a top tip for anyone on the verge of a venture: "When looking for an idea, some things are mind-numbingly obvious. The solutions never are but the problem always is."

On that note, I leave the clutter-free cubicle land of Aleri.

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