Articles related to FinTech (Financial Technologies)
By Michal Rozanski, CEO at Empirica.
In the very centre of Canary Wharf, London’s financial district, in a brand new EY building, a very interesting FinTech conference took place – FinTech Forum on Tour. The invitation-only conference targeted the most interesting startups from the investment area (InvestTech) from mainland Europe. The event had representative stakeholders from the entire financial ecosystem. As Efi Pylarinou noted – the regulator, the incumbents, the insurgents, and investors, were all represented.
Empirica was invited to present its flagship product – Algorithmic Trading Platform, which is a tool professional investors use for building, testing and executing of algorithmic strategies. However, it was amazing to see what is happening in other areas of the investment industry. There were a lot of interesting presentations of companies transforming the FinTech industry in the areas of asset and wealth management, social trading and analytics.
The conference was opened with a keynote speech by Anna Wallace from FCA. Anna talked about the mission of FCA’s Innovation Hub; that is to promote innovation and competition in the financial technology field and to ensure that rules and regulations are respected. Whilst listening to Anna it became clear to me what the real advantage of London holds in the race to become the global FinTech capital – London has Wall Street, Silicon Valley and the Government in one place – and what’s most important, they cooperate trying to push things forward in one direction.
A short look at the companies presenting themselves at the event leads to the conclusion that the hottest sector of FinTech right now is robo-advisory. It’s so hot, that one of the panellists noted it’s getting harder and harder to differentiate for robo-advisory startups. On FinTech on Tour this sector was represented by AdviseOnly from Italy, In2experience, Niiio, Vaamo and Fincite – all from Germany. Ralf Heim from Fincite presented an interesting toolkit ‘algo as a service’ and white label robo-advisory solutions. Marko Modsching from niiio revealed the motivation of retail customers, that “they do not want to be rich, they do not want to be poor”. Scalable Capital stressed the role of risk management in its offering of robo advisory services.
Social analysis/Sentiment/ Big Data
The social or sentiment analysis area, keeps growing and gains traction. Every day there’s more data and more trust in the results of backtesting as that data builds up over the years. The social media space is gaining ground. Investment funds as well as FinTech startups are finding new ways to use sentiment data for trading. And, it’s inseparably related with the analysis of huge amounts of data, so technically the systems behind it? are not trivial.
Anders Bally gave an interesting presentation about how to deal with sentiment data and showed how his company Sentifi is identifying and ranking financial market influencers in social channels, and what they discuss.
Sentitrade showed its sentiment engine for opinion mining that is using proprietary sentiment indicator and trend reversal signals. Sentitrade is concentrated on German-speaking markets.
From the area of asset management an interesting pitch was given by Cashboard, offering alternative asset classes and preparing now for a huge TV marketing campaign . StockPluse showed how to combine information derived from social networks and base investment decisions on the overall sentiment. United Signals allows for social investing by making it possible to trade by copying transactions of chosen trading gurus with a proven track record, all in an automated way. And, finally BondIT, an Israeli company, presented tools for fixed income portfolio construction, optimization and rebalancing with use of algorithms.
Bitcoin and Blockchain
An interesting remark was given by one of the panelist: ‘we have nearly scratched the surface for what blockchain technology can be applied to in financial industry’. Looking at the latest news reports that are saying that big financial institutions are heavily investing in blockchain startups and their own research in this field, there is definitely something in it.
A company from this sector of FinTech – Crypto Facilities, represented by its CEO Timo Schaefer, showed the functionalities of its bitcoin derivatives trading platform.
Hervé Bonazzi, CEO of Scaled Risk, presented its technologically advanced Big Data platform for financial institutions for risk management, compliance, analytics and fraud detection. Using Hadoop under the hood and low latency processing. Ambitious as it sounds.
Analysis of financial data for company valuations, Valutico presented a tool that’s using big data, AI and swarm intelligence. Dorothee Fuhrmann from Prophis Technologies (UK) presented a generic tool for financial institutions to derive value and insights from data, interestingly describing indirect exposures and a hidden transmission mechanism.
Stephen Dubois showed what Xignite (US) has to offer to financial institutions and other FinTech startups in the area of real-time and historical data that is stored in the cloud and accessible by proprietary API.
Qumram, in an energetic presentation delivered by Mathias Wegmueller, described technology for recording online sessions on web, mobile and social channels, allowing for the analysis of user behaviour and strengthening internal security policy.
London is the place to be for FinTech startups. No city in Europe gives such possibilities. Tax deductions for investors. Direct help from the UK regulator FCA. Great choice of incubators and bootcamps for startups. No place gives such a kick. Maybe Silicon Valley is the best place for finding investor for a startup, maybe the Wall Street is the centre of the financial world, but London is the place that combines both the tech and the finance. It has a real chance of becoming the FinTech capital of the world.
The people responsible for creating both a great and professional atmosphere at the event were Samarth Shekhar and Michael Mellinghoff. Michael was a great mentor of mine who transformed my pitch from a long and quite boring list of functionalities of our product to something that was bearable for the audience. Michael let me thank you once more for the time and energy you have devoted to Empirica’s pitch!
And because the FinTech scene in our region is not well organized yet, I sincerely advise all FinTech startups from Central and Eastern Europe to attend cyclic events of FinTech Forum in Frankfurt organized by Techfluence professionals!
Read about our Lessons learned from FinTech software projects.
Empirica has been nominated for the Best Fintech Startup in Poland at the CESA festival. CESA (Central European Startup Award) is the biggest no-pitch, no-conference start-up festival in the Central-Eastern European region. The festival brings together nearly 4.000 start-ups from 10 countries and it will be held in Vienna this year.
We are in good company, as other companies nominated in FinTech category are:
- our friends from FriendlyScore
The Central European Startup Awards is a series of events in the CEE countries, that aims to recognize and celebrate the entrepreneurial spirit and startup ecosystems of the region. This year eight categories will be awarded in:
- Startup Of The Year
- Best Investor
- Best FinTech startup
- Best Cloud/Data Application
- Best User Experience
- Best Social Impact Startup
- Most Influential Woman
- Best Coworking Space
CESA regognized FinTech as separate category this year reflecting that financial technologies are now the fastest growing technology sector worldwide. Incumbents in the financial industry – big banks and other financial institutions – are witnessing the emergence of new players that are profoundly changing the way individuals and business conduct their financial operations. Global investment in financial-technology (fintech) ventures tripled from $4.05 billion in 2013 to $12.2 billion in 2014, with Europe being the fastest growing region in the world, according to a report by Accenture. Last year, fintech investment increased at more than three times the rate of overall venture capital investment. While it remains to be seen whether the burgeoning fintech industry will actually pose a threat to established institutions, it is clear that the sector is rapidly growing and many of these entrants are here to stay. Investors in the nascent sector are taking notice, profitable exits are on the horizon, and big banks are investing in new technologies to strengthen their competitive positions.
More on this year’s nominees:
By Michal Rozanski, CEO at Empirica.
Reading news about fintech we regularly see the big money inflow to new companies with a lot of potentially breakthrough ideas. But aside from the hype from the business side, there are sophisticated technical projects going on underneath. And for new fintech ideas to be successful, these projects have to end with the delivery of great software systems that scale and last. Because we have been building these kind of systems for the fintech area for over 5 years we want to share a bit of our experience.
“Software is eating the world”. I believe these words by Marc Andreessen. And now the time has come for finance, as technology is transforming every corner of the financial sector. Algorithmic trading, which is our speciality, is a great example. Other examples include lending, payments, personal finance, crowdfunding, consumer banking and retail investments. Every part of the finance industry is experiencing rapid changes triggered by companies that propose new services with heavy use of software.
The best evidence that something is happening somewhere is to see where the money goes. Investments in fintech companies globally grew to $12 billion last year, which is a three times increase comparing to 2013, and five times during the last five years, according to the research reports by CBInsights.
If fintech relies on software, and there is so much money flowing into fintech projects, what should be looked for when making a fintech software project? Our outsourcing software projects for the fintech industry as well as building our own algorithmic trading platform has taught us a lot. Now we want to share our lessons learned from these projects.
1. The process – be agile.
Agile methodology is the essence of how software projects should be made. Short iterations. Frequent deliveries. Fast and constant feedback from users. Having a working product from early iterations, gives you the best understanding of where you are now, and where you should go.
It doesn’t matter if you outsource the team or build everything in-house; if your team is local or remote. Agile methodologies like Scrum or Kanban will help you build better software, lower the overall risk of the project and will help you show the business value sooner.
2. The team – hire the best.
A few words about productivity in software industry. The citation is from my favourite article by Robert Smallshire ‘Predictive Models of Development Teams and the Systems They Build’ : ‘… we know that on a small 10 000 line code base, the least productive developer will produce about 2000 lines of debugged and working code in a year, the most productive developer will produce about 29 000 lines of code in a year, and the typical (or average) developer will produce about 3200 lines of code in a year. Notice that the distribution is highly skewed toward the low productivity end, and the multiple between the typical and most productive developers corresponds to the fabled 10x programmer.’.
I don’t care what people say about lines of code as a metric of productivity. That’s only used here for illustration.
The skills of the people may not be that important when you are building relatively simple portals with some basic backend functionality. Or mobile apps. But if your business relies on sophisticated software for financial transactions processing, then the technical skills of those who build it make all the difference.
And this is the answer to the unasked question why we in Empirica are hiring only best developers.
We the tech founders tend to forget how important it is to have not only best developers but also the best specialists in the area which we want to market our product. If you are building an algo trading platform, you need quants. If you are building banking omnichannel system, you need bankers. Besides, especially in B2B world, you need someone who will speak to your customers in their language. Otherwise, your sales will suck.
And finally, unless you hire a subcontractor experienced in your industry, your developers will not understand the nuances of your area of finance.
3. The product – outsource or build in-house?
If you are seriously considering building a new team in-house, please read the points about performance and quality, and ask yourself the question – ‘Can I hire people who are able to build systems on required performance and stability levels?’. And these auxiliary questions – can you hire developers who really understand multithreading? Are you able to really check their abilities, hire them, and keep them with you? If yes, then you have a chance. If not, better go outsource.
And when deciding on outsourcing – do not outsource just to any IT company hoping they will take care. Find a company that makes systems similar to what you intend to build. Similar not only from a technical side but also from a business side.
Can outsourcing be made remotely without an unnecessary threat to the project? It depends on a few variables, but yes. Firstly, the skills mentioned above are crucial; not the place where people sleep. Secondly, there are many tools to help you make remote work as smooth as local work. Slack, trello, github, daily standups on Skype. Use it. Thirdly, find a team with proven experience in remote agile projects. And finally – the product owner will be the most important position for you to cover internally.
And one remark about a hidden cost of in-house development, inseparably related to the IT industry – staff turnover costs. Depending on the source of research, turnover rates for software developers are estimated at 25% to even 38%. That means that when constructing your in-house team, every fourth or even every third developer will not be with you in a year from now. Finding a good developer – takes months. Teaching a new developer and getting up to speed – another few months. When deciding on outsourcing, you are also outsourcing the cost and stress of staff turnover.
4. System’s performance.
For many fintech areas system’s performance is crucial. Not for all, but when it is important, it is really important. If you are building a lending portal, performance isn’t as crucial. Your customers are happy if they get a loan in a few days or weeks, so it doesn’t matter if their application is processed in 2 seconds or in 2 minutes. If you are building an algo trading operations or payments processing service, you measure time in milliseconds at best, but maybe even in nanoseconds. And then systems performance becomes a key input to the product map.
95% of developers don’t know how to program with performance in mind, because 95% of software projects don’t require these skills. Skills of thinking where bytes of memory go, when they will be cleaned up, which structure is more efficient for this kind of operation on this type of object. Or the nightmare of IT students – multithreading. I can count on my hands as to how many people I know who truly understand this topic.
5. Stability, quality and level of service.
Finance is all about the trust. And software in fintech usually processes financial transactions in someway.
Technology may change. Access channels may change. You may not have the word ‘bank’ in your company name, but you must have its level of service. No one in the world would allow someone to play with their money. Allowing the risk of technical failure may put you out of business. You don’t want to spare on technology. In the fintech sector there is no room for error.
You don’t achieve quality by putting 3 testers behind each developer. You achieve quality with processes of product development. And that’s what the next point is about.
6. The Dev Ops
The core idea behind DevOps is that the team is responsible for all the processes behind the development and continuous integration of the product. And it’s clear that agile processes and good development practices need frequent integrations. Non-functional requirements (stability and performance) need a lot of testing. All of this is an extra burden, requiring frequent builds and a lot of deployments on development and test machines. On top of that there are many functional requirements that need to be fulfilled and once built, kept tested and running.
On many larger projects the team is split into developers, testers, release managers and system administrators working in separate rooms. From a process perspective this is an unnecessary overhead. The good news is that this is more the bank’s way of doing business, rarely the fintech way. This separation of roles creates an artificial border when functionalities are complete from the developers’ point of view and when they are really done – tested, integrated, released, stable, ready for production. By putting all responsibilities in the hands of the project team you can achieve similar reliability and availability, with a faster time to the market. The team also communicates better and can focus its energy on the core business, rather than administration and firefighting.
There is a lot of savings in time and cost in automation. And there are a lot of things that can be automated. Our DevOps processes have matured with our product, and now they are our most precious assets.
7. The technology.
The range of technologies applied for fintech software projects can be as wide as for any other industry. What technology makes best fit for the project depends, well, on the project. Some projects are really simple such as mobile or web application without complicated backend logic behind the system. So here technology will not be a challenge. Generally speaking, fintech projects can be some of the most challenging projects in the world. Here technologies applied can be the difference between success and failure. Need to process 10K transaction per second with a mean latency under 1/10th ms. You will need a proven technology, probably need to resign from standard application servers, and write a lot of stuff from scratch, to control the latency on every level of critical path.
Mobile, web, desktop? This is more of a business decision than technical. Some say the desktop is dead. Not in trading. If you sit whole day in front of the computer and you need to refer to more than one monitor, forget the mobile or web. As for your iPhone? This can be used as an additional channel, when you go to a lunch, to briefly check if the situation is under control.
8. The Culture.
After all these points up till now, you have a talented team, working as a well-oiled mechanism with agile processes, who know what to do and how to do it. Now you need to keep the spirits high through the next months or years of the project.
And it takes more than a cool office, table tennis, play station or Friday parties to build the right culture. Culture is about shared values. Culture is about a common story. With our fintech products or services we are often going against big institutions. We are often trying to disrupt the way their business used to work. We are small and want to change the world, going to war with the big and the powerful. Doesn’t it look to you like another variation of David and Goliath story? Don’t smile, this is one of the most effective stories. It unifies people and makes them go in the same direction with the strong feeling of purpose, a mission. This is something many startups in other non fintech branches can’t offer. If you are building the 10th online grocery store in your city, what can you tell your people about the mission?
Fintech software projects are usually technologically challenging. But that is just a risk that needs to be properly addressed with the right people and processes or with the right outsourcing partner. You shouldn’t outsource the responsibility of taking care of your customers or finding the right market fit for your product. But technology is something you can usually outsource and even expect significant added value after finding the right technology partner.
At Empirica we have taken part in many challenging fintech projects, so learn our lessons, learn from others, learn your own and share it. This cycle of learning, doing and sharing will help the fintech community build great systems that change the rules of the game in the financial world!
Michal Rozanski, CEO of Empirica, was invited to join advisory board of FinTech Connect. The main purpose of the board would be to share knowledge and experiences with new fintech ventures looking for support.
FinTech Connect is a new initiative for the global community of financial technology stakeholders – investors, financial institutions, fintech startups and solution providers.
Empirica definitely sees a need for one place where people interested in advancement of financial technologies could exchange ideas, experiences and good practices. We are already taking part in similar initiative but on different field – IT Corner association for local software companies – and advantages of such an initiative are obvious to us. When such an idea gets critical mass of people involved that want to be active, then the effect is much more than the sum of its parts. IT Corner is living evidence of that. Therefore we are great fans and we will happily support the development of FinTech Connect.
FinTech Connect provides a digital hub and meeting place for the fintech sector. It allows start-ups, tech providers, investors and financial institutions to connect and do business through community platform. FinTech Connect has already thousands of members and the count is growing daily. In addition to start up events, FinTech Connect provides global seminars and conferences on subjects such as banking security, cash management and commercial payment strategies for corporate treasurers, and cloud IT platforms for financial institutions.
Steve Clarke, the founder and CEO of FinTech Connect says: ‘We launched FinTech Connect because we wanted to provide a global platform and community for the fintech industry. With the incredible amount of innovation going on within many different technology hubs around the World, there is a natural element of fragmentation between stakeholders and it can at times, seem like innovation is taking place within micro-communities; either in certain geographies, sub sectors or on a smaller scale again within accelerator or incubator programmes.’
FinTech Connect is also organizing Europe’s most exciting exhibition of fintech startup innovation – FinTech Connect Live. This conference will gather over 2000 fintech professionals, over 100 exhibitors and over 100 speakers and visionaries all in one place for two days in London in December 2015.
Learn more about FinTech Connect at: www.fintechconnect.com
and about FinTech Connect Live at: www.fintechconnectlive.com .
For news on cryptocurrencies, algorithmic trading, bitcoin, ethereum, crypto exchanges, quantitative cryptocurrency strategies, blockchain and algorithmic trading software.
© Copyright 2010-2016
Empirica, the vendor of
Cryptocurrency Algorithmic Trading Software
- Algorithmic Strategies Development
- Algorithmic Trading Platform | Software
- Company culture, team and values
- Confirm Subscription
- Contact us
- Crypto Robo Advisor
- Cryptocurrency Arbitrage and Automated Trading Software
- Empirica Get Full Version – Displayed in TradePad Demo
- Empirica Platform Offerings
- Get Empirica Platform!
- Insights and News
- Java | Software Developer | Wroclaw | Work
- Our Team
- Software development services | FinTech | Outsourcing
- Who We Are
- Java Software Developer | Wroclaw | Work
- Software Tester | Wroclaw | Work
- Quant | Wroclaw | Work
+48 66 777 09 04
5-7 Tanner Street, London
+48 575 017 043
Finland & Scandinavia
Mannerheimintie 12B, Helsinki
+358 50 61 061
Podwale 7, Wrocław
+48 600 825 279
Germany & Switzerland
+48 600 825 279