What's your (Fin)Tech Stack?
Recently, I was going through the Institutional Investors Trading technology ranking for 2017 which tracks asset management, buy side Trading firms and Exchanges who are at the forefront of technology innovation to drive their business.
I have been following these rankings since 2013 and happy to see Arcesium in that list this year which has been spawned off from D. E. Shaw in 2015 and provide post trade technology offerings to other Hedge Funds including D. E. Shaw. Spawning off internal technological prowess as a separate technology business especially by a Hedge Fund requires a mindset of building businesses driven by technology and not the other way around. A more ubiquitous example would be Amazon Web Services spawned off from e-commerce giant Amazon. In both these cases, the core businesses are different.
While at D.E. Shaw, I had the privilege to get a real sense of what it means for a Wall Street Hedge Fund to call itself a Technology Development firm. I worked on multiple facets of Hedge Funds business but one thing was common throughout, right from Trading Signal generation(source of Alpha) to executing the trade to post trade activities, entire business was technology driven cutting across concerns and acted as a major driver in all aspects whether generating outstanding returns for actively managed funds to scaling up the AUM and to managing Investor relations, technology was deep rooted. At that point, I hardly used to hear the term FinTech, but ex-ante D E Shaw is a true FinTech company.
Later, I worked for world leading Index provider MSCI building Indexes and ETFs driving the needs of building custom benchmarks for the passive Investment community and ETF providers globally completely driven by deep technology infrastructure. By this time, I was sitting at the cusp of understanding how active and passive Investing are culminating together driven by technological innovation and structural changes for the ultimate benefit of asset owners.
The eureka moment of venturing out in Indian FinTech ecosystem started during my stint at D E Shaw where I had the opportunity to work on a Joint Venture with an Indian conglomerate setting up Institutional Brokerage and Proprietary Trading business based out of Mumbai, India. That was the time I realized the tremendous opportunity that exist in Indian Financial Services sector especially in Asset management space in terms of using Technological Innovation to build great businesses which are truly FinTech and make technological innovation as the profit center.
Traditionally, Financial Services in India are largely driven by capital and human resources and most of the technology requirement outsourced to large scale enterprise technology companies and treated as a cost center especially with Banks. On both the buy side and sell side trading and asset management firms even, the technological innovation happened in the past were mostly in house for institutional purposes only. In last couple of years, things have taken a positive drastic turn and technological innovation is reaching in the hands of consumers whether it is Banking, Trading, Broking and Asset Management.
The primary reason behind the massive transformation in the Indian Financial services industry backed by new business models and inherent structural changes, is the convergence of several tech disruptions all at the same time. Mobile revolution which is the convergence of multiple forces backed by cloud computing, open source technologies, high speed mobile network, consumer adoption of new technology at a rapid pace, data driven insights to better understand consumer behavior (Artificial Intelligence) and regulatory acceptance around new business models, are all together pushing the way financial services are offered on both the asset side and the liability side.
Investment management has been by some measures slower to evolve, but it, too, is changing. As a FinTech company innovating in Investment Management and Trading Technology in Capital Markets for both asset managers and owners, our focus is to build irreversible business models catering to changing regulatory landscape driven by deep technologies serving the entire value chain cutting across concerns for the ultimate benefit of asset owners both large and small.
Coming to our technology differentiation, we have built our system following the reactive manifesto and it is flexible, loosely coupled, scalable and completely message driven. We are harnessing the power of AWS cloud infrastructure using open source technologies such as Akka to build a highly distributed system which fuels both our consumer facing mobile app and web as well as our complex trading and execution infrastructure. Internally, our systems interacts with each other through APIs (Application Programming Interfaces) and these same APIs integrate Advisers/Fund managers, Broker/Exchanges and Investors on our consumer facing Investment platform.
The consumer Investment platform focus is to make actively managed funds easily accessible to retail Investors at an affordable cost sans the complexity and providing the ability to invest and track like passively managed funds. Objective is to blur the line between active and passively managed funds and make them available to retail Investors which otherwise is restricted to only HNIs and Institutions. On the asset manager side, our objective is to make asset managers focus on their core competencies and make their actively managed funds available to retails Investors with ability to scale and prepare them to shift to fee based advisory model which the regulator is pushing as well.
The future of asset management will be highly scientific, technology driven and empirical in nature and we are working on building that ecosystem. The winners are clear: innovation will continue to empower investors and help asset owners—whether they are individuals or institutions—reach their objectives.
So what's your FinTech stack?