5 #Fintech Questions with Barchart’s Mark Haraburda
Last week, Barchart held an event in Chicago to discuss the technology trends dominating financial markets and trading. The event had more than 400 attendees and 20 different Fintech company participants. Mark Meadows of Propllr PR caught up with Barchart Managing Director Mark Haraburda to talk about the takeaways from the event.
1. What led you to organize this event?
The “fintech” title has been cannibalized by consumer-facing applications, overshadowing innovations in financial markets and trading technology. Yet, while we’ve seen consumer fintech improve user experiences and bring commission-free trading to the masses, technology serving financial market has completely reshaped how we deliver data, analyze market patterns and judge sentiment on any number of securities. And leading the charge are companies like Anova Technologies, Vertex Analytics and Social Market Analytics, who fly under the radar in these conversations.
Our goal was to highlight those companies and shine a spotlight on the innovations that are occurring in financial markets and trading technology.
2. What can a strong fintech ecosystem do for financial markets and trading?
Financial markets are becoming increasingly more collaborative. As the common denominator between trading firms evens out, each firm’s core business becomes more important. Less expensive baseline technology has also enabled the rise of the one and two-person operations, providing more and more competition over the same pie.
A strong fintech ecosystem will spur innovations that have ramifications beyond just financial markets and trading. Some of the smartest minds are working on issues of networking, storage and data mining – all with respect to financial markets and trading. Those innovations have obvious applications elsewhere.
3. What role should Chicago play in that ecosystem?
When most people think about fintech, they think about New York, San Francisco and London. Yet, Chicago has a rich history in financial markets and technology, starting with the development of both futures and options markets here. We think that at the intersection of financial markets and technology, Chicago has an obvious role to play.
4. What were the largest trends in fintech?
There were three main themes (all related) that we heard over and over again that could continue to drive innovation. The first is choice. To survive, fintech needs to be based in open architecture with APIs and easy-to-use plugins. Legacy software, whether it is in a trading platform or used by brokers, is being abandoned in favor of cloud-based, flexible solutions.
Another macro trend – and this one is in all tech, across industries – is that tiny upstarts are challenging large, established entities, even those with seemingly high barriers to entry. This means that analysts, exchanges and investment banks are all feeling pressure to adapt faster.
The final trend is agility. For example, in tech development, it can be better to have a team of generalists over a team of specialists. Generalists can find the right tool for the problem, instead of forcing a tool to fit into a solution.
5. What does the future look like?
Inside these trends, we expect a few key changes to play out. First, much of the discussion focused on bitcoin – not debating the usefulness of bitcoin itself, but rather on the blockchain technology that can be critical in the future. With this technology, some speculated that it could reduce settlement times from three days to, potentially, zero days.
That could become the new race to zero, as the way financial markets currently think about latency could become a historical discussion. Instead, speed will matter with respect to how firms are able to iterate quickly and reduce a strategy’s time to market.
And the way that firms will do that is by increasingly moving to the cloud. The importance of the cloud is growing exponentially – which may lead entire exchanges to trade based in the cloud. If not that far, firms will develop and test strategies almost exclusively in cloud-based systems.
Customers can now access an expanding library of datasets via cloud APIs.
FINRA’s Office of Financial Innovation reviewed nearly 40 broker-dealer firms.
DZ BANK, BayernLB and Deutsche Börse implemented the digital OTC derivative using DLT and cloud technology.
Firms are increasingly moving to more agile technology, microservices, and data models.
Workloads supporting retail, commercial and investment banking, and wealth management will move.