Fintech Disrupts Software Development
A start-up launched three years ago to build a framework for faster and cheaper software development in capital markets has completed a financing round which includes Illuminate Financial Management, a venture capital firm specialising in institutional financial services.
Stephen Murphy, chief executive of genesis, told Markets Media: “I have had experience of building systems in-house and buying from vendors for capital markets.”
Murphy previously held senior roles in firms including Goldman Sachs, Merrill Lynch, HSBC & BTG Pactual in London, New York, Hong Kong & São Paulo. He and James Harrison founded genesis in 2015.
“We launched genesis three years ago as we realised firms need a microservices framework for developing software, rather than the traditional monolithic way of changing whole platforms,” Murphy added.
He explained that microservices breaks the problem into small components of functionality, while ensuring that the data they use is consistent in real-time.
Venture firm Sequoia hosted a microservices summit in 2016. Matt Miller from Sequoia said in a blog that firms such as Google, Amazon and Facebook have been running microservices for over a decade.
“In fact, every time you search for a term on Google, it calls out to roughly 70 microservices before it returns your result,“ Miller wrote.
Miller continued that embracing microservices requires a process to ensure developers do not create a sprawl of duplicative services, and that performance is the same quality across services.
“Connective tissue that manages the access and flow of information across services becomes paramount,”added Miller. “In this model, the relationships across services are often as important as the services themselves.”
This connective tissue is provided by genesis for the firm’s clients.
“Our framework allows software to be developed up to 80% faster and cheaper,” said Murphy. “For our last client we delivered in two months, against their expectation of more than 12 months. Our products are also scalable and resilient as any failures result in switching to another microservice.”
He continued that the primary channel for product development is genesis’ innovation labs, where the firm builds products with a partner, which has allowed a rapid growth of the product suite. The start-up uses a predefined set of core technologies but clients can also choose the best of breed to provide functionality. For example, genesis supports a number of relational databases and messaging platforms.
Current genesis products are focused on front-to-back solutions for treasury and wealth management; and multi-asset class post-trade solutions for broker-dealers and asset managers.
“From zero clients three years ago, genesis now has 12 clients and a number in the pipeline,” said Murphy. “Clients include top-tier broker dealers, asset managers, treasuries and clearing houses.”
Last week genesis announced the completion of its Series A financing round, raising a total of $3m (€2.6m) from Illuminate Financial in the UK, and Tribeca Angels, a New York venture group.
Paul Walker, member of Tribeca Angels, said in a statement : “We chose to invest in genesis because we understand that the combination of a rapid innovation technology platform, client success, and a high quality pragmatic team make for a very compelling investment. When we invest, we invest for the long term and we look forward to our collaboration.”
Murphy added: “A number of investors approached us as we have been profitable for the last year and a half. We wanted the right investors with long-term goals and who would provide synergies.”
He continued that the investment will allow genesis to expand the products on its framework stack; and to grow the client base and innovation labs. The firm has clients in Europe and the Americas but also wants to launch the full product range globally.
Mark Beeston, managing partner and founder of Illuminate Financial, said in a statement: “Market structure has been evolving to a series of best in class business solutions for some time which increasingly depends on the fast delivery of technology based on a microservices framework. We believe that genesis has created the only fit for purpose foundational layer of microservices.”
Illuminate Financial was launched in 2014 to invest in fintech companies in capital markets that create change through providing solutions for cost, control, capital efficiency or compliance with regulations.
Mark Whitcroft, founding partner at Illuminate Financial Management, has compared current changes in financial services technology to the transformation in manufacturing through Henry Ford introducing the assembly line. Whitcroft said in a presentation at an ISDA conference in London last year that a generational change is taking place in capital markets.
“A huge part of financial services built technology in-house or used a small number of vendors and that old model is dying,” Whitcroft added. ‘Financial services is being componentisized.”
This mean firms need to choose different components to solve specific problems, which then add together to give best of class performance.
“Firms need to look at vendor relationship management for procurement and integration,” said Whitcroft.
He stressed that this change will not happen quickly. “The short-term impact of fintech is being over-estimated but the long-term affect is under-estimated,” Whitcroft added.
Murphy said: “We want to grow from genesis 2.0 to genesis 8.0. In three years time we want to be the number one software vendor globally for all capital markets and asset and wealth management.”
The investment manager in digital asset. crypt and blockchain sectors will list on Nasdaq.
The venue is the first national regulated exchange offering T+0 settlement.
The regulator said it is considering modernizing its rules related to the definition of an exchange.
The firm will bolster its derivatives efforts, launch new businesses and make acquisitions.
He served as the 13th Chairman of the CFTC from 2014 to 2019.