FinTech Focus – Paul Hienkens, Commercial Director of Chronicle Software
What can you tell us about your business?
In a nutshell, Chronicle Software’s solutions and consulting services enable financial market participants, such as investment banks, trading houses and execution venues, to build higher performance trading systems in Java, with shorter time to market and enhanced ease of maintenance on an ongoing basis. Our products bring the ease of development provided by micro-services, to large-scale and highly-performant trading systems.
Our solutions are unique in that they provide our clients the ability to leverage Chronicle’s own set of fully configurable, customisable trading system modules in conjunction with their own proprietary algorithms and in-house systems. We bridge the gap between “off the shelf” vendor software, which so often fails to provide the flexibility, throughput and latency goals that are essential for financial firms to remain competitive, and bespoke, custom-built trading systems and their associated costs and risks.
What has been your journey to current position?
For Peter Lawrey, the company’s founder, Chronicle Software represents a means of addressing many of the challenges and issues that he has encountered during the course of his professional journey. Even prior to establishing Chronicle in 2013, Peter was a well-known Java Champion and Open Source advocate, both within the financial services industry and beyond. In addition to his many years of Java development in financial institutions, Peter had also created his own Open Source portfolio of software (which is still downloaded thousands of times per month!).
Some time after making the transition from pure development to consulting and advising clients on their technology challenges, Peter decided to bring his growing portfolio of software modules and components together with a group of talented individuals to support it – and so Chronicle was born.
The last few years have seen continual growth for the company, with each more successful than the last. Our growth has been fuelled by an expanding client base of tier 1 and tier 2 banks. Our service offering now encompasses a combination of software modules, development frameworks, consultants and training. We are extremely proud of our ability to massively accelerate the development of trading systems whilst working hand in hand with our clients.
What interested you in this space?
From a technical perspective, low-latency, high-performance software is a huge challenge, and one that Peter has always found to be irresistibly intriguing. He has always been fascinated by problems such as how to make software go faster, at latencies that are almost incomprehensibly tiny to the human mind. Later, he focused on how to make these solutions more accessible to all developers.
From a business perspective, a key driver in trading systems is opportunity risk, and this raises interesting technical problems which aren’t as apparent in those areas of IT that are driven by reducing costs. At Chronicle, our focus is on helping the client’s business make more money overall, rather than focussing focusing predominantly on how to save money. Our primary concern is therefore with the strategy of our clients, their growth plans and ambitions, and how we can help facilitate this through our software and services.
How have you settled into the business?
It has been incredibly rewarding for the Chronicle team to find a niche in which their love of technology can be combined with solving real business problems. Due to its inherent nature, it’s an extremely demanding area of specialisation. It requires constant learning in order to make use of the latest innovations in software paradigms – and this, for Peter and the other Chronicle experts, is a form of paradise!
What lessons did you learn in your previous role?
As the team has worked with a wide range of clients collectively, each member has been able to contribute the lessons learnt from their previous experience into building up Chronicle as a firm. Peter likes to reminisce about one of his previous roles, working on software for index futures. His key takeaway was that finding a model to fit the past is relatively easy, but this doesn’t mean it has predictive power, which is more elusive! This is an important lesson for Chronicle as a company – we need constantly look to the future, identify the new trends emerging and leverage these in our products, rather than building software that meets our clients’ past needs.
Where do you see the opportunity for you in the UK and European market?
Chronicle is a forward-thinking company, and innovation is at the core of our vision. Our people are motivated by constant learning and development, and our goal is to continually offer improved products and services to our clients. Our roots lie in the open source community, and we see a real opportunity in thought leadership and in expanding our framework and methodologies to empower more developers in bringing innovative low latency / high throughput systems to market faster.
What are some of the major challenges facing the industry that your companyovercomes?
We see the challenges created by new financial markets regulation – such as MiFID II – and the changes it is bringing to the OTC derivatives and bonds markets, including increased trading on electronic venues, and enhanced use of straight-through processing (STP). In order for firms to remain competitive, they need to rapidly adapt to the changing execution environment. We have developed and integrated new trading systems in around one-third of the time normally taken. Using our development framework and methodologies both significantly reduces delivery risk, and makes it much easier to add new client-bespoke functionality.
As trading on these instruments increasingly shifts to electronic markets and platforms, Chronicle can provide financial firms with the tools and expertise that they need to get ahead of the game, fast!
How does your company differentiate itself from its competitors?
Our innovative product suite and modular trading system components, combined with a strong, experienced consulting team, enables us to “hit the ground running” on new client engagements. Our unique way of working with our clients means that the in-house development team can focus on their “secret sauce”, where they add the most value.
This division of labour has yielded significant success on our client engagements. Recently, we co-developed an FX trading system for a tier-1 investment bank, replacing an off-the-shelf vendor product in less then 6 months and immediately enhancing the client’s business and performance.
Ultimately, Chronicle isn’t really competing with other vendors and service providers in the same space, because our operating model is so completely different to that of our industry peers. In our experience, the choice that our clients find themselves having to make is between the upfront investment and opportunity risk associated with an in-house build, versus the additional costs and risks associated with vendor solutions. In both scenarios, it is expensive for clients to hire in the additional highly skilled resources to implement or integrate the respective solutions. These projects can often drag on for years, all whilst the world outside is moving ahead of the original project requirements.
We offer a middle ground that provides the best of both worlds – our flexible, customisable trading system components plus the expertise of Chronicle’s technical consultants, combined with the power of their own in-house teams’ business and systems knowledge. Our aim is to provide anywhere between 20-80% of the software infrastructure required, depending on the client’s business requirement and specifications. Throughout the process, we work closely with our clients’ internal development teams to ensure that skills development and knowledge transfer is achieved.
Where do you see the future of the market heading?
We foresee a trend towards increasing use of electronic and algorithmic trading across all instruments, with the potential for bonds and OTC derivatives markets to start looking and feeling more like equities and futures markets. This will bring the same challenges to these markets: a drive towards standardisation and increasingly more focus on performance and latency.
What do you feel are the biggest obstacles facing the industry?
There is a shortage of top developers who are both capable of understanding the complex businesses of financial firms, and building the high performance, easy to maintain trading systems that these business require – this is a small pool of people who are in extremely high demand. At the same time, given the amount of resource that financial firms have needed to dedicate to regulatory change over the past few years (and now to divert to Brexit planning), there are huge cost barriers for firms to overcome when planning to electively upgrade or enhance their trading systems. This means less money and less skilled resources to devote to strategic change, and a danger that firms will lose their competitive edge.
How do you plan to overcome those obstacles?
Chronicle seeks to attract and retain talented technical consultants, who can then work closely with our clients’ in-house teams, using our own framework and methodologies and enabling our clients to achieve much more with their existing team of developers.
What makes your company an employer of choice?
Working at Chronicle Software means working with a team of highly skilled and experienced technical consultants, who also truly understand our clients’ business and infrastructure needs. We only recruit consultants who come with a deep understanding of and expertise in Java, who are problem solvers, and who can convince Peter that they are genuinely interested in our company and vision, and are willing to learn from being part of the team.
In addition to our consulting team, we are also steadily expanding other parts of the organisation, such as our Sales, Business Development and Marketing functions. People join us as we are a young (at heart), ambitious, fast-growing, innovative organisation with a product and skill set that is pretty unique in our industry.
What are your plans for 2018 and beyond?
In 2017 we brought micro-services to low latency, high throughput trading systems in Java.
In 2018, we will be bringing block chain to low latency trading systems. We are currently developing a block chain platform that is designed to support payments in virtual and fiat currencies, and capable of managing hundreds of millions of transactions per second. Like everything we do, it will be packed with innovations, including an open source AI to manage volatility, and the ability to support to support IoT (internet of things) with sub-milli-second latencies.
What areas of financial services do you see as most ripe for disruption bytechnology?
We are certainly far from alone in seeing blockchain as a disruptive technology. Blockchain lowers the requirement for trust between individuals and institutions. Trust is placed in the open protocols, rather than those using the platform. It has the potential to become the internet for financial/value/asset transactions. As such, it can become the preferred way to hold value, perform payments and exchange assets digitally.
In many well-documented respects, it is ideal for financial transactions. However there is one main issue: blockchain technology, as it stands, is excrutiatingly slow.
Our vision is to build and evangelise the technology that can support financial service transactions utilising low latency, high throughput blockchain solutions.
What do you think the financial services sector will look like in five years’ time?
Banking users will have far more choice as to how and where they hold value as well as who provides financial services to them. Much like the internet itself, if users don’t get the experience they want, they will be able to switch providers almost as easily as they switch web sites. Companies that deliver the services which bring users back will grow the most.