We at Algomi are happy to announce our acquisition of ALFA technology from AllianceBernstein Holding L.P. With this investment Algomi expands our product range and improves our catalogue of great software for both buy-side and sell-side traders.

Both the brand name and the intellectual property behind the ALFA system has been acquired by Algomi Limited. In exchange AllienceBernstein now has a seat at the board of directors over here at Algomi, along with an undisclosed minority stake in the company. There is a lot of interest around Algomi investment, with Euronext investing $10 million to develop a new system in conjunction with Algomi.

Algomi´s financial technology software revolution

Since it´s inception in 2012, we at Algomi have acquired and developed a fantastic catalogue of software that help with modern digital fixed income trading. The key to our success is that our software, from both the buy-side and sell-side, communicate with each other, sharing important information to create a clearer view of the market as a whole. Don’t worry, all of our technologies are hosted on secure clouds and all data shared between platforms is completely anonymous.

Large companies are more attracted to diversify into fintech because many fintech are not just profitable businesses, but they produce software that can help in areas like the trading of stocks and shares.

ALFA technology in a nutshell

Algomi´s latest addition allows the buy-side trader to see a real-time picture of the market as a whole, including high yield, investment grade, government bonds, emerging market, municipal debt, and structured credit. It provides cross-market information on trade intent and liquidity to do this.

The program is designed to be sold to buy-side fund managers, showing relevant and helpful data from messaging platforms, electronic venues and direct dealer inventory feeds. As with all of our Algomi software, ALFA is hosted on a secure cloud with unique instances for individual traders, this allows them to build a relationship with traders via API or the use of a graphical user interface.

Traders need to stay as up-to-date as possible to make efficient and successful trades. ALFA provides real-time information that could dramatically affect the success rates of trades. Further Algomi investment will keep the good news coming for traders everywhere.

Recently we at Algomi, a UK-based financial technology company, secured a $10 million investment from pan-European stock exchange Euronext. Euronext has been going through an acquisition spree, snapping up companies in different sectors like the foreign exchange market with the acquisition of FastMatch.

It´s obvious that Euronext is trying to diversify in an attempt to weather the market instability, but the investment in Algomi was more than just diversification. We make software that can help Euronext in ways other than simply diversification. Euronext´s $10 million Algomi investment bought them a seat at the board of directors over here at Algomi and a 10-year development plan.

Algomi´s revolutionary software

Since Algomi´s inception in 2012, we have won many awards for innovative products that work well and make a big difference in the trading world. Euronext´s Algomi investment may be partly because they knew that with us they could develop a product that would both be profitable when sold and a product that they could implement themselves to make more profitable trades.

We at Algomi offer a range of products for different types of traders, but the system being developed with Euronext is called Euronext Synapse. This new, exciting system is an anonymous centralised inter-dealer marketplace. This product will truly increase liquidity when trading illiquid stocks. The platform is completely anonymous at every stage, preventing any data leakage, and eliminates the key liquidity challenges faced by fixed income markets.

Algomi´s efficiency comes from our whole collection of software working together from both the buy-side and the sell-side to benefit your trades. Our Honeycomb network links to our Synchronicity software and also shares information with Euronext Synapse. This way of sharing huge amounts of information and data anonymously is truly to everyone´s benefit. It allows both parties to make better trades and ones you´re more likely to be happy with.

The future of Algomi investment

In such a short time Algomi has made big waves in the trading industry and has entered into many journalist´s minds as being in the fintech top 50. Who knows what exciting opportunities are coming in the years ahead for us at Algomi.

The key to successful innovation is to provide an invaluable service for which there is a great need in the market. Algomi investment has been shrewdly focused on big data management. The bond trading industry is frequently seen to be drowning in a combination of information overload and illiquidity. Complex algorithms and software solutions seem to be the only way out.

What is ‘big data’?

‘Big data’ is a term that was coined in the 1990s. It refers to massive amounts of information that could potentially be mined for business gains or further material given the right circumstances. The big data analytics market is currently worth around $203 billion.

Analysing the big data sea entails taking raw data or pre-processed forms and running it through algorithms that highlight pertinent data points. This has to take place within a manageable timeframe to be useful.

What are the systems?

Algomi investment has centred on software programs that crunch the big data of the bond trading world. This has included creation and delivery to interested companies. Some of their programs have been independently developed and others were acquired or created in partnership. The 4 big offerings at the moment are:

• Synchronicity, this is one of Algomi’s sell-side products that creates an internal network of traders and salespeople within a bank. It can be used alongside the institution’s existing trading platform to provide a seamless and useful flow of information;
• Euronext Synapse, created by partnering with pan-European giant, Euronext, Synapse is described as an ‘anonymous centralized inter-dealer marketplace, a new secure ecosystem connecting pools of liquidity through a network of interconnected banks’;
• Algomi ALFA, ALFA stands for ‘Automated Liquidity Filtering and Analytics’ and was originally developed by Alliance Bernstein. They sold the product to Algomi so that it could be brought to market using existing structures and networks. It’s essentially a way to pull together the available electronic platforms for data analysis into one place, giving a view of the entire bond market;
• Honeycomb, turning ‘big data’ into useable knowledge and offering information on trade opportunities is this program’s great strength. It is designed to service portfolio managers, execution desks, and compliance teams. Traders can investigate potential deals through Honeycomb without telegraphing their movements to the whole market.

Fintech is blossoming in ways that no one expected. From crowdfunding to peer-to-peer lending and big data crunching with Algomi investment software to wage systems for the unbanked, the possibilities are exciting and potentially endless.

Below are just some areas where fintech has found fertile ground and has the ability to change the shape of current systems.

Personal finance and banking

The way people manage their money is changing. The days when a customer had to visit the bank in their lunch hour or fill out lengthy, paper forms is more or less over. Banks have to keep up while, at the same time, providing the personal service that customers say they want. This means harvesting and utilising available data to mine customer behaviours for tips on how they want to experience their banking services. Many of the major banks are responding well with tools such as apps, branch personalisation, and enhanced online banking with customised recommendations.

Mobile payments and transfers

Mobile payments are perhaps the biggest area of growth in the fintech industry. Companies like PayPal and WorldPay have had centre stage for a while now. They created ways to protect the consumer during online transactions.

The developing world is a major market for mobile payment fintechs. Millions of people throughout India, Asia, and Africa are unbanked but still have financial needs. Tapping this market in ways that big banks cannot is a recipe for success.

P2P lending

Peer-to-peer lending is enabling ordinary people to lend other people, small businesses, charity projects, and so on. It has helped to financially empower a huge swathe of a previously disenfranchised population and will surely continue to develop in interesting ways. Some of the leaders in the industry are Zopa, Ratesetter, and Funding Circle.

Better ways to use financial data

This is the category where Algomi investment has really come into its own. They now have 2 buy-side and 2 sell-side software solutions that link with each other in interesting ways. They are cross-platform and compliance conscious so they are meeting some of the major challenges in the big data processing world with their time investment. Algomi are just one of the fintechs responding to illiquidity in the market and they are doing so by making some stunning moves and partnerships.

In 2015, 15 leading global banks invested nearly $80 million on 606 mobile banking apps. HSBC alone had 11 iOS, 6 Android, and 1 Blackberry app in operation. Barclays had an added 30 iOS and 27 Android apps. This figure reflects spending at all stages of app development, testing, deployment, advertising, consumer education, and so on.

Meeting customer expectations

The market is tough for competing banks and customer retention is everything. The public expect to have a ‘bank in their pocket’ these days and be able to make payments, check balances, and more from their phones. In the USA, 62% of users primarily interact with their accounts through digital banking.

Benefits of mobile banking

The benefits of mobile banking are where banks need to invest their time and money. The more customers experience the following, the more likely they are to stick to their bank:

• Money management, customers are finding it easy to stay on top of their accounts through mobile banking and therefore avoid debt and charges;
• Security, it’s easier for customers to spot suspicious activity in their accounts if they are checking them more often. Also, the inherent riskiness of mobile transactions has forced banks to add extra layers of security for fraud prevention and compliance;
• Convenience, paying bills, opening accounts, and transferring money are all made easier with mobile banking. Some apps even allow customers to make ATM withdrawals using a code supplied by their mobile app – a handy feature if someone has left their cards at home.

A wider perspective

Shifts in the banking world are reflective of changes throughout the financial world. As we can see with growing fintech companies like iwoca, ClearBank and Algomi, investment in the future is the way forward. These companies are tackling the changes head on. Algomi investment software confronts illiquidity problems in the market. ClearBank saves costs using the cloud. What will major banks do to meet the mobile challenges and hang on to their customers? Will they be able to meet the challenges in the same way as Algomi? Investment has changed and banking will need to evolve to keep up.

The financial industry is experiencing a shake-up on a permanent basis these days. New fintechs and financial institutions are challenging the status quo and giving established companies a run for their money. Some are information-based, such as Algomi investment software offerings, and others are more finance-based, such as ApplePay. Some say that the real power to change the system though, lies in banking.

In February 2017, the 12 clearing banks in the UK were joined by a 13^th – ClearBank. This is the first new, purpose-built clearing bank to be created in 250 years. Nick Ogden is the brains behind the venture. He has spent 3 years putting together this multimillion pound project, which includes all the UK payment systems – Faster Payments, BACS, and CHAPS.

Other team members on the board at ClearBank include CEO Charles McManus, CFO Mark Jenkins, chief risk officer Steve Barry, CTO Andrew Smith, and chief governance officer Philip House. This brings a wealth of experience to the table and drives their credibility. They are some of the main investors in the banks success. ClearBank also secured £25 million from PPF Group and CFFI Ventures.

What makes ClearBank different?

ClearBank will cater to financial institutions, fintechs, and banks. They will not service the public. They employ purpose built technology that uses the Microsoft Azure Cloud system.

This is indicative of a general change in the market that is likely to see significant investment. Algomi CEO said this of cloud technology:

“But using trading tools that are inherently flexible by virtue of their cloud credentials also has significant business continuity benefits. Ultimately, it greatly minimises the risk of system outages and disruption when upgrade work takes place; an advantage that reduces IT risk.”

Algomi investment software innovator, Usman Khan

Ogden claims that “With the improved efficiency delivered by ClearBank’s built-for-purpose technology, between £2 billion and £3 billion could be saved from the annual costs that are paid for transactional banking in the UK”. Given this estimation, ClearBank could be the first truly competitive bank to enter the market in a long while, ClearBank could be unlucky for some of the existing behemoths like RBS, HBOS, and Lloyds.

The Algomi team is comprised of some of the most innovative, forward-thinking and experienced operators in today’s financial technology landscape. Usman Khan, the chief technology officer, is just one of them. He is committed to taking pioneering technology ideas to market.

In this article, Fintech Investment Reviews highlights some of Usman’s career history and awards to showcase what he brings to Algomi.

Career – past and present

The formation of Algomi in 2012 was the genesis of a future bond trading revolution. Tapping into streams of big data for analysis and use by traders and teaming up with other big and forward thinking companies like Euronext and OpenFin are just a few of the bold steps taken by Algomi. Investments like these meant that the liquidity-discovery start-up is looking to create an avalanche of opportunities within the bond-trading market within the next few years by tapping, organising and improving the accessibility of previously unreachable data streams. Indeed, they have already been responsible for the creation of swathes of liquidity in the market with their data crunching platforms. Their software, Honeycomb, already boasts connections with more than 240 buy-side clients and 17 international banks creating billions of data points.

Khan comes to Algomi from international giant UBS where a colleague had this to say about him: ‘Usman’s always been a highly respected individual and I’ve have nothing but positive feedback from my team members across the board.’

Usman is also a board advisor for Cognism. They are considered experts in financial narrative that communicates risk and opportunity to help drive sales.

Awards

Usman was named one of the top 40 under 40 rising stars of trading and technology by the Wall Street Journal eFinancial news in 2014 and 2015.

He was also listed as one of the 40 Coolest People to Know in Fintech by Business Insider. They describe him, affectionately, as a ‘fintech geek’ citing the fact that ‘he built a mock-up blockchain at home using rented AWS servers just to see how the thing works’.

This is just the tip of the iceberg when it comes to awards that have landed in Usman’s office. These cover his personal contribution to the industry as well as the work he has done collectively with the Algomi team.

In a seemingly complex world like Fintech, what is the value of going back to basics? The foundation of a search for liquidity remains the same regardless of the vast amounts of data that need to coalesce in order to make the trade. It’s all about buy and sell, speed and relationships.

All that is required to revitalise the system and return to basics, while still tapping into the resource of big data, is a new idea from an innovative company. Algomi have found ways to open up the treasure chest of data in the bond trading market. Their success so far has grown from innovative ideas, great partnerships and a highly-experienced team. Algomi Investment numbers have gone through the roof due to their unique offering.

Michael Schmidt is the chairman of Algomi and is profiled here by Fintech Investment Reviews. We explore some of his history and experience as well as articulating his vision for the company.

History

Before founding Algomi, Michael worked with the Swiss financial services firm UBS. He went on from there to form CapXD with Usman Khan and Robert Howes. The consultancy firm landed a big banking client early on but, due to contractual restrictions, did not have the room to breathe that these industry innovators clearly required. They proceeded to form Algomi together with some other industry stars and have been on the rise since then.

Vision for Algomi’s role in the marketplace

Schmidt, in an article he wrote for Fund Technology, explains why Algomi’s software has so much potential in the bond market:

“Over 95% of the $86 trillion global fixed income market is illiquid, with a typical bond being traded once a year, if at all. And yet of all the industries that are ripe for the big data treatment, it’s the bond market. Because the bond market generates data. Lots of it.”

Algomi’s software, Synchronicity on the sell-side and Honeycomb on the buy-side, are essentially data processing platforms that are designed to create liquidity by highlighting true trade opportunities. With the added bonus of sensitivity to privacy and facilities that help with reporting to regulators, these programs will be at the forefront of changes in the shape of the industry in the coming years. Fintech Investment  Reviews advises you to watch this space as the company moves forward.

The key players in Algomi are appearing more frequently in the news. In a recent interview with The Trade, Stu Taylor explained the recent moves of his company, Algomi. Investment information supply is clearly an area of expertise for Stu Taylor who is the chief executive officer and co-founder of Algomi.

Two years running in 2015 and 2016, Stu was identified as one of the key 40 players in the global trading tech industry by Institutional Investor Magazine.

Current and previous roles

Stu is also a non-executive director for Baymarkets, who provide Fintech and Regtech solutions to the financial industry. Prior to that, he worked for prestigious firm UBS, who supply wealth management advice, investment banking and asset management.

In 2012, along with Usman Khan and Rob Howes, Stu founded Algomi. Investment in big data analysis is key to the future of the bond trading market according to this team.

The role of Algomi

Freeing up data and putting it to good use, creates liquidity. That’s the simple premise underlying Algomi’s contribution to the industry. Its gets more complex from there though as the web of information of all different types is immense. Refining it into useful actions has always been the result of trader skills, and more than a little luck. Using their flagship software programs, Synchronicity, Honeycomb and Synapse, Algomi offer the opportunity for insight, precise communication and increased productivity.

When you are wondering what the next step is, a program like Honeycomb can show you the way. The discretion of your investigation process is assured and is protective of your client. You still make the final trade from the potential unlocked by Algomi. Investment information provided by their programs just makes it that much easier to get to this stage.

The human factor

One of the underlying philosophies of Algomi is the retention of the human factor in bond trading. They recognise that the infrequency and size of bond trades means that the marketplace needs its salespeople. Stu summarised this when he said, “Coming from an e-trading background allows me to see the limits of electronic execution and the bond markets are too broad and complex for this. We digitise the information to allow investment banks’ sales and traders’ access to the broadest range of opportunities and offer products that their clients might not even realise they want. But there remains a need for human intervention in the execution.”

One of the foundations of a great company is the team that keeps it going. If you get the dynamics right, tap the key skills and have excellent communication, this supports everything else you try to do.

For inspiration, you can look around at some of the top companies in the world today. In the Fintech industry, Algomi is one of these companies. They have constructed a world-class team to support their exciting journey into bond liquidity creation through big data analysis. Algomi are all about generating effective networks to benefit the industry and, it seems, they have done this within their company structure as well.

In this article, Fintech Investment Reviews profiles Rob Howes. One of the seemingly quieter founders of Algomi, who does not appear in the news as often as CEO Stu Taylor or CTO Usman Khan. He is their chief operating officer. Howes is clearly an innovative thinker, who started with a vision and then helped create a company to realise it.

History

Howes believes in the power of technology to disrupt the status quo. Far from being destructive, this creates fertile environments where new growth can appear. The bond market has traditionally suffered from illiquidity and is ripe for the kind of innovation that Howes, along with the other team members at Algomi, brings to the market.

He gained a M. Eng. in Information Systems Engineering from Imperial College London, before spending some time with UBS. He left to co-create consultancy firm, CapXD, with Usman Khan. Together, they became two of the key instigators of Algomi. Investment landscapes are always shifting and staying ahead of this movement involves being able to dive into the sea of information and come up with pearls. They recognised the potential for technology to support this process and created software programs like Synchronicity and Honeycomb to help.

The future

Working in partnership with great companies has been a key part of Algomi’s strategy. They highlight the importance of co-operation in a traditionally competitive industry. Recently, they have made some key deals with major players including Euronext and OpenFin. Each of these moves mean that they are able to offer traders assistance at every stage of the journey, from wondering what to do next though to the final trade.