So advanced and varied are the technological solutions available to FX brokers these days that customization has become increasingly popular as a means of brokers differentiating their offerings from that of their rivals in what has become a highly competitive industry.
There are indeed some schools of thought which prefer an off-the-shelf product which requires minimal effort to set up and lower costs than that of customized solutions, and conversely there are those who seek to aim their offering at a specific niche market which requires specific parameters.
Financial software company Devexperts is firmly in the customization camp, providing solutions to enable brokers to adapt their offering according to business requirement. Indeed, at this year’s iFXEXPO in Cyprus, the company’s VP of FX Products Stanislav Stolyar reinforced the importance of technology within the forex industry whilst addressing a panel during which the virtues of proprietary platforms compared to third party ones were discussed: “ “This business is all about technology. Last year, there were extremely low volumes industrywide, and many FX firms had to cut costs.”
“This is where vendors generated certain solutions for that in order to keep the cost down but continue to grow the business. An example of this is offering different asset classes and adding them to existing platforms. Brokers are taking this to vendors, facilitating customization of the platform to accept these” stated Mr Stolyar.
In this week’s Forex Magnates Executive Interview, Devexperts’ Business Development Director Mikhail Berman details the company’s current focus, and explains what parameters need to be borne in mind to provide an effective solution to forex companies worldwide.
Please detail your professional background, and what led you to your senior position at Devexperts.
Like most of Devexperts employees I have a technical background. I gained my MSc in Computer Science from St. Petersburg State Polytechnic University and then held different positions within technical projects in different companies.
I was a technical manager of contact center solution at Alcatel with annual revenues of over 20 million Euro. I also held a position with the pioneering company in the mobile commerce sector in Russia, being responsible for their project with Yota, the first 4G (WiMax) mobile carrier in Russia.
Since the high-aptitude IT community is quite close I had personal connections with many people at Devexperts and always admired very high technical skills this company could maintain in its team and solutions. Thus it was an easy decision for me to join Devexperts and now I’m happy to be a part of the team.
Upon assuming your post as Director, what did you initially seek to achieve and how did you set about achieving it?
A few challenges stood out to me at the time.
The first was to improve the way company presents itself, its projects, skills, teams, results and so on. Of course, by that time Devexperts had a great experience in working with long-term partners but we wanted more and we had to improve our approach to find them and talk to them. I think we have succeeded here even based on the already announced projects, and more are waiting to be announced.
Another one was to improve the lead evaluation process. A company obviously cannot pursue every incoming lead/project, as in order to do so it needs to grow dramatically the number of headcount which leads to many infrastructural problems including risk of losing high technical ability of its team and solutions.
In this respect, through recently implemented (and newly started) projects I think we demonstrate progress in this direction.
One more topic was to develop and increase relationships with local sales partners/representatives. We had good and bad examples in the past and now we are trying to get the best out of it.
We have our local Japanese branch, Devexperts Japan, which was established in 2011. It is not an easy task to push projects forward in Japan and the entire busines experience in this area is very different. Even before 2011 we had some projects with systems in place for Japanese brokers.
This experience allows us to move forward with implementing some projects that could not be done well without us. Just one example is that in Tokyo in a matter of few weeks we have set up a demo installation of our dxFeed (real-time market data delivery) service which is connected to TSE (Tokyo Stock Exchange).
According to the measures completed with the client it has about 10 times lower inbound latency comparing to similar solution from Reuters. We are experiencing about 65 microseconds internal delay.
Recently I’ve seen so many companies, both sell and buy sides, attending the Forex Magnates Tokyo Summit so I think 2 years ago we made a good step in setting up in Japan and I’m happy we have a great team at Devexperts Japan.
As a software provider specializing in online brokerage solutions, how do you gain market share against other very established providers, plus whitelabeled solutions from big FX firms which can get a broker up and running quickly?
We believe there is a niche for different solutions on the market.
What makes our solution different is the approach that we practice. We know that any broker at a certain level becomes unique in terms of its business processes, features, market differentiators and so on.
At this point they usually raise their demand with regard to the system, the vendor, and many other aspects. This is our main target audience.
We know very well how to develop systems following business growth and vice versa, which is how systems can let brokers’ business grow.
We know this from our experience because we not only develop systems but also maintain them. We do it not only in SaaS (PaaS) mode but also having them installed on customer premises/datacenters.
We put great flexibility, scalability and configurability into our solutions, and we make them modular because it allows to better match a broker’s business process and feature requirements. I think this is our main differentiator.
At the iFXEXPO in Cyprus this year, Stanislav Stolyar, VP FX Products, addressed the technology panel which discussed the virtues of customized systems as opposed to proprietary solutions. Mr. Stolyar explained that last year, due to last year’s industry-wide low volumes, many FX firms had to cut costs and one of the methods of doing so was to replace manual operations with technology. Please detail the rationale behind this methodology, and if brokers view it as a cost that they must pay initially in order to reduce cost long term.
Cost saving is always a good idea for any business, however when the business is doing well and the company revenues are growing, cost saving programs are usually getting less attention from the management than the revenue generating operations.
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Last year when the situation changed significantly, many companies have been looking at various ways to keep their margins. In some cases replacing manual operations with technology may be a good idea.
In our experience every now and then we see opportunities to remove manual labor in broker’s operations in risk management, compliance and other areas. For a broker operating in multiple jurisdictions and catering for various client types room for manual labor optimization may be significant.
Customized systems provide more flexibility in this case, of course.
Volumes this year have increased dramatically, and there has been an expansion of business by existing brokers and a number of newly established brokers. Do you think it is wise to go into business with an off-the-shelf system and be up and running with tried-and-tested integrated technology, or do you think it is better to go the custom route at the outset?
As I said earlier we believe there is a niche for both models. We have a solution for brokers who want to go live in a matter of a week or two. I mean it is ready, all basic features are there.
On the other hand our solution is very modular. It is designed in a way that every module may be changed or even replaced, keeping in mind that brokers may already have certain components ready or for whatever reason. Even risk management models can be added just as plugins to the order management system.
Think about it: we have used the same order management and front-ends in a HFT (high frequency trading) project we have implemented last year in India. Of course, the HFT core was created separately using completely different technologies (to assure max 5 microseconds inbound latency) but then it was connected to the OMS as yet another module. Basically it fits to the overall design of our solution.
The standard front-end application was extended to support strategy monitoring and control commands, and the special risk management module was plugged in and that’s basically it. For me this is a huge proof of flexibility of this solution.
What is your view on the increasing cold shoulder which MetaQuotes is giving to third party software providers? Do you think MetaQuotes will become very strong in offering their own internal versions of solutions provided by third party developers, or do you think FX firms will move away from MetaTrader 4 in favor of open, customizable platforms?
Frankly I don’t know. Devexperts does not position itself as a company which automates MT4.
What I see is that in the last few years MetaQuotes has not been very active about their MT4 offering.
The company was focused on the launch of MT5 while enjoying a growing MQL community (mainly supporting it in terms of online resources). MT5 is yet far from being a success story.
The main hook MetaQuotes has now is a huge MQL community but there are some fresh initiatives on the market to break this domination. Should this happen big brokers may cease to offer MT4 and it may be a big problem for MetaQuotes. Thus I think MetaQuotes will become much more open to brokers explaining their strategy and intentions to be more predictable and less risky.
Is the Far East an important market for Devexperts? The firm was at the Forex Magnates Tokyo Summit recently. Japan’s FX market is largely domestic traders using domestic firms, which makes it hard for an overseas firm to gain market share. However, there is a large dependency on customizable and fully automated systems in Japan. Please detail how Devexperts approaches this, and what products are the most popular in Japan.
I have already said few words on this topic earlier. Yes, the Far East is very important for us. It is not only due to the booming FX volumes, “Abenomics” or other economic aspects.
We also see some technical trends in the industry as a whole relating to both OTC and exchange traded products. Far Eastern countries, especially Japan and China, are moving fast in terms of technology and very often a question we hear from them is “tell us how this is done in the US or in Europe” which means they are ready to apply same solutions.
On the other hand there is a certain inertia linked with trading habits, perfectionism, regulations and many other factors. In 2011 we opened Devexperts Japan to help us become familiar with this market and get projects there.
As for the products we see strong demand for almost all type of solutions: from the monitoring system to market data delivery service/technology, including broker’s software of course. This is another indicator that the Far East is going to narrow the technological gap.
Until last year, Devexperts had worked with just two FX firms. This has grown substantially in that space of time. How did Devexperts make further inroads into providing systems for FX brokers, and what is the attraction to Devexperts’ solution compared with other customizable products such as those offered by x Financial Solutions?
The first time I visited iFXEXPO in Cyprus was back in May 2011. At that time, Devexperts brand recognition there was lower than I expected. So about two years ago we have decided to put FX solutions and FX customers as our priority. This effectively resulted in two major aspects: we have increased our investments into the dxFX Suite and we have started advertising ourselves as an FX vendor more aggressively (thanks a lot, Forex Magnates, for being instrumental for us in this task). I think this is the key to gaining more customers. We also have some people and companies approaching us by good reference coming from other projects we have participated.
We evaluate leads carefully; this allows us to avoid wasting our efforts and stay always ready for interesting challenges and sound projects.
What makes us different from other vendors? I guess it is our domain expertise, our experience, as we have been here for more than 10 years, our size as we have over 300 talented engineers, and our focus insofar as that we stay concentrated on trading related technologies.
At that particular time, it was Devexperts’ view that most newly founded brokers looked for ready-to-use, turnkey systems, whereas now you are witnessing a lot of demand for fully customizable systems. What caused the market to change so rapidly and how did Devexperts adjust its business model to suit?
I don’t think the market has rapidly changed in this sense. We still see that most of newly founded brokers are looking for ready-to-use, turnkey solutions.
However, as I said, sooner or later each broker could become unique and at that point there is a need for that flexibility and customization. Sometimes brokers may think about this situation in advance even when they are starting their business. Newly founded broker does not necessary mean newbie people starting it.
What is the corporate plan for the immediate future?
We plan to continue our current FX related technology projects as we see big potential in this market.
We also plan to pay more attention to non-FX solutions and launch a couple of interesting projects in the non-FX area, as well as bringing equities and options trading to some advanced FX brokers, who would like to extend and improve their services for traders.
We are always happy to be involved in any challenging project with well-established brokers, and we also will not miss a chance of interesting custom development project.