Resilience: the capacity to recover quickly from unexpected events or challenges
Resilience is a critical attribute of financial systems. There have certainly been no shortage of challenges and unexpected events in the past year that have strained the resilience of many legacy trading and risk management systems. We’ve built Beacon on four fundamental characteristics that make the platform highly resilient in the face of high volume, increased volatility, or unexpected market events:
When Kirat and I started working at big banks in the 90s, IT departments covered a wide range of products and corresponding skill sets, from mainframe systems to end-user applications. Technologies that were just being developed and commercialized back then, like Linux and the Web, are now the foundations of modern tech stacks. The increasing complexity and specialization of the information technology stack over the years means it is no longer feasible, and makes little sense, to maintain all of these skills in-house. Competitive edge comes from focusing resources at the top of the technology stack, on your areas of expertise. There is little or no competitive advantage to be gained from building your own version of complex but relatively commoditized foundational systems.
At Beacon, we’ve focused our attention on designing and integrating that foundation, specifically for the needs of financial services and capital markets. Cloud compute infrastructure, high-speed data warehouse interfaces, integrated development environment, web application framework, and workflow automation are areas that we have focused on, so you don’t have to. Combining Beacon’s focus areas with yours significantly amplifies your capabilities.
Nothing that is essential to your business should operate as a black box. Using standardized pricing models, risk analytics, or other algorithms without being able to read and understand the inner workings can generate significant risks. High market volatility, unexpected events, and edge cases can return unpredictable values (negative oil prices, anyone?) and a distorted view of asset values or risks or unexplained PnL changes.
At Beacon, we start by providing clients with transparent access to the source code of our platform, giving you appropriate ownership of the full stack. Next we add some technology abstractions to make everyday activities easier, like configuration templates, real-time dashboards, and development frameworks. You can always dig down into the details, but don’t have to build the infrastructure from scratch. Then we layer on development frameworks and customizable definitions, so that you can make changes and enhancements based on your expertise and intellectual property. Finally, everything is supported by modern governance, version control, and release management tools, so that code is reviewed and tested before its released, and you always have a record of who changed what and when.
An integrated platform means that you can change a piece of data or revise a model and have that change available across all books and portfolios. Or introduce a new financial instrument and have it immediately connected to existing market data and risk analytics. The opposite of integrated is siloed — lots of different point solutions in different parts of the business, with data and functionality copied over and over. A classic siloed solution is spreadsheets; often a quick way to solve a problem, but they can become fragile and disconnected as they are modified and multiplied over the span of a few years.
Siloed solutions slow down your business and introduce data discrepancies as changes need to be copied to dozens or hundreds of different implementations. Within Beacon, everything is securely integrated. Everyone from research to trading and risk management draws on the same data, models, and analytics — with appropriate user authorizations and version controls. Add or modify a financial instrument, data source, or pricing model and it immediately snaps into your framework and is available to authorized users.
Systems without a modular architecture have a long history of planned or unplanned obsolescence. They often struggle with adding new functionality or adapting to changes in the technology stack, and come with a lengthy and cumbersome release cycle. Inflexible legacy systems with infrequent updates, which clients often skip because they have to carefully evaluate each one in an expensive and time-consuming process, lead to security risks and missing out on useful functionality.
We have built Beacon from the cloud up as a modular system. The platform is cloud-agnostic and not defined by the lower-level hardware or the software language. An infrastructure-as-code architecture means that virtual-machine images are defined in configuration files, spawned as needed, and released at the end of their service. Continuous deployment of appropriately tested and approved patches, updates, and new functionality keep the platform’s foundation fresh. Containerized workloads and segregated data warehouse deliver the speed and agility needed to adapt and respond to any sort of market event. In 10 years almost everything may be upgraded, replaced, or enhanced, but without significant disruption.
Getting the best results from your technology
Today’s businesses are so dependent on technology that they need to work with an effective and appropriately designed platform — one that delivers the necessary foundation and fundamentals so that you can focus on your business. How quickly can you add a new business, data source, or market model, without creating a new silo?
When finance developers and quants spend the majority of their time on real business problems and competitive opportunities, not the underlying technology, they deliver better results, faster. That means faster response to emerging market opportunities, new investment strategies, and risk profiles, and increased returns.