Articles related to Empirica products and services like fintech software development, blockchain, artificial intelligence and the like.

Michał Różański, CEO of Empirica, was among keynote speakers at the CFA Investment Summit in Warsaw.

On October 27th, 2017 the CFA Investment Summit, a key event for financial market participants in Poland, took place at the Warsaw Stock Exchange.

The event was organized by CFA Society Poland. The main media partner was the newspaper “Puls Biznesu“. The conference was divided into a series of lectures and panel sessions with the participation of nearly 250 experts from Poland and abroad.

This year’s event began with the presentation of the results of a survey commissioned by CFA Society Poland. The survey was run on a sample of more than 500 financial professionals and its subject was knowledge of fintech issues.

Its results indicate that, when asked about their knowledge of the use of new technology in the financial industry,  only 31% of respondents responded that it was very good or good. The vast majority of respondents (40%) said that they were “neither well nor poorly” acquainted with the topic.

The conference

In the first part of the conference, the speakers focused on what the opportunities and risks the fintech revolution presents, especially for companies and managers dealing with traditional investment advice.

According to a survey conducted among top experts, they absolutely do not see the threat. Almost 80% think that fintech is not a problem for them, because they are good enough that when conditions change they will adjust and win. On the other hand, for less developed professions that do not require creativity, it is indeed a threat, because these professions will disappear. The ones which stay will be specializations that require creativity, an analytical approach and communication skills – explains Krzysztof Jajuga, President of CFA Society Poland.

The next part of the conference was dedicated to robo-advisory platforms. The panel discussed the difference between fully automated models and hybrid solutions. It was attended by Empirica S.A. CEO Michał Różański, who noted:

There is space for a whole spectrum of advisors on the market – from traditional to fully automated models. Today, in a rapidly changing world, it is hard to predict  how the accents will be distributed. Since now 1 percent of  the population uses financial advisory services, there is a problem with supply/the problem lies with the supply, because it pays off for advisors to advise only the richest . This is the space for automated consultancy.

The founder of Empirica believes that the entrance of the generation of millennials in  the market, increasingly eager to use AI-based (artificial intelligence) solutions, will especially be the impetus for the development of fully automated advisory platforms, which, using a well-tailored user interface, will allow customers with lesser resources to engage more on the investment market. Which, he added, should lead to its greater democratization.

More (in polish)

Blockchain meetup sponsored by Empirica, Wroclaw

Monday June 19th a beautiful sunny day in IT-friendly Wroclaw, tech start-ups and cryptocurrency enthusiast gather together at IT corner Tech meetup, sponsored by Empirica.

The event was planned to focus on key areas of current trends in Blockchain and Ethereum.

The event began with Mr Wojciech Rokosz, Ardeo CEO presentation. The session was dedicated to introduction to the economics of token. Explaining the new changes and updates we are and we will face in our economy with this huge entrance of virtual currencies.

The event later carried on with Mr Marek Kotewicz on introduction to Blockchain, Bitcoin and Ethereum. The session was summarizing the differences between Bitcoin and Ethereum.

The third and last part of the event was conducted with Mr Tomek Drwga, Blockchain meetup organizer,  diving deeper into smart contracts and programming ( introduction to Solidity) for Ethereum.

The event ended with open discussion between the audience and speakers, and visitors were served with beverages.

 

Empirica at Cloud Expo 2017

Empirica takes part in Cloud Expo in June 6-8, 2017 in New York.

Cloud Expo offers a wide selection of more than 120 technical and strategic Industry Keynotes, General Sessions, Breakout Sessions, and signature Power Panels.  Durnig the FinTech Session we will present own advanced Robo-Advisory Platform and our experiences we have gained for over 6 years of developing solutions for financial institutions and FinTech companies, including robo-advisors. We will illustrate the most important issues of building tailored FinTech software. We’d love to welcome all FinTech innovators interested in how properly implemented technology can move their businesses forward.

The biggest market maker uses Empirica Platform

It’s been two years since Empirica has successfully deployed the full version of Algorithmic Trading Platform for Dom Maklerski Banku Ochrony Środowiska (DM BOS Brokerage House). Since then DM BOS has become the most active market maker on Polish capital market, running its market making and algorithmic trading operations through Empirica’s platform.

With a great pleasure Empirica would like to inform that DM BOS was lately awarded as Polish Capital Market Leader 2016 by Warsaw Stock Exchange (WSE).

The Gala was attended by representatives of the most important capital market institutions: issuers, brokerage houses, banks, investment firms, industry organisations and associations. DM BOS was awarded in following categories:

GPW (2)

  • for the biggest share of a local market maker in trading in equities on the Main Market in 2016,
  • for the biggest share of a market maker in the volume of trade in index options in 2016 on the derivatives market,
  • for high quality of the reporting of trades to KDPW_TR in 2016.

– We are very pleased to see, that using our software DM BOS was awarded by WSE in main categories. I would like to sincerely congratulate managers of DM BOS such amazing results for the 2016. Since 2012, when we started our cooperation we are committed to continuously develop and enhance our algorithmic trading platform in order to achieve the highest technical requirements and to satisfy different and changing needs of our customer. I would like to thank DM BOS once again for the opportunity to be a part of these awards. – Michal Rozanski, CEO of Empirica

WSE is the biggest securities exchange in Central and Eastern Europe and organises trading on one of the most dynamically growing capital markets in Europe. WSE operates a regulated market of shares and derivative instruments and the alternative stock market NewConnect for growing companies. WSE is developing Catalyst, a market for issuers of corporate and municipal bonds, as well as commodity markets. Since 9 November 2010, GPW is a public company listed on Warsaw Stock Exchange.

Read more about Empirica Algorithmic Trading Platform

A Blockchain based capital market systems

A broad range of innovators are creating solutions using blockchain technology. The most common are active from the ecosystem of cryptocurrencies (and related tools such as wallets). These basically provide a form of retail payments. A variety of blockchain applications across fiscal services are being contemplated, particularly about wholesale payments/correspondent banking, trade finance and other forms of trade banking. In this post, we focus on programs from capital markets and associated activities like post-trade and securities servicing.

A Blockchain based capital markets system:

Agreeing and preventing datasets of financial obligations and ownership forms the simple core of capital markets operations. This generates the continual need to reconcile data with massive systems and procedure copying, leading to high prices and protracted time to perform tasks. Could blockchain be the structural change the marketplace requires?

If we started from a blank sheet of paper now, with accessibility to efficient, well-architecture blockchain technology, we would anticipate the industry structure and processes to seem very different. The listing of each security would be held onto a flat accounting basis – that is, with multiple levels of beneficial ownership in a single ledger. There would be no requirement to run data normalization, reconcile internal systems, or consent exposures and obligations. We would have standardized procedures and solutions, shared benchmark information, standardized processing capabilities (for instance, reconciliations), close real-time data and enhanced understanding of counter party worthiness. For privileged participants such as labs, we’d have transparent data on holdings, among many other improvements. To bring this ideal scenario to life, we put out under a stylized ‘capital markets utopia’ based on blockchains and smart contracts.

 Securities transaction

Automatically verifying that another has the means to finish the transaction. (by way of example, Client A demonstrably owns the safety on the asset ledger, and Client B demonstrably owns cash on the cash ledger). Client A and Client B collectively ‘sign’ the trade by applying their private keys to unlock their advantage or money, and then by transferring ownership to the recipient via their public key. The signed transaction is broadcast into the dispersed blockchain ledger to be validated and recorded in the next update, along with a simultaneous update to some money ledger used in blockchain.

Asset servicing

Actually, securities themselves could be unbundled so that the individual cash flows, and also the rights they encapsulate, might be moved individually. Mandatory occasions and distributions could be handled via smart contracts using blockchain technology, embedded inside the securities. Complex events can be structured as easy Delivery Versus Payment (DVP) trades between investors and issuers.

With horizontal accounting, the numerous custody layers are shrunk to a single function. Presently, a single security may be held in as many as five or six layers of custody (stockbroker, sell-side lender, local custodian, global custodian, CSD, etc.) each with their own accounting viewpoints. Here the advantage is held by means of a type of wallet supplier recording the last beneficial owner.

Derivative trade

The utopian set up for derivatives represents the largest change. In the first case, unbundled securities could enable new approaches to financial technology, allowing specialists to construct bespoke instruments consisting of individual cash flows which meet precise needs in terms of timing and credit risk. These tools could be financed by issuers promoting their own instruments that fit the cash flows they expect to achieve, in essence producing swaps without the need for balance sheet intermediation.

Additionally, derivatives with blockchain will be created as preprogrammed smart contracts, catching the duties of both counter parties (for instance, margin agreements or swap requirements).

(CCP) would continue to permit traders to net their exposures. Adding collateral into the CCP in the shape of initial and variation margin could be achieved either by escrowing cash on a money ledger, or by simply devoting funds held on other asset ledgers to some security ledger. Later on, if a central bank problems publicly available digital money on demand, it might allow traders to pledge that the eligible part of their inventory to the central bank and utilize central bank money security when trading.
The smart contract may automatically recompute exposures by referencing agreed external information sources that recalculate version margin. Inter operable derivative and collateral ledgers would automatically allow the contract to call extra collateral units on asset ledgers to encourage these needs. At maturity, a closing net obligation is computed by the smart contract, Along with a payment instruction automatically generated in the cash ledger, closing Out the deal.

Empirica starts development of institutional solutions for MetaTrader 5

Empirica has announced the development of brokerage solutions for MetaTrader 5. Our company has become the institutional software provider for companies using the advanced multi-asset platform. More brokers actively switching to MetaTrader 5 generate a demand for applications expanding and complementing the platform features, while tech service providers as Empirica strive to satisfy this demand by pushing further the development of the platform and its infrastructure. 

“For the last 6 years we have strengthened our market position as leading software partner for financial institutions and FinTech companies. We have developed a very strong algorithmic engine, that has already made one of our customers the fastest market maker on Warsaw Stock Exchange. We are pioneers in developing intelligent robo-technology based on machine learning. Now in cooperation with MetaQuotes we will support brokerage firms and investment companies in MetaTrader server extensions that will meet their specific requirements and needs in relation to the forex market. The customers of MetaQuotes can benefit from our ability to combine the high technical expertise and deep industry knowledge of our team”, — says Michal Rozanski, CEO at Empirica S.A.

 

Customers who have already benefited from strong competences and experience of Empirica are Warsaw Stock Exchange, Credit Agricole, brokerage firms and robo advisors like BOS Bank, InvestHelp and Swissborg. Empirica is headquartered in Poland and set up international units in Germany, the Netherlands, Finland and Switzerland.

How AI will cause robo advice to completely outperform human advice

Most financial advisors are in a state of denial about robo-advice. They say clients value the human touch or need real people to understand the nuances of their financial lives. They’re wrong. Soon robo advice will be much more efficient than human advice ever was. The next step in wealth management is to get rid of it’s weakest and costliest part – the human advisor. 

In this article we would share the results of our analysis on most important areas where appliances of Machine Learning (or marketing term – Artificial Intelligence) will take wealth management to the next level. Those areas include:

  • ML in behavioural analysis that tracks typical investors mistakes and reacts on nervousness, not thought-through decisions, spontaneous reactions to market downturns etc. Contact the investors when they really need explanation and support.
  • Sophisticated portfolio allocation and rebalancing backed by algorithmic trading and execution algorithms
  • Real time adjustments in investment strategy (change in goals, life situation, job, location, marital status, remuneration) on finest level, that human advisors could not deliver
  • Combination of long term advice with ML analysis of current budget status (with integration all bank accounts) and spending and saving practices. The result would be high level plans combined with help in everyday execution.
  • Chatbot and voice technology – explaining the investment strategy and current market situation in most natural manner.
  • ML in in analysis and navigation of tax nuances

Implementing those AI functionalities in robo advice systems will be important step on the way to delivering more financial freedom. Professional advice, available to anybody, especially to those who can’t afford it now, but need it most. At friction of the current costs.

AI is beating humans in chess, go and recently even in poker. Now it’s time for a financial planning game. And these are not bad news, but not for the financial advisors but for the customers.

Voting

If you want us to elaborate on the topic of using Machine Learning in Wealth Management please vote for us to be part of incoming WealthTech Book:

WealthTechBook_big

 

See our Robo Advisor Software:

Three use cases of Smart Contracts in Financial services

Savings and upsides from decreasing syndicated loans settlement time

While the High-Yield Bond transactions are settled in more than three days, the settlement interval for leveraged loans frequently extends to almost 20 days. This creates increased danger and a liquidity challenge from the leveraged loan market, hampering its growth and attractiveness.
Since 2008, the global loan market has witnessed negative gain, whereas the High-Yield Bond market grew by 11 percent. We assume that smart contracts can reduce the delay in procedures such as documentation, buyer and vendor affirmation and assignment arrangement, and KYC, AML and FATCA checks, with the assistance of a permissioned ledger. With estimation that with the decrease in settlement times, if the rise of loans may be at least half that of their High-Yield Bond market growth (i.e. between 5 percent and 6%), it would amount to an additional $149 billion of loan demand on the industry. Such loans generally carry 1% to  5% of fees, translating into extra income of $1.5 billion to $7.4 billion to investment banks. In addition, operational expenses, regulatory capital requirements and costs related to delayed compensation payments throughout the settlement of leveraged loans will probably be decreased together with the shortening of the settlement cycle.

Read more about basic idea behind Ethereum and Smart Contracts here.

Mortgage business to benefit from adoption of smart contracts

The mortgage loan process is dependent upon a intricate ecosystem for the origination, financing, and servicing of the mortgages, including costs and delays. Smart contracts could reduce the price and time involved in this process through automation, process redesign, shared access to electronic versions of bodily legal documents between trusted parties, and access to external sources of information such as land records.

Our earlier study on banks back-office automation suggests that mortgage lenders may expect savings between 6 percent and 15% from business $149 billion added leveraged loan volume increase with a reduction in settlement times 11 client fills mortgage application with earnings, taxation and property details Are property documents valid and lien status in order? Reject loan application and inform the client credit mortgage accounts article verification of earlier measures calculation of the cost savings possible from the usage of smart contracts in the US mortgage sector register bank’s lien on land signatures confirmed and mortgage accounts generated customer signs the mortgage document in addition to the witness mortgage record created approved rejected credit history id check KYC & AML check check income and land LTV reject program and notify the customer mortgage adviser creates loan workflow and updates credit, id, KYC, AML information in bank’s loan workflow for mortgage origination predicated on sale of 6.1 million houses of which 64% are being marketed on mortgage mortgage loan origination cost for an average loan of $200,000 in the US (2015), minimum savings US$ 4,349.5 17 billion 396.3 (9.1%) 1.5 billion 1,528.4 (35.1%) 6 billion. These numbers, coupled with our experience and discussions with industry experts, helped us estimate anticipated savings for each of the processes involved in loan origination. For example, in the US housing market, almost 6.1 million homes were sold in 2015. Based on historical averages, 64 percent of them were bought by home owners with a mortgage. We estimate that minimal savings of $1.5 billion could be achieved by loan providers through the automation of tasks in their organizations. Further, economies of $6 billion could be achieved once external partners such as credit scoring companies, land registry offices, and tax authorities become accessible over a blockchain to facilitate faster processing and reducing costs.

We also estimate that loan clients could expect a 11% To 22% drop in the entire price of mortgage processing fees billed to them if smart contracts are adopted. The total of outstanding mortgage loans across the united states and European Union countries in 2014 was valued at $20.98 trillion. Based on the US mortgage market case, smart contracts may possibly save between $3 billion and $11 billion in the new mortgage origination process across the US and EU.

Claims processing cost savings at the motor insurance industry

We consider that, in the motor vehicle insurance industry, smart Contracts that bring insurers, clients and third parties to a single platform Also, third-parties like chargers, transport providers and hospitals — once They are part of the dispersed ledger — will be able to supply faster Support against promises to clients and can anticipate quicker settlement of claims. The united kingdom motor insurance industry dropped 3.7 million claims and spent $13.3 Billion in claim expenses and costs. We calculate that roughly $1.67 Billion, or 12.5 percent of their overall costs, might be saved by adopting smart contracts. Dependent on the United Kingdom motor insurance market, we estimate that each year $21 billion could be spared from the global motor insurance industry via the Usage of smart contracts. A portion of savings can be passed on to the Clients via reduced premiums on motor insurance policies. We estimate that the Cost savings amounts to a reduction of $90 on average on each premium payment In the event the insurers pass on each of the savings generated from smart contracts Adoption to customers, and $45 per premium in the event the insurers decide to pass On only 50 percent of economies.