apis are powering fintech innovation. what is next?

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APIs ARE POWERING FINTECH INNOVATIONWHAT IS NEXT?

xignite@sduboisStephane Dubois – CEO & Founder – Xignite

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FINANCIAL MARKET DATA APIS

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MARKET DATA IS THE LIFEBLOOD OF FINTECH xignite@sdubois

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MARKET DATA INDUSTRY

175 Years Old $26.6 Billion +1.2% Annual Growth

xigniteSource: Burton-Taylor@sdubois

xignite@sdubois Source: Bloomberg xignite@sdubois

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FINSERV EMPLOYEMENT

19801981

19821983

19841985

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

20165M

6M

7M

8M

Source: Bureau of Labor Statistics

xignite@sdubois xignite@sdubois1910’s-60’sTICKER TAPE

1990’sCLIENT SERVER

2000’sWEB

2010’sAPIs

1970’sMAINFRAME

quotron

Vehicles

Terminals

Displays

Mobile Wearables

IoT

Robo-Advisors

Trading

1,000s OF BROKERS 10,000s OF TRADERS 100,000s OF ANALYSTS MILLIONS OF USERS BILLIONS OF DEVICES xignite

EXPLOSION OF END POINTS

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2020 CONNECTED DEVICES

21 BILLIONSource: Gartner

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HOW DO YOU SERVE 20B DEVICES?

CLOUD APIS

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WHAT’S A CLOUD API?

•Simple To Use•Standard Based•Unlimited Power

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API GENERATIONS

Program

Library

Program

Program

Program

Server

Program

Cloud

Pre-HistoryExternal Libraries

(60’s)

1st Generation APIsRPCs

(70’s-80’s)

Network

2rd Generation APIsWeb APIs(90’s-00’s)

3h Generation APIsCloud APIs(00’s-10’s)

Local Not Sharable Complex Not Scalable

Remote Sharable Complex Not Scalable

Internet Shared Simpler Scalable

Internet Mutualized Simple Zero-Footprint

Internet Internet

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API HISTORY

HTMLW3C Standard

IMG TagFirst pointer to resources on external servers

JavaScriptFirst smart client capabilities

IFRAME TagComplex resource embedding

1996 FlashComplex resource embedding

XMLHttpRequestFirst Web API Implementation

AJAXFirst smart client logic

First API(Maps)

JSONPCall a server without a server

RESTRoy Fielding publishes his dissertation on REST

CORBAFirst standardRPC

First API

First API

First API

JSONFirst Spec

XMLW3C Standard

xigniteFirst Commercial API

First API First API

First API

S3 EC2

HTML5First Spec

SOAPW3C Standard

xigniteFirst Cloud API

First API

1990 1991

1993

1995 1996

1999 Feb-00

2000 2001

Jul-02Nov-00 Jun-05

Feb-05 Dec-05

1996 Aug-03 Jul-04 Aug-06 Sep-06Mar-06

Sep-121998

Oct-10Oct-08 Nov-13

FINTECHWAVE

First API

Oct-08

Jun-07 Jun-08

App Store

iPhone 1

First API

Oct-02

Jeff Bezos API Memo

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THE ENABLER

https://www.ics.uci.edu/~fielding/pubs/dissertation/fielding_dissertation.pdf

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THE CATALYST

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XIGNITE FIRST API

http://web.archive.org/web/20031024042925/http://www.xignite.com/xRealTime.asmx?op=GetRealQuote

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USAGE SINCE INCEPTION

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Fcast 0.0002B 0.002B 0.02B 0.2B 1.6B 3.8B

40B 71B

137B

456B

1,395B

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API 4 COMMA CLUB,,,,xignite ?

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SOFTWARE IS EATING THE

WORLDAPIs ARE

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XIGNITE IN NUMBERS

750BRequests 16’ YTD

650API End Points

150 Data Sources

1100+ Clients

$37MRaised

45 Employees

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THE FINTECH REVOLUTION

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POST-CRISIS REGULATIONOPENED THE ROAD

FOR FINTECH

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0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

0

500

1000

1500

2000

2500

MARKETS AT AN ALL-TIME HIGH

DOW JONES INDUSTRIAL AND S&P500 2000-2015

2000 2005 2009 2011

$5,000,000

$500,000

$50,000 $5,000

FINTECH REVOLUTION DRIVERS

ECONOMICALFACTORS

SOCIALFACTORS

TECHNOLOGICALFACTORS

NEW MILLENIAL EXPERIENCE

COST TO BUILD APPS DROPPED

MaturingOf App

DevelopmentScaling

of PublicCloud

SocialCustomer

Acquisition

Dawnof APIs

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FINTECH NOT SLOWING DOWN

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30$0B

$2B

$4B

$6B

$8B

$10B

$12B

$14B

$16B

$18B

$20B

Fintech Fundings 2015 vs 2016 Week by Week

2016

2015

Week in Year

Sources: Finovate

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ANDY RACHLEFFCHAIRMAN & FOUNDER

“WEALTHFRONTWAS ENABLED BY 3TECHNOLOGIES:ETFs, TRADING APIs, AND MARKET DATA APIS.”

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APIS POWERING INNOVATIONRobo-Advisors & Robo-Platforms

Brokerage & Trading

Media

Retirement

Investor Reporting, IR & HR

Lending & Payments

Wealth & Portfolio Management

Compliance

Horizontal Enterprise Applications

Terminals

IoTE-Commerce Enterprise Financial Reporting

Research & Analytics

Social & Analytics

Search Engines

Back-Office & Processing

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TECTONIC SHIFT APP DEVELOPMENT INFRASTRUCTURE CUSTOMER ACQUISITION CORE SERVICES

100XFasterCheaper

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FINSERV BIG SQUEEZE

Fintech

User Experience Pressures

Business ModelPressures

Cost StructurePressures

Regulator

Balance Sheet Pressures

Business ModelPressures

Operational CostPressures

Since 2013 Since 2008INNOVATION REGULATION

FinServ

INNOVATETRANSFORM

REDUCE COSTSCOMPETE COMPLY

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THE GREAT WEDGESuper HNW

HNW

Retail

Robo Advisors Powered by APIs

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AWARENESS AT THE TOP

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"Silicon Valley is coming.“Jamie DimonChairman & CEO – JPMorgan ChaseLetter to Shareholders - 2015

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THE MARKET DATA CHALLENGE

Market data is one of the largest expenses for many firms.

Previously neglected or hidden is the cost of market data infrastructure.

Legacy market data infrastructure stifles innovation, prevents transformation and drives up costs.

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MARKET DATA

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ColocationColocation

TYPICAL LANDSCAPE

Lots of legacy in-house infrastructure Vendor lock-in and point to point interfaces Significant compliance risks and costs Many data silos across vendor technologies Reliability and maintenance issues Redundant or unnecessary expenses Rigid, expensive and innovation killer New app development nearly impossible Unable to disconnect legacy systems Costs continue to increase with scale

EXCHANGES VENDORS

Databases

Handlers

Databases

Analytics Engines

Databases

Tick Databases

App Servers

Cache Servers

Fanout Servers

Messaging Servers

Processing Engines

Search Engines

Trading & Algos

Handlers

Feeds FilesFeeds

Proprietary Processing Engines

Vendor Proprietary Servers

Redundancy

Compliance

Silos

Personnel

Upgrades

Lock-inPoint to Point

Legacy

Front-Office Mobile & Web

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MARKET DATA INFRASTRUCTUREInfra-

structure$76M

Market Data

$100M

MARKET DATA SPEND

Hardware

Software

Networking

Personnel

$33M

$21M

$14M

$8M

INFRASTRUCTURE SPENDING

Typical Top Tier FirmSource: Rosenblatt Securities

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INDUSTRY-LEVEL ISSUE

Much replicated data and infrastructure• Same feeds from same exchanges• Same files from same vendors• Same databases to store and manage the same

data.• Massive replicated data centers, storage an

processing• Same hardware and system administration

burden• Same staff to monitor and administer

No significant competitive benefit• 95% of infrastructure is commoditized• Billions of dollars wasted on replication• Enormous innovation inertia

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INDUSTRY-LEVEL ISSUE

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THE CASE FOR MUTUALIZATION

DATA SHOULD BE STORED ONLY ONCE

RULE OF NORMALIZATION:

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WHERE TO PUT THE DATA?

Source: Gartner Group

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Ex-Market Data ProfessionalCirca, 2008

“APIs ARE TOYS!“

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FINSERV VS FINTECH

Innovation

Legacy

Innovation

CloudAPI

s

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WHY APIS MATTERReducing the Cost Structure• Build a new tech stack from scratch• Leverage the public Cloud• Leverage third-parties

Improving the Experience• Improve User interface & workflow• Reduce friction and automate• Increase access to information

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NEW THINKINGTrading & Algos Front-Office Mobile & Web

ColocationColocation

Databases

Handlers

Databases

Analytics Engines

Databases

Tick Databases

App Servers

Cache Servers

Fanout Servers

Messaging Servers

Processing Engines

Search Engines

Trading & Algos

Handlers

Feeds FilesFeeds

Proprietary Processing Engines

Vendor Proprietary Servers

Redundancy

Compliance

Silos

Personnel

Upgrades

Lock-inPoint to Point

Legacy

42

EXCHANGES VENDORS

Cloud?

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ADOPTION ROADMAP

First Use Case• Customer Facing/Backup• Mobile/Web• Critical Innovation• Critical Time to Market• No New Infrastructure• Get Comfortable• Align with API Strategy

Adopt Broadly• Deploy for all new apps• Reduce dependency on legacy• Eliminate fringe infrastructure• Replace some data sources

Remove Legacy• Onboard data sets • Add contributed data sets• Migrate legacy back ends• Eliminate core infrastructure

6-18 Months

1-3 Years2-5 Years

43

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THE NEXT GENERATION APPS

1990 1995 2000 2005 2020 2025

Client-Server Generation Web Generation

MainstreamApplications

The Next Big Thing

Fintech Mainstream Generational Replacement

FinTech EarlyAdopter Wave

2010

Cloud Generation2015

Internet – HTML – Browser – Active Server Pages – Broadband – AJAX

RDBMS – LANs – PCs – Mini Computers

Virtualization – SOAP – XML – JSON – REST – HTML5

Fat Client

DB Server

HTML

Web Server

HTML5

Cloud APIs

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THE FINSERV API VALUE CHAIN

Customers

Employees

Apps Developers APIs Market Data

Markets

Back-Ends

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EXAMPLE 1: REAL-TIME DATA TO MOBILE USERS

ColocationColocation

Handlers

Parsing Engines

Handlers

Feeds

EXCHANGES

Databases

Tick Databases

Fanout Servers

PROBLEMS Tons of infrastructure Peak activity scaling Software licensing Custom processing Complex programming 6-12 months minimum Scaling lead time Monitoring required Large capex and opex

TRADITIONAL APPROACH: IN HOUSE

Silos

Redundancy

Legacy

Monitoring

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SOLUTION: CLOUDSTREAMING API

ColocationColocation

Handlers

Parsing Engines

Handlers

Feeds

EXCHANGES

Databases

Tick Databases

Fanout Servers

CLOUD APIS

CloudStreaming API

EXCHANGES

Deploy instantly High reliability Scalable to millions No capex No worries

TRADITIONAL APPROACH: IN HOUSE CLOUD APPROACH

Redundancy

Legacy

Monitoring

Silos

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EXAMPLE 2: ENGAGING CUSTOMERS WITH ALERTS

TRADITIONAL APPROACH: IN HOUSE

ColocationColocation

Databases

Handlers

Databases

Analytics Engines

App Servers

Messaging Servers

Processing Engines

Handlers

Feeds FilesFeeds

Proprietary Processing Engines

Vendor Proprietary Servers

Redundancy

Compliance

Silos

Personnel

Upgrades

Lock-inPoint to Point

Legacy

EXCHANGES VENDORS

PROBLEMS Tons of infrastructure Huge amounts of data Significant integration Custom processing Complex programming 6-12 months minimum Scaling lead time Monitoring required Large capex and opex

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SOLUTION: CLOUDALERT API

CLOUD APIS

CloudAlert API

Internal Systems

Short time to market Scalable to millions No data management No capex No worries

CLOUD APPROACHTRADITIONAL APPROACH: IN HOUSE

ColocationColocation

Databases

Handlers

Databases

Analytics Engines

App Servers

Messaging Servers

Processing Engines

Handlers

Feeds FilesFeeds

Proprietary Processing Engines

Vendor Proprietary Servers

Redundancy

Compliance

Silos

Personnel

Upgrades

Lock-inPoint to Point

Legacy

EXCHANGES VENDORS

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TRANSACTIONAL APIs

BUSINESS APIs

THE NEXT-GENERATION APPS

INFRASTRUCTURE APIs

MARKET DATA APIs

ANALYTICS APIs

WORKFLOW APIs

THE FINTECH API ECOSYSTEM

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MARKET DATA CLOUD

INFRASTRUCTURE APISStorage, Processing & More

DATA APISMarket Data – Reference Data – Contributed Data

ADVANCED APISStreaming – Alerts – Visualization – Analytics – Screening

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XIGNITE GLOBAL MARKET DATA CLOUD

Equities Funds Fixed Income Indices Futures Options Forex Metals Derivatives

Real-Time Quotes Valuation Fundamentals Master Ticks & Bars Analytics Markets

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THE INDUSTRY’S EASIEST APIS

Standard Based Comprehensive Consistent Integrated Scalable

Real-Time Data Master Data Fundamental Data

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THANK YOU

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Stephane Dubois – CEO & Founder – Xignite – sdubois@xignite.com – @sdubois