Why I left UBS and Goldman Sachs for a fintech firm, and what's coming next
We spoke to Josh Schubkegel, the ex-head of global equities technology at UBS, an ex-trading technologist at hedge fund Bridgewater and a former senior technologist at Goldman Sachs. In July 2013, Schubkegel left Goldman to work for REDI technologies, an independent financial technology (fintech) firm that begun life within Goldman Sachs. This is what he told us about working in tech now, and the skills you'll need for the future.
1. Before starting REDI you worked across the fintech spectrum - in banks, hedge funds and technology companies. What's the main difference in approach between each one?
"Every firm has its own unique approach to managing their organization. But generally speaking, the biggest difference I’ve found relates to what each firm considers their core competency and competitive advantage and how they manage their business as a result. For us at REDI it’s technology, and in today’s environment it’s a good niche to be in. Regulatory and technology costs have increased dramatically over the past few years, and at the same time, capital requirements have risen. As a result, many banks today are unwilling or unable to allocate the resources necessary to undertake the kinds of bold development projects that excite top tier technologists. Instead they are outsourcing them, which is part of the reason we’re seeing a migration of technology talent from the traditional financial institutions like banks, brokers and exchanges to Fintech. One of the big points I make to our candidates is that the level of technology entrepreneurialism and impact you can have at a firm like REDI is multiples of what you’ll find at a big bank or hedge fund."
2. You spent nine years between 2002 and 2011 as the global head of equities technology at UBS. That must have been a pretty interesting time to be in that space. What were the main issues that you faced as equities trading became increasingly automated? And how do you think fixed income businesses which are pushing for automation can learn from that experience?
"The time I spent at UBS was a very exciting one. I was fortunate to work with a really high-caliber team, and in the early days we operated like a start-up inside of a larger organization, shielded from a lot of the typical overhead and distractions. While I was there a series of seismic changes in the equities space including Reg ATS, Reg NMS and decimalization led to an amazing proliferation of trading venues, necessitating the development of automated execution technologies for the buy-side like algos and smart routers as well as EMS and OMS platforms to manage the trading process. And at the same time, those regulatory changes helped fully push market making into the electronic realm, which required further refinement of the buy-side’s execution tools and analytics abilities in order to effectively interact with that new type of flow. I think you’re already seeing a similar pattern play out across some of the fixed income businesses, where the markets and participants in those asset classes are demanding the same level of sophistication from their technology platforms to enable a more electronic and automated trading process."
3. REDI spun out of Goldman Sachs. Can you explain a little how that worked and why that happened? Is it possible now to have a technology career in an investment bank and then to spin out as a start up with a particular product, or was REDI special?
"There were a variety of factors that lead to REDI’s spinout, all of which were related to the simple fact that REDI can create more value for our clients, partners and shareholders as an independent entity. While we’ve seen other similar scenarios in the recent past – Instinet’s incubation and ultimate spinout of Chi-X comes to mind – and may very well see others, I think a more likely approach moving forward will be for banks to invest in promising Fintech startups that bring open, industry-backed solutions to the market. We’ve seen several of these types of investments in just the past few months – Symphony, Kensho, Digital Reasoning, etc."
4. As someone at the forefront of trading technology, what do you think the three key trends will be over the next five years?
"Clearly we all talk about using the cloud for various applications and I think that will obviously only continue, but I think there’s also some really cool stuff going on around leveraging infrastructure-as-a-service or platform-as-a-service (IaaS, Paas) models, which allow you to offload the management of servers, data center space, connectivity and so on. I think you’re going to see a continued theme of openness, which has historically not been the case in this industry, with technology solutions instead having been very siloed and walled off. We see users demanding more interoperability between their systems to streamline workflows and reduce complexity. Taking more ideas and approaches from outside the industry in terms of open APIs, service-oriented architectures and micro-services are things we are making a lot of investment in and embracing at REDI. I think you’ll see many financial firms start doing the same over the coming years."
5. And which skills (in terms of programming languages or other) will technologists need to follow these trends?
"At REDI we’ve very much tried to look outside of the industry for ideas that might be considered non-traditional for the financial services space, and I think that’s been hugely beneficial for us. Over the last year we’ve brought in technologists from places like Amazon, Google, MongoDB, RedHat, TravelClick, PlaceIQ and others. They bring extremely quantitative approaches to the product development process and in many ways have helped lead a cultural shift in our technology organization. For us it’s less about specific languages or technology frameworks – those are always going to evolve and we are constantly evaluating new tools and stacks that may enable us to deliver more product faster with more quality. That said, some of the specific themes that continue to be interesting are around general automation and taking a developer mindset to support, infrastructure, configuration management and other areas where that has historically not been the case. Tools and methodologies like Chef, SDNs, OpenStack and the notion of DevOps are all things we’re heavily involved in. There’s also a lot of innovation happening on top of the JVM again, with new languages and frameworks that provide a lot of developer productivity and efficiency without sacrificing some of the performance optimization that firms in the financial world demand."
6. Which technology skills (programming or other) do you see becoming obsolete by 2020?
"After Facebook bought Instagram a few years ago, they seamlessly moved petabytes of data on a live application via configuration automation tools like Chef, and their end users didn’t notice at all. All of us in the financial industry rely far too heavily on humans doing things in a certain sequence or legacy systems that have been patched together, but to be able to effectively handle the complexities of today’s world we have to be able to remove those types of steps from critical processes. Folks in roles where they’re managing legacy systems or processes with bailing wire and duct tape should probably begin actively looking to augment their skill set, since it feels like we’re rapidly moving to a point where new technologies will significantly reduce those types of jobs."
7. Are there skills shortages in fintech at the moment? Which are the key skills that companies need, but can't find?
"Our industry has obviously grown extremely complex over the years, which has required technologists to develop not only specialized skills but also a deep understanding of micro market structure. So while we’re always on the lookout for talented developers such as the folks we’ve brought in from outside the industry, we do also require specialists in some of the more domain-specific areas and it can be hard at times to fill those seats. I think in general it can be difficult to find a lot of great front-end (i.e. UI) engineers – people who have the rare combination of strong engineering chops with the appreciation and experience in building very user-friendly products, similar to what you’d find in the pure consumer/retail space. We also have struggled to find a lot of people in the “DevOps” space who have experience supporting platforms through more automated, programmatic means, as opposed to the more manual and one-off scripting approach that you tend to come across. It’s a skill set that’s currently easier to find outside our industry and so we’ve been hiring in people from outside the finance space as well as training up existing folks in our organization."
8. What are your hopes for REDI over the next five years? How do you think the Fintech industry is changing?
"When it comes to their trading technology stack, the buy-side is increasingly looking not for one monolithic “system” but instead only the specific capabilities that they require and a platform on which those can be delivered. This is being driven by several macro technology trends—the migration toward cloud computing and the “app” model that we’ve all grown accustomed to being two—but the biggest factor in my opinion is the move to a user-centric rather than product-centric world. Clients increasingly demand the ability to fully customize every aspect of the user experience, from look and feel to the controls on the dashboard to the capabilities available to them. They are also beginning to expect that their EMS or OMS—and the better term given where we’re headed is probably something like Trade Management Platform—offers a library of integrated third-party trading applications. And in five or ten years, when our clients are people who’ve known only a world with ubiquitous mobile technology, I have no doubt they will expect their platform to be able to seamlessly transfer data and functionality from desktop to device, whether that’s a phone or tablet or glasses or watch. So that is where we hope to be in a few years – an open, device agnostic platform through which dozens or even hundreds of third-party applications are seamlessly available."