Some of the biggest financial services firms in the world are coming together to back a small New York-based technology company called OpenFin with aspirations to become the “operating system” for financial services applications.
The company has just closed a new $15 million round from investors led by the banking giant J.P. Morgan, the venture firm Bain Capital Ventures, and NEX Euclid Opportunities — the investment fund affiliated with the publicly traded electronic trading platform, NEX Group plc.
Additional investors in the round included DRW Venture Capital, Nyca Partners, Pivot Investment partners, and select angel investors and financial industry execs.
The company now bills itself as an Android for capital markets, although “Docker” for capital markets may be better? Without getting too in-the-weeds (although maybe I already have), OpenFin was developed on top of Google’s Chromium project — an open source project (anyone can see the code) that’s the same code Google uses for its Chrome browser.
OpenFin has forked that project to develop its own layer for developing and distributing applications. The company bills itself as a way for companies developing applications for financial services and capital markets to operate effectively across the different programming environments in each big bank, marketplace, hedge fund, or money mover.
The company’s software is already used by 35 of the biggest banks, hedge funds, and trading platforms and is installed on over 100,000 desktops.
OpenFin bills itself as a more secure, fully integrated way for anyone using trading or communication tools to work in the financial services sector.
“There’re three main things that [OpenFin’s service] does,” says OpenFin chief executive Mazy Dar, a former executive with the Intercontinental Exchange. “It’s the conduit that gets the app onto the [system], it provides security, and is the unifying layer to allow apps to talk to each other.”
Since applications that run on top of OpenFin never access the underlying network within a financial services institution, Dar argues that deployments on top of OpenFin are far more secure for their users. And in the notoriously security-focused financial services sector, that’s a good thing.
Currently, it can take anywhere from 6 to 18 months to deliver an application or an update to a desktop inside a financial services firm, according to OpenFin. The applications not only have to be vetted by security, but they also have to be integrated or customized to the back-end of each company (and each company has a different, proprietary, back-end).
OpenFin pitches itself as a service that can allow different fin-tech focused apps to communicate effectively without accessing core networks or existing in silos.
Even better for banks, there’s no charge. The company makes its money on per-seat fees charged to the companies that make and distribute the applications that run on its service.
This business model is both a blessing and a curse. OpenFin works insofar as there are applications that want to run on OpenFin’s platform. So far the company has 50 apps that are distributed through its service from customers including J.P. Morgan, Citadel, Electronifie, REDI, Trumid, Greenkey, ICAP, OpenDoor, embonds, and Tullett Prebon.
What’s appealing about OpenFin isn’t just the company itself (which, because I’m a nerd, I think is pretty fascinating), but also the ability to extend the company’s thesis into other industries.
Taking the specialized OS approach means that other security-conscious industries (oil and gas, utilities, heavy industry) could create a buffer between applications and their underlying architectures and (correct me if I’m wrong, y’all) create a stronger defense against cyber threats.
Just throwing that out there.