In February, international retail financial derivatives trading company the IG Group set up its new operation in Ireland. We spoke to chief operating officer Peter Hetherington about the changing face of technology and how it is transforming the online platform.
Hetherington has a colourful background. An economics graduate with a master’s degree in finance from the London Business School, he was an officer in the Royal Navy before joining IG Group in 1994. Today he is a director of the group, which is a FTSE 250, with 140,000 clients in more than 130 countries, with a market capitalisation of stg£1.7bn.
Technology is at the heart of the spread betting group’s operations, says Hetherington. (The group’s CEO Tim Howkins originally graduated in computer science and maths).
Hetherington oversaw the launch of the group’s new online financial trading platform back in 2002. “It’s a long time ago now. We would have called it 3G (third generation) which gives you an idea how long. This was before 3G became a telecoms word. In truth, our first two platforms had been hamster-in-wheel affairs, they were glorified online chat mechanisms if I’m honest.”
Architecture at work
It was a major undertaking at the time. “Everyone talks about how quickly technology changes, but if you look at the core architecture put in place by the team at the time, it has broadly stayed very competent. If you get your architecture right in the first place, then while technology moves, and you change components, you’re not fundamentally changing the architecture of the system, so that same architecture is live today.
“People think ‘oh, it must be old and rubbish’ if it’s there for 10 years, but actually every layer was designed properly in the first place. Don’t get me wrong, we’ve changed any number of components, we’ve upgraded the way we get streaming data to a client and various things like that,” he continues. “But actually the architecture remains constant, and we still think of it as completely fit for purpose.”
Not that it was a pain-free process at the time. “I’d love to take credit for it, but I was just overseeing this. It was a two-year project which, like most projects of its kind, was hideously late, hideously over budget, and difficult to get live, but actually they built really good architecture. My role was to come in and get the thing live.”
IG Group has some 40pc of the spread-betting market in the UK and, says Hetherington, it’s crucial that the technology work impeccably if they are to steal a march on competitors.
“I feel a little sorry for some of our competitors – well not really (he laughs) – because it does become a scale game. And we have between 450 and 500 people in the IT grouping at IG. The staff numbers of many of our competitors is far lower than that.”
The real challenge for all players in this sector is the speed at which the industry is fragmenting, he says. “Just a few years ago, you either used Internet Explorer or Safari, and they were the browsers you used to talk to people. Today, not only have you got whole swathes of different browsers, you’ve also got completely different ecosystems on mobile. The number of developers you need just working on front-end mobile, IOS, Android, on Windows 8 and so forth – we have 40 all the time.
“When a client is choosing who to broke with, they’re not going to change their phone because their supplier doesn’t support the phone they use. The phone is more important to them than the supplier. We’re now seeing 28pc of deals done on properly mobile devices – and that is going up every single week.”
That’s a pretty big jump considering that, back in 2002, Hetherington says 85pc of IG Index deals were done on the phone, and 15pc on the internet. “In the last four years, about 99.5pc of deals done with us have been online in the wide sense, but the percentage of those done on online mobile have being going up every single day.”
Very few clients will not connect at some time on a mobile device, says Hetherington. “Many use it to look at what’s going on, and to close positions in extremis, while initiating positions from their desktops – that’s category 1. Category 2 just use both interchangeably. Category 3 use only their mobile devices and that has really made us rethink the way we do technology.
“It always used to be that we put everything on the desktop, and then we put a cut-down version of our service on mobile, and that just doesn’t work anymore. Today you’ve got to support every function on every device. That requires a huge amount of work. Today, clients don’t ever expect to have to phone up.”
This has had major implications for the group’s user experience design (UX).
“Obviously, UX is harder the smaller the device, but it forces you to be much more logical,” says Hetherington. “Arguably, our iPad app is better than our desktop app from a UX perspective, because you have less real estate, it forces you to have less unexpected ways of accessing a function.
“On old Java phones we’re still on a very cut-down service, but on the likes of iPad and iPhone you have identical functionality. With Android it depends on the quality of the phone.”
“But the thing we’ve found is that people hate cut-down, and they still prefer functionality over even navigability, so we’ve gone the way of giving clients everything on mobile devices.”
This is not a challenge in countries like Ireland, but remains so in countries like South Africa, where 20pc of its business is still coming trough small Java phones.
The move to mobile has also influenced how IG Group designs its desktop UX. “A desktop platform like ours is quite complex with many screens and options, then you take it to an iPad and it suddenly becomes quite clear. You follow a much more logical route through. So now we’re actually reverse-engineering that back into our desktop platform, because when we talk to our clients, we see they want us to make it simpler.”
The group takes its technology very seriously, and spends stg£25m in salaries alone on its IT grouping. “Usability, latency and reliability – these are the three things that drive us, and latency is utterly crucial, as it inevitable improves the client’s P&L.”
That said, Hetherington points out that when looking to Ireland, IG Group always felt it was vital to have a physical presence in the country also. “Clients want to be able to come into your office, they want to meet the guy, to go to the seminars, to build some trust and rapport with the company.
“Yes, we’re 5,000 people, half of whom are technologists,” says Hetherington, “But we only operate where we can actually put a bricks-and-mortar operation in place, and it’s the people who are key.
“It may sound like the answer for a tech business, but we just don’t believe the support should be run out of another country. Ireland was always high up on the list. Then we found a great guy who we trusted who really wanted to do it (Ireland CEO Declan Bourke) and he persuaded us of the opportunity. So, bizarrely for us, this remains a people play.”