This technology toolbox is transforming the structured products market, introducing speed and convenience. Its development is an ongoing process with bonus certificates planned for later in 2020.
Just as a fire continually throws off sparks, so Julius Baer’s toolbox of the same name is designed to swiftly deliver structured products investment ideas. Using React and Tailwind cascading style sheets (CSS) to deliver a superior user experience, Spark is far from a static tool. Launched in September 2019, it’s in continuous development applying the Kanban methodology, with about 600 incremental changes resulting in several major functional enhancements being made since then.
Within the last few months, for instance, an environmental, social and governance (ESG) factor has been introduced so that users can screen a structured product’s underlying securities to select those with strong ratings. And in the near future there are plans to introduce participation products, such as bonus certificates, to the platform, complementing the yield enhancement products already there.
For the intermediaries who use Spark, these improvements are intended to deliver new features on an ongoing basis, often in response to their requests. At the same time, this dynamic method of improving the tool allows the development team to ensure that releases remain of a low-risk nature and also means they receive more frequent feedback from the users. In the event of defects being introduced by new updates they can be easily detected and quickly fixed.
“We aim to deploy smaller changes whenever they are ready, which could be multiple times a week,” explains Christoph Kaufmann, Head Markets Toolbox. “What we also aim to do is introduce two or three more major features regularly, for instance on a monthly basis. This should have a big impact on, for example, user experience or convenience and usability. It might be related to Spark using investment strategies, or investment factors, or any other feature or any payoff.”
Number of users trebles in 2020
Helped by this commitment to continually developing, Spark’s popularity has increased swiftly since its introduction initially in Switzerland and then across other geographies. The number of intermediaries using the tool has trebled in 2020 at the time of writing, while the number of search requests has quadrupled.
The launch of participation products, or bonus certificates, later in 2020 is a major development for Spark, expected to lift usage rates still further. In line with the overall concept of simplifying the creation of structured products, Spark will simplify the selection of suitable underlying securities for participation products, which can otherwise require timely research. If, for example, a participation product is based on a single underlying equity then an attractive dividend is an important factor, but if there are several underlying equities then also the correlation of their stock prices matters.
“Going forward, preselection of these underlyings will happen within seconds on the Spark engine,” says Christoph. “And instead of just offering one idea, Spark offers the end user multiple possible solutions, which it believes are attractive. We are eagerly waiting for this new product and think users are really going to like it.”
Just like the rest of Spark’s development, the participation product brings together the ideas from the structured products sales and trading team with others on the business side, as well as the technology specialists. The salespeople and traders give feedback from their clients, which is then often quickly incorporated into new enhancements, which might be anything from the way the screen is laid out to a new feature such as ESG screening.
A development team of 10 people works from Zurich-Altstetten, comprising software engineers, quant specialists and business analysts/project managers. “I think the mix of the right profiles within our team and the skillsets is an additional success factor, driving Spark in the right direction,” asserts Christoph. “We are also quite an international group of people, which results in a lot of different insights and views and ideas. It’s a really exciting environment to work in.”
Looking to the future, they are now reviewing the possibilities of harnessing artificial intelligence (AI) and machine learning within the Spark toolbox. “By using the latest technology we’re aiming to speed up the whole advisory process,” notes Christoph. “The innovation is around bringing in speed and convenience.”