Tales from the trading floor: David Brown of Banach Technology on the ‘crown jewel’ of in-play trading

Q: How are you settling in with Banach Technology?

David Brown (DB): It’s been incredibly straightforward as I’ve known the critical driving forces running the business for some time. Many of the team were significant contributors to the rapid development of the digital performance and growth of the Paddy Power brand.

While I was trading director at William Hill, I was hugely impressed by the performance of Paddy Power’s digital trading environment. You make a point of developing your competitor knowledge and identifying who is steering the initiatives and developments in rival businesses. I retired from William Hill in early 2010 and then did a few pieces of consultancy work for Paddy Power, which brought me into contact with more of the team.

After Banach was created, I was delighted to be asked to join as an adviser. It’s a great team blending the best of the past successes with new arrivals to create a dynamic start-up. I love the energy and the work ethic to succeed. Above all, it’s personally very satisfying to now be on the same team after having to compete against those who form the beating heart of Banach.

Q. With your time at Ladbrokes Coral and William Hill, where did you see the most significant advancements in trading technology?

DB: I have worked in the industry since my 16^th birthday, and when I joined William Hill in 1987, several processes were predominantly manual.

However, computerised bet acceptance and call handling technology soon began to improve the customer experience. Efficiencies within telephone and retail bet handling and liability control furthered this. William Hill had a vast telephone betting business at that time and continued to grow the sector until digital betting emerged towards the end of the 1990s.

Digital betting changed the whole dynamics of the betting industry. Customers started to demand more than the traditional markets on offer. The old ways of working within trading had to change. Initially, Excel spreadsheets allowed traders to create more markets as in-play betting grew from non-existence to available on many live sports with football the key driver.

Very quickly, bespoke algorithms to create multiple markets were written and developed. The days of the football trader creating every price offered on a match were effectively dead, especially for in-play activity. The human being could not react as quickly as a sophisticated mathematical algorithm.

So, the algorithm became the ‘crown jewels’ of in-play trading, which enjoyed a massive surge in popularity. The trader now oversaw the algorithm rather than compiled the odds and that was a fundamental shift in the requirement and use of technology. The quality of your in-house algorithm became a differentiator in the marketplace.

These complex pieces of mathematical engineering needed to be constantly reviewed to ensure there were no inaccuracies buried deep within the code. So, the automation of much of trading on many sports is now accepted and part of every successful trading floor.

Liability control was also improved by the automating processes that had previously been manual. The liability software would regularly give updated views on risk where prior it was often at best sporadic. More real-time activity on markets and customers could be viewed to best manage the customer base and reflect their activity to improve the quality of decisions made by the company and user experience.

The bookmaking activity of making a price, adding a reasonable margin and then altering prices in reaction to live trading volumes is the same as it always has been. However, technology has developed to do this more efficiently, on significantly more events, more profitably and in many cases with reduced resource needed to manage the product.

Q. What was the biggest challenge you faced in the trading room?

DB: Invariably the most significant challenge to trading technology has been adapting the skill set of traders to embrace technology and not look through ‘sepia-tinted’ glasses at how it used to be done. All businesses continuously need to evolve and develop as technology improves performance and a better offering to the customer.

The old skill-set of compiling every price offered manually relying on the trader’s market expertise has effectively become redundant except in a few specialist areas. Trying to coach traders to understand that technology was their friend and not trying to take their job away was always a constant issue.

In my career as a trading director for almost 20 years, before I finally retired, I’ve been through many mergers, takeovers and restructures of the businesses and trading rooms.

Those people that have developed their careers within trading functions have embraced new technology and proactively used it to improve their roles and the customer’s experience. Those who failed to adapt have generally left the industry. It does give me great pleasure to see a large number of people who were relatively junior traders in my teams now hold very senior positions (including trading directors) within the industry.

One other significant challenge was the constant battle with suppliers and internal technical functions to deliver the technology on time and to specification. Then to maintain it 24/7 and not merely during more traditional working hours. I’m afraid that topic would probably require another few weeks to discuss to a conclusion!

Q. How do you see the future of trading technology taking shape?

DB: We have already seen the use of predictive technology embedded into trading systems. Bookmakers have huge databases of results, bets and customer activity. It was a logical step to use this data to analyse and start to predict customer behaviour. This is particularly helpful in customer and liability management, predicting price movements and shaping trading plans. No doubt, as technology improves, this area will keep pace with that development. Algorithms will continue to evolve and become ever more sophisticated.

As the industry sees more mergers and takeovers over the last few years, this presents its own technical challenges. Companies can be operating a number of different brands under one parent owner with many different trading systems operating largely in isolation. So, rationalisation without impacting the customer is going to be a significant requirement to create internal efficiencies within the sector.

Also, I believe as brands do grow to be truly global, operating in many jurisdictions simultaneously then tolerance of any downtime of core systems will be challenged.

I think CEOs and CFOs will be expecting trading technology to be stable and available 24/7 every day of the year with much more built-in resilience. Downtime on key days like Grand National day will simply not be tolerated, and this means better engineering, capacity control and internal and external IT capabilities.

Banach Technology makes up one-third of AllSported, a trading solution from Racing Post. The solution gives customers made-to-measure racing odds delivered with streamlined integration to build better books and to maximise profit. To find out more about AllSported visit www.AllSported.com.