How Many Utilities Does the Industry Need?
What started as enthusiastic talk within the reference data industry about the benefits of utilities is increasingly being put into practice, with the announcement this month that Swift is working with a group of large banks on a utility for know-your-customer (KYC) data.
When it is launched in December, Swift's KYC Registry will join a growing list of reference data utilities—at the end of 2012, Euroclear and SmartStream teamed up to create their Central Data Utility; GoldenSource has also partnered with IBM to create the Global Data Utility; and the Depository Trust and Clearing Corporation is working with a group of banks on a client reference data utility.
There are good reasons for this scramble to establish utilities, the most obvious of which is cost reduction. At a time when financial firms are trying to make the most of reduced budgets, utilities create the potential for significant savings because service providers perform a common data management task only once and share the results with a group of users, rather than doing the same work separately for each user.
Utilities can also lead to greater standardization—because a larger number of users will be sourcing the same data from a common source—and improved levels of data quality, because this group of users will be available to provide feedback on the same data.
However, these benefits only become significant if a utility attracts a large number of users. If it secures only a handful of users, the hoped-for economies of scale and competitive pricing will not materialize, and there will be less of an impact on data quality.
As more utilities become available in the reference data space, the benefits of each solution are likely to be reduced. This is because the market will be spread out thinly across a wide range of utilities, each of which will find it harder to secure a critical mass of users.
As vendors look for new operating models, questions have to be asked about how many utilities the industry really needs. It will be interesting to see, in the coming month, how vendors differentiate their utility offerings and which of these rises to the top.
For more on this topic, see this feature and this video interview with Euroclear's Martijn Groot.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Data Management
FactSet unveils Data-as-a-Service offering
The vendor is introducing the suite of managed services for more efficient data management as emerging technologies, like GenAI, require more from datasets.
Moral models: The ethics of data management
The IMD Wrap: You may be managing data efficiently, but are you managing it ethically? And is that something you should be concerned about? Yes, says Max, you should.
Footsteps in the dark: Private markets’ data quality “problem”
Data quality in the private markets is poor. But is this a quirk of the market or a problem that needs fixing?
Deep in the heart of Texas, market data vets sweat the talent gap
The secrets to unlocking all of market data’s questions and the antidote for all its ills were discussed in Texas last week. Unfortunately, we promised not to tell—not all of them, anyway.
Fidelity’s quantum exploration unites theory and proof
The asset manager and Amazon have teamed to put a quantum twist on machine learning.
Interop after acquisitions remains daunting for buyers
Executives from a variety of vendors speaking at WFIC explained why desktop interoperability is important and why progress has been slow.
GenAI could connect ‘constellation’ of vital information technologies
At WFIC, Six Group’s Marion Leslie highlighted the opportunities and risks that the technology holds.
TRG Screen cuts 20 jobs following review and restructure
The review follows an eight-year period of acquisitions and buy-in from a new private equity owner last year.