Opening Cross: Data Democratization Requires Revenue Diversification
![max-bowie max-bowie](/sites/default/files/styles/landscape_750_463/public/import/IMG/807/101807/max-bowie-incisivemedia-color.jpg.webp?h=ee12d8fd&itok=FIjEj0Li)
It’s the Super Bowl: America’s annual celebration of overpriced a-holes—not the players, but the tons of hot dogs of dubious origin that will be consumed during the game. It’s almost enough to put me off my food, which would be a shame because so many mouth-watering commercials air during the game. In fact, for a Brit who still doesn’t get American Football, the commercials can be the most entertaining part of the event.
After all, companies pay millions of dollars for a 30-second slot, with many saving their best ads for this one annual event. But the return can be worth it: In 1999, Victoria’s Secret reportedly received a million visits to its website within one hour after a Super Bowl commercial.
One company that no doubt would have loved Super Bowl airtime is AlphaTrade, a minor vendor of market data displays for active traders and retail brokers that had previously struck sponsorship deals with various sports organizations. But after financial problems with those organizations (two of which sued for non-payment), AlphaTrade soon ran into its own financial problems, filing for Chapter 11 bankruptcy protection in 2011, and now finally liquidating altogether.
This despite the fact that the clients targeted by AlphaTrade—retail brokers, advisors and active traders—are now the subject of much activity from other vendors, who realize that targeting an audience of institutional users in the hundreds of thousands, with an install base dominated by two main providers, pales in comparison to an audience of millions of potential consumers, plus the professionals that serve them. And with staff cuts still in force across the financial industry, the big money may no longer be in selling tools to banks in large enterprise deals, but in finding ways to bring those tools to a wider, retail-focused audience in the name of democratizing trading.
Other stories in this week’s issue bear out this trend: For example, Norwegian data vendor Marketmind is putting the finishing touches to its Taurus terminal, which banks and brokers will be able to white-label to provide a custom data and trading platform that clients among advisors, stockbrokers and even retail investors can configure to their own needs.
And while these products may not quite rival Bloomberg’s Professional terminal or Thomson Reuters’ Eikon—which was developed with the specific intent of building a product that would appeal to a new generation of financial professionals used to web tools and social media, rather the clunky terminals of yesteryear—the tools they provide have far more in common with screens used by professionals on trading floors than they do with many of the antiquated models used to attract retail traders.
If you want to attract flow, give traders the tools and ideas that encourage them to trade, rather than waiting for them to come up with their own, says Kevin Ashby, chairman of Rising Sum, a startup analytics provider that is also targeting a range of end-users from investors to advisors and small hedge funds by seeking to strike distribution agreements with brokers serving that client base.
And even Nasdaq’s move to consolidate its market data and index groups—having already consolidated its market technology and corporate solutions businesses earlier this month (Sell-Side Technology, Jan. 18)—in a bid to create a more “diversified” business smacks of a recognition that its clients are no longer just the institutions with the big budgets to spend on direct feeds, but increasingly the average investor who may not be trading huge block trades, but feels empowered to trade equities, exchange-traded funds and options.
The question that all this activity raises is how long current commercial models for market data can last if the industry’s focus shifts to consumers without thousands of dollars to spend per month. And in that theoretical future, revenue diversification that rewards a higher volume of lower-paying customers might prove a saving grace for startups struggling for traction, or existing players able to adapt.
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.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
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. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Emerging Technologies
This Week: IPC extends Google Cloud partnership, BlackRock/AIA, DTCC and more
A summary of the latest financial technology news.
Waters Wavelength Podcast: Deutsche Bank’s Boon-Hiong Chan
Boon-Hiong Chan from Deutsche Bank joins the podcast to talk about blockchain interoperability.
SocGen pushes data, analytics use cases for SG Markets
The bank is letting a handful of clients experiment with its proprietary data and models to inform their research.
Ace high or busted flush? Digital Asset’s mixed fortunes mirror DLT adversity
The vendor hoped to remodel post-trade using blockchain technology—and it still might—but its bumpy progress raises questions over the future of DLT in finance.
AI could cut time for money laundering checks by 99%
Leading crypto exchange rolling out large language model for enhanced due diligence checks.
Standard Chartered keeps faith with quantum experimentation
The bank is aiming to future-proof itself with the ability to adopt new technology at an early stage.
Waters Wrap: CME, Google and the pursuit of ultra-low-latency trading
CME Group and Google have announced Aurora, Illinois, as the location for the exchange’s new co-location facility. Anthony explains why this is more than just the next phase of the two companies’ originally announced project.
This Week: Genesis/Interop.io; S&P Global; Finos/OS-Climate and more
A summary of the latest financial technology news.