Data and communication tools are two of the key ingredients for traders and brokers. In fact, Bloomberg and Thomson Reuters have made quite lucrative businesses combining the two products within their financial terminals. However, the bundled products also come with a large price tag.
Similar to other data industries such as telecom and cable, where customer demand is pushing towards the unbundling of products, the financial sector is experiencing similar trends. As a result, instead subscribing to bundled and expensive data plans like those offered from Bloomberg, more and more users are looking towards lower cost alternatives that can provide similar experiences for their core needs. As an example, rather than acquiring a full $2,000-a-month terminal, a stock trader can now opt to use a service like The Fly on the Wall for their breaking-news needs.
A possible new entrant to the financial data field is Symphony. According to a report from Reuters, the startup, with financial backing from 13 Wall Street banks led by Goldman Sachs, is exploring an unbundled approach for financial data by creating a digital marketplace for research data. Rather than users connecting to data providers like Reuters and Bloomberg directly, it would be Symphony’s proposed product that aggregates data from them. Users would then interact with the Symphony platform and be able to access numerous research and data reports for their specific searches from a variety of sources on the individual platform.
There are two main benefits for users: specific data queries and diversified results. Filtering through numerous data feeds, as well as possibly a user’s own emails and social accounts, Symphony will be able to provide customized data searches as well as ongoing market updates based on a customer’s interests. In addition, unlike closed platforms like Bloomberg and Reuters, by partnering with several vendors, Symphony users will have access to information from multiple proprietary offerings on one stream.
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The proposed business model from Symphony comes as the firm has been slowly rolling out its communication platform. Launched as Perzo, the startup was renamed Symphony after receiving $66 million in funding from the abovementioned Wall Street banks. At the time the startup was believed to soon be releasing a cross-firm communication product focused on the financial industry to rival similar messaging products from Bloomberg and Reuters. The company then purchased Markit’s Collaboration Services in a deal announced in December, providing it access to that platform’s existing network of financial users.
Combining its own secure services and Markit’s network, Symphony has begun to market its communication platform to financial firms and other industries this year. While messaging software isn’t always the top product on people’s radars, examples like the Sony hack, and subsequent release of sensitive company and employee emails, revealed the importance of securing corporate correspondence.
For the financial sector, Symphony is aiming to provide a secure solution that can be used both internally and by external users such as other financial firms and clients, while meeting regulatory requirements such as storing company correspondence for seven years. As well as incumbents like Bloomberg and Reuters who offer messaging tools for the financial industry, Symphony also competes against Wickr, another startup who is working on a similar product aimed at the financial industry and received backing from the CME.
While Symphony has been tagged as focusing on messaging, the inclusion of a data marketplace can be viewed as a natural extension of their service. If the product is taken up by bank clients, it would seemingly also be connected to the communication service, thereby increasing the network effect of that product by having more users on the platform. However, as noted in the Reuters report, getting data providers such as Reuters and Bloomberg on board who have been thriving with their closed model may not be an easy endeavor. Ultimately, though, as end-users would benefit from a more open data marketplace, it may trigger enough demand to force the hand of vendors.