Platform technology is revolutionizing the financial industry in the same way Airbnb has changed the rental market. How is co-innovation helping our clients address regulation, technology trends and other challenges?
The financial industry is facing a perfect storm of market trends.
These challenges threaten the status quo and highlight the importance of co-innovation and the need to create a fertile ground for the platform business model to flourish.
The trends are varied and substantial:
- Regulation and regtech: The ever-changing regulatory landscape means that much of the innovation and development work in financial institutions is dedicated to streamlining regulatory compliance rather than adding value.
- Big data: Keeping on top of ever-increasing volumes of information has become a real challenge.
- Fintech: Firms must keep abreast of the rapid fire of innovation from fintech businesses and then integrate this innovation into legacy technologies and processes.
- Technology trends: Financial market participants need to collaborate and forge closer relationships with partners to develop new business models.
- Growth of passive investing: The last decade has seen a steady rise in the popularity of passive investing, which puts additional cost pressure on traditional active buy-side customers.
- The rise of the millennials: Millennials are pushing to improve the overall digital experience of financial applications, which lag the consumer experience on sites such as Amazon or Google.
- Global rebalancing: A global rebalance is underway, driven by a move of wealth into Asia: Singapore’s assets under management are forecast to grow from US$0.5 trillion to $2 trillion by 2020, overtaking Switzerland.
The combination of these trends is driving the emergence of new business models and industry collaboration.
This can take the form of, for example, utilities, shared services and co-innovation, as consumers demand an ever-more engaging digital environment and firms strive to take advantage of technological advances to deliver the same.
The result is a fertile environment in which we expect platform companies and business models to continue to grow.
Platforms provide business agility and speed to market, as in the example of Airbnb.
The company uses platform technology to connect parties offering and seeking accommodation so users can both offer and book accommodation remotely.
Airbnb has experienced exponential growth to over three million listings in 65,000 cities and 191 countries, despite having a relatively small employee base and not owning any lodgings.
As Airbnb has shown, platforms offer the ability to monetize assets.
Platforms also foster co-innovation and growth. A good example of this has been the development of “smart city” technology involving AT&T and GE.
The two sides worked together to realize their shared vision, and used platform technology to link connected LED light bulbs from GE and sensors and infrastructure from AT&T.
The result was a successful collaboration that achieved a level of innovation far beyond the sum of the parts.
Our primary platforms
From a provider perspective, we are moving increasingly towards a self-service API-based model.
This approach accelerates and scales the onboarding of new suppliers, as well as enhances their ability to access our distribution capabilities and monetize via our platform.
From a consumer perspective, we are working on enhancing discoverability and enabling users to quickly find content and, for example, download it to a sandbox and experiment with it before purchasing.
Innovation in action
A key enabler of our platform strategy is the Eikon App Studio, delivered via our flagship Eikon desktop.
By creating the App Studio we transformed a traditional market data desktop into a development environment for our customers and third parties with open APIs, reducing both costs and time to market.
In response to the growing importance of machine processing and machine learning within the industry, we’ve also developed the Elektron Data Platform.
This is an open platform that supports an ecosystem where content, analytics and proprietary, customer and third party technology come together to reveal previously hidden buy and sell opportunities, potential risks and new pathways to profits.
Being scalable and flexible, it allows customers to create their own customized data management universe, by subscribing to multiple content sets and publishing their own content to reach their customers, all integrated and accessible from a single location.
We have always provided the critical data-driven insights, connectivity and human expertise that form the foundation of financial markets.
Now we can use our powerful platform capabilities to unlock power and deliver co-innovation to help our clients address the challenges of regulation, globalization and changing customer demands.