Financial Market Data Web Services – Xignite Blog

I will be attending the Web 2.0 / Enterprise 2.0 in the Capital Markets Industry conference in NYC on 9/17 where I will moderating a panel on Enterprise Web 2.0 in Financial Services. This is a small event but it attests to the growing interest the financial services industry is giving to the new wave of technologies that have hit the enterprise over the last 2 years.

One of the most interesting ideas that I have seen emerging around this subject is a concept I call Private Service Oriented Networks. Here is how it goes:

Financial service providers (FSPs) have long provided their institutional clients (money managers, pension plans, etc.) with technology layered on top of their financial services. For example, with custody services, they provide analytics on top of the clients portfolio holdings. For execution services, FSPs provide services and analytics covering the pre-trade and post-trade processes.

The point of providing this technology is to increase the firm’s differentiation and the "stickiness" of the services–which are often very commoditized. In the "old world", such technology took some pretty basic form: daily data feeds made available to clients–mostly through FTP, at best some web applications. This method of delivery made sense because the clients themselves were running standalone client/server applications. Clients needed files to upload data to their own systems.

Although primitive, those technologies delivered quite a bit of stickiness. During my days at Advent Software, I remember talking to some clients ready to move several hundred million dollars to a new custodian solely based on the availability of an interface between that custodian and the firm’s portfolio accounting system.

But under the new Service Oriented model, this old way of doing business falls apart and many FSPs know it. I have been talking to more and more firms who are trying to find ways to "upgrade" the way they deliver technology to their clients for the brave new service-oriented world.

What they want is provide their clients with a collection of unique, private web services allowing them to build more powerful, more responsive applications. Forget about the old daily downloads, we are talking intra-day information here, whether it’s real-time portfolio or trading analytics, the goal is to enable the institutional client to easily access all the data and functionality they to build their new generation applications.

So imagine such a Private Service Oriented Network providing you–the institutional client IT executive- with market data, account information, execution services, accounting services, analytics services. All through an open web service (SOAP/WSDL or REST/WADL) interface. Suddenly, your ability to deploy service-oriented business applications greatly increases. And to you, the benefits are significant: rather than building everything in house, you can start treating your FSP as an extension of your own IT organization while preserving complete flexibility and control about what makes your business unique.

This is a bit similar to what SalesForce.com has done by exposing its internals through web services. You could say that the SF.com API was the first and largest of the Private Service Oriented Networks. Now thousands of clients have built deep integration between their internal systems and SalesForce.com. This makes switching CRM system hard.

I foresee that over the next several years FSPs large and small will be deploying their own web service networks. And just like in the old days having or not having an interface to your clients system could make or break a deal, tomorrow’s institutional assets are likely to flow in the direction of the FSPs with the best networks in place.