It’s hard to believe that it’s been over 50 years since Instinet and NASDAQ first launched electronic order quoting and routing, and over 40 since Bloomberg first launched the Terminal. By addressing industrywide challenges in trading and market data, these pioneering firms helped to sow the seeds for the rise of the capital markets solutions vendor. Over the years, these enterprise-focused vendors have expanded their offerings and adapted to a constantly shifting landscape, all while facing regulatory and competitive headwinds.
Much of the recent competition they have faced has come from fintech startups, whose agility enables them to “build fast and break stuff” while solving specific challenges often overlooked by larger vendors. But newcomers can’t build or deploy in a vacuum, and given the usually narrow focus of their offerings, they need to build to integrate with legacy enterprise technology. Collaboration is almost always necessary.
So, will legacy solutions providers disappear completely? No. Will the future asset manager, bank, or broker-dealer run completely on applications from startups? No. The reality is that the technology vendor of the future will combine enterprise-grade capabilities with startup agility. But what exactly does that look like?
In this series of articles, we’re going to look at what’s worked, what’s been missing and what vendors need to do in order to drive material modernization in the industry over the next few years. We’ll start with the most topical, logical question – where are we now? How close are we to full health in capital markets technology solutions, and are vendors doing their part to keep costs down and innovation rapid?