Single-Dealer Platforms – Moving Beyond eFX White Label
When people talk about Single Dealer FX Platforms (SDPs) a large number think about the original platforms, which were bank branded and offered to clients – names like UBS, Autobahn, AVT (remember them?) and Reuters RET
But the market has changed significantly since the early 2000s, as modern SDPs have been affected by two major factors. The first is the natural progression of technology, and the second is the introduction of numerous rules and regulations within the banking sector. Banks today find themselves struggling to manage their responsibilities to regulators whilst trying to find ways to efficiently utilise the endless amounts of data running through their systems.
As technology automates more and more processes within a bank, the SDP has evolved to serve both external customers, and the increasingly important requirements of its internal users. Modern sales teams within banks are shrinking, as less valuable customer relationships are becoming entirely digital. As a result the remaining salespeople are expected to service higher value customers across a range of asset classes – operating more like a modern-day relationship manager. Salespeople need to be able to draw more easily on the pool of knowledge within their SDP in a way that helps them add real value and deliver actionable cross-asset insights to their most valuable clients.
We spoke with Caplin, the long-standing provider of SDPs, which provides data streaming technology to many of the top 10 banks and GUI services to regional and local banks from around the world. They highlighted two specific trends.
“A large number of banks are looking to connect their adjacent lines of revenue through their SDPs. For example, FX trading and commercial payments, two traditionally distinct divisions, are being connected to cut costs and gain insight from a broader range of data,” said John Ashworth CEO of Caplin Systems.
He added, “Post-trade services is an area that remains largely outdated in terms of technology. With many institutions still heavily reliant on manual data entry, post-trade is an area with significant opportunity for a quick win using an SDP.”
Looking forward, it is clear that there is no simple solution to the banking industry’s many complications, and while SDPs offer noticeable efficiency gains, a single design will not fit the varying needs of the global, regional and local banks, plus brokers and trading venues. A key requirement for technology providers is to be nimble in their approach and develop solutions with flexible design and adaptable programs. One thing for certain is that technology and regulation will continue to change, and SDPs will need to evolve to meet the challenges of an increasingly digitised and informed world.