Why Haven’t Industry Utilities Gained More Ground?
Virginie O'Shea has written a post covering the idea of industry utility platforms and why they haven't seen more take up. Given the amount of cost in the post-trade space for processing transactions it would seem an idea ripe for investment.
In my career I saw SwapsWire founded and sold, the DTCC TIW built and SwapClear take off. What I've also seen is FinTech firms with bright ideas struggle to get take-up for good ideas. What we also forget is that many fund managers outsource their back-office processing the Third Party Administrators, why don't banks do this too?
The question which is hard to answer is this: Why do larger banks continue to maintain huge and complex back office platforms, when if they pooled resources they could have an equity stake in one huge complex back office provider, and then compete on the front office skills and capital efficiency?
I don't know of any bank who wins trading business by having a better back office – do you?