As you would expect at Caplin, we closely track the evolving Single Dealer Platform (SDP) market. Who is building an SDP, what front end technology has been selected, across which asset classes, and for which client segments etc.
Almost without exception all tier 1 and increasingly the majority of tier 2 banks have over the past couple of years, either completely overhauled their existing SDPs, or in a number of cases, built new SDPs from scratch.
But what’s the vision that drives an SDP project, and who does, or should own it?
For a couple of top banks, their SDP has become synonymous with ‘the bank brand’ (think BARX, or Autobahn).
However, for all banks engaged in an SDP project, it’s critically important that:
Internal stakeholders, including senior management, sales, trading, back office, research, e-commerce and technology must understand and ‘buy into’ the vision of what their SDP is being built to deliver and for whom. This requires joined up thinking that operates ‘above the silo’
Rising above silo politics
Unfortunately, in many banks, ‘silo politics’ still prevails, which means those who own the ‘above the silo joined-up vision’ seldom have the authority or the budget to deliver on that vision.
Historically, this has tended to result in clients having to navigate across multiple poorly-integrated single-asset-class execution and pre-trade offerings. In many cases, this unhappy experience results in clients executing trades on competitor platforms where they can more quickly and easily find what they need.
So, in addition to all internal stakeholders buying in to the unified vision, it’s also critically important for an SDP project to have ‘above the silo’ sponsorship, which is sufficiently senior to enforce a unified bank view over the silo view.
What is a good vision to have?
The starting point is to understand that an SDP is about showcasing and delivering the bank’s capabilities to clients. Depending on the bank and its capabilities and their ability to deliver, the vision could be as grand as to position the SDP as the primary channel through which the bank communicates with, and delivers intelligence, liquidity and value to, its clients. In those market segments where it is particularly strong, this might translate into the bank having an ambition to “own” a particular market, product, or country, or even a continent (think of a bank with a strong emerging markets franchise).
So, what makes a good SDP?
Whatever the vision, a good SDP is about building a platform that seamlessly and intuitively presents to clients what they need at every stage of their workflow, throughout the trade life-cycle. This requires a deep understanding not only of who your clients are but also how they work and what they need to do their job. Their needs and workflow requirements must be placed at the forefront of the platform’s UX design and build process.
At Caplin, we commence all SDP projects with a series of ‘persona workshops’ with all the platform stakeholders. These focus on understanding and grouping the key characteristics of their end users and their segments, to characterise end-users and their needs in the form of personas. These personas are rigorously validated with real end-users, and are used throughout the project to ensure that, at every stage of the development process, the platform is built to meet workflow needs of those users. Interestingly, in this area we are starting to see more and more banks that now ‘get it’, which is why some banks are hiring UX designers for their SDP projects.
It’s also worth noting that personas for an SDP are not only external clients. For example, nowadays internal Sales Traders usually use the same platform as their end-user clients to trade on behalf of those clients. For them, it’s important to link the SDP with internal MIS client information, so they can enrich their platform view with a real-time understanding of their clients positions, trade history, execution hit rate, upcoming rollovers — everything they need to deliver added value to their clients.
Execution flow is the reward for a good SDP
Users will reward (with execution flow) those SDPs that intuitively combine the delivery of liquidity with relevant slices of market intelligence (not just information) and risk tools that enable them to effectively manage risk throughout a trades life-cycle.
By understanding and meeting the needs of your end-user personas, an SDP will become part of the client’s workflow rather than separate from it, enabling the bank to move from just providing a price (which is competitively shopped) to delivering value, which is not – and in that way, move up the value chain.