Why are people building single-dealer platforms anyway?

We are seeing plenty of new comments, and blog posts regarding who is building single-dealer platforms (SDPs), although there don’t seem to be many posts that take things back to basics and explain the actual reasons SDP’s are being built. For those of you looking for a brief, straightforward explanation, here you go:

When built by an experienced team, single-dealer platforms are a fast, low cost and low risk way to service highly differentiated client segments, delivering unique relationship pricing in commoditised vanilla flow products, and adding stickiness through enhanced compelling and more complex services.

There are no restrictions on what can be built on top of a single-dealer platform. Top players tend to build their platforms in-house, leveraging their huge internal core competences for strategic competitive advantage.

Other benefits to banks include:

  • Improved margins, through delivering unique per using relationship pricing
  • Better customer retention, through delivering highly segmented workflow solutions
  • Reduced transaction costs, by providing low touch, low cost price discovery and execution, with full STP
  • Cross-selling capabilities
  • Escape from commoditization, by offering customised solutions, and aditional value added services such as research, analytics, and other client focused services
  • Internalisation of flow

One Response

  1. […] 2010 I wrote Why are people building single-dealer platforms anyway? because I had to. In the technology adoption lifecycle, single-dealer platforms were still pretty […]

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