Single-Dealer Platforms: (5) the client segment axis

This is number 5 in a series, expanding on my original post about all the ways in which SDPs are evolving. This post will discuss the broadening range of end user segments targeted by SDPs.

Before the beginning

Early on, SDPs weren’t really “targeted” at all. I remember many years ago, in one of the first SDP projects we were ever involved in, asking the project sponsor (a CTO at a tier-1 global bank) who the primary users were going to be. He said, “Don’t know, really. We’ll wait and see who uses it.”

Those were the days. Now, in a world of sophisticated UX design and fierce competition for user screen space, you won’t get far at all without a very clear idea of which user segments you’re going after, and a pretty deep understanding of those users’s needs.

Surveying the landscape

An SDP project with any chance of success today starts by segmenting the user space. A typical segmentation might look something like this:

  • Internal sales traders
  • Downstream banks
  • Hedge funds
  • Real money managers
  • Large corporates
  • SMEs
  • Financial advisors
  • HNW investors
  • Active retail investors

Clearly, different segments have different degrees of relevance depending on the bank, the geography, and the asset classes being traded. For example, HNW investors are most relevant to equity trading (under-represented on SDPs, but starting to catch up). Meanwhile corporates and SMEs are of most interest to the FX desks at regional banks, often as an enhancement to a transaction portal.

Until fairly recently, most of the emphasis was on the first three on the list, more or less in order of priority — not least because they were the least likely to be wedded to multi-dealer offerings. As regional banks have stepped up their investments in payments portals for their corporate clients, large corporates and SMEs suddenly became hot segments. And currently we’re seeing a storm of activity at the retail end (represented by the last three on the list).

State of the art

In the last year, we’ve been involved at Caplin in SDP projects that, between them, have targeted every single one of the segments on the above list. A particular offering might be aimed at more than one of the segments, but never at more than three. If you try to design a user experience (UX) that works for more than two or at most three of these user types, you’re pretty much bound to create something that doesn’t work well for any of them. And in general, the narrower the focus the better, in terms of effectiveness. That’s why we’ve long advocated basing an SDP on a framework that makes it easy to build multiple, highly targeted front ends.

It’s interesting to draw a matrix of client segments against asset classes, and look at the clustering. But that’s a topic for another post.

One Response

  1. […] that banks are providing these innovative risk management tools and services through their own client relationship channel, which is of course their single dealer […]

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