Convergence @ the International Traders Expo in NYC

Dropped into the International Traders Expo in NYC yesterday – ostensibly an event for brokers to promote their technology to America’s massed ranks of affluent, self-directed investors/speculators/day traders.

Previously, online brokers apparently had a single goal in mind when designing their platforms: copy the UX (user experience) of professional trading workstations.

But what happens when apps aimed primarily at individual investors overtake their institutional counterparts? In an industry whose marketing relies heavily on trading floor imagery (e.g. multi-headed workstations with screen-after-screen of charts, watchlists, analytics, market depth, etc.) it was unclear where the UX would go next, now that one or two of the more visually compelling platforms (e.g. Schwab’s StreetSmart Edge) make some of the institutional equivalents look a bit passé by comparison.

Happily, plenty of examples of innovation were on display across two exhibition floors in the Marriott Marquis Times Square.

Schwab and some of the other big players, such as E*TRADE and Fidelity, have evidently funneled a lot of time and treasure into a broad front of improvements into their various platforms – spanning desktop, web and mobile. All were proudly showing off their latest smartphone offerings – including specific versions for tablets – as well as the most recent incarnations of their traditional thick-client installed apps, still the favored tools of active traders.

The results, so far, are visually compelling – a lot of energy has clearly been spent on making each separate version of the app look and feel great, from which Windows users look set to get the most benefit. Mac and Linux users, however, are still largely left out in the cold – Linux isn’t so much of an issue, but there’s arguably a significant overlap between the economic demographic who use Macs, and the sorts of customers that online brokers want to attract.

Looking further ahead, there appears to be recognition that cross-platform convergence is the way forward – with multiple apps aimed at different audiences being replaced by a common front-end that nonetheless still delivers different groups of users (pro, beginner) the functionality they require.  There’s sense in this approach – not least that having a single focus for R&D efforts, rather than it being spread thinly, is generally a good idea.

Driving this mood will be a host of cost/efficiency arguments – a theme that has already been picked up upon by a small number of niche players such as TradeKing, whose HTML5 offering came to market last year.

Indeed, at the niche players the distinction between the web platform and the “pro” (installed) app appears to be blurring – as these firms ride on the surge in power of standard web technologies and harness these within their own offerings, and as the ROI-benefits of standardization/convergence become more apparent.

Will giants such as Schwab decide to standardize on one platform? In time, they most likely will – however in the short run such innovation looks set to originate from those firms who have less invested in their fat client platforms, and who see HTML5 as a chance to steal a march on their competition.

Looking forward, one characteristic of “real” trading floor technology that online brokers probably won’t be looking to emulate forever is its heavy dependence on a lot of expensive-to-maintain, fat client technology – that’s one element of the trading experience that they’ll surely be keen to relinquish.

As with banks, competition and cost-consciousness will surely continue to drive brokers towards leaner and more economical distribution strategies.

It’s the Las Vegas show in May – after which we’ll report back on how the various online brokers are responding to these challenges (and opportunities). Perhaps, by then, we’ll also have seen some more examples of how the online brokerage space is, in turn, influencing its institutional motherland.

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