While some of its competitors have built black boxes, Thomson Reuters has made openness a core value at the organizational level. That’s because the firm, which now bills itself as the “answer company”, believes that opening up its platform products makes them better longer term and produces better customer outcomes.
And that’s something in a market that’s facing challenges from all directions.
Financial firms contend with unprecedented challenges
Regulation and technology are exerting pressures on financial firms that require them to considerably up their games. That’s not really anything new and generally business-as-usual for an industry that’s still emerging in the wake of a global financial crisis. More expansive regulation, increased capital requirements, market structure changes, digitization and automation are all pushing financial firms to become more efficient at what they do and rationalize all the businesses they continue to compete in.
The speed required for innovation, though, is getting so fast that it’s hard for individual financial firms to keep up, according to Thomson Reuters’ Abel Clark, who heads up the firm’s activities in the financial industry. “We went from analog to digital, from voice to digital trading — these digitization trends have been with the industry for a long time, but we’re reaching an accelerated chapter in the financial industry’s evolution,” the executive said. “We’re seeing a step change, an accelerated evolution.”
It’s within this environment that Thomson Reuters has made a big push to open up its core products, creating platforms for its financial-industry customers and partners.
Managed services an industry-wide opportunity
In the wake of this increased pace of change, which requires continuous cost reduction, financial institutions are taking long, hard looks at what parts of their organizations are core to their businesses and jettisoning the rest. Given its positioning within the industry, Thomson Reuters sees an opportunity to provide shared infrastructure, much like Amazon has done with its AWS for the technology industry.
An example where the industry benefits from collaboration, TR’s Clark cites Know Your Customer (KYC) programs, required at all financial institutions. KYC is hugely important and every organization needs to run this process. “Because everyone runs their own KYC programs, there’s huge duplication across the industry,” said Clark. “There was an opportunity for Thomson Reuters to step in and provide industry-wide KYC services.”
Org ID is the name of the firm’s global KYC managed service. The service collects, classifies, and verifies a client’s identity in compliance with global regulators.
Openness a core value
At the core of Thomson Reuter’s KYC managed service is the firm’s open-sourced PermID, a unique identifier assigned to every piece of information collected about an individual or a firm. In fact, PermID is more than just a building block for good database management — it speaks directly to the firm’s strategy in building open systems. This theme of open systems is one Clark continuously comes back to. “Openness is core to our strategy — core to our firm — and existed long before the debate of open vs. closed began and before the terms were even coined,” he said.
TR’s Eikon terminal and its messenging product were constructed so that the financial industry can plug-and-play their own data and applications into them. Customers and partners can build proprietary apps directly into Eikon for internal distribution using a firm’s own data, Thomson Reuters’ feeds, and 3rd party data. The open research and trading platform is also well-suited, according to TR’s Clark, to act as a distribution mechanism for fintech startups. Financial technology firms can focus on what they’re good at and can use TR’s platforms as broad distribution channels.
Front end tools to information backbone
This ability to play nicely with customer and competitive systems is exemplified by the firm’s Thomson Reuters Enterprise Platform, or TREP. This middleware product serves as the information backbone of financial organizations. Clark says that TREP, which underpins the majority of trading floors globally, has also attracted a vibrant ecosystem that’s grown up around it. With 3rd party APIs, partners know that if they build out functionality on TREP, they’ll have access to a large global customer base. Conversely, customers know that when they choose an open system like TR’s Enterprise Platform, there are thousands of partners with whom to collaborate.
And this comes full-circle to TR’s belief that openness makes for better products and customer experience. “Openness wins longer term because it provides for more customer choice,” Clark said. “When there’s sharing and collaboration happening between partners, the financial industry will be better equipped to thrive in this challenging era of innovation.”