Nasdaq unit says risk and data capabilities give FS firms a way to rebuild client trust
Financial services firms should get a grip on their risk management and make more use of the data available to them as part of a two-way process in gaining user trust and building new revenue streams.
“There is an equation at work in financial services: you need trust from the customer, but to make that happen you have to provide transparency – and to achieve that, you need to have a solid grip on your risk management and your data,” says Luc Brandts, chief technology officer at BWise, a company acquired by Nasdaq three years ago. “Data is not used enough, and it should be used a lot more. “
The acquisition of European governance, risk and compliance specialist BWise was part of the exchange’s diversification strategy. While traditional revenue sources from trading activity have reduced for all trading venues in recent years due to competition, reduced volumes and diminished trading sizes, many exchange businesses have looked to broaden out into technology, services, data management and compliance. BWise was an existing compliance business that fitted well within that remit.
“We look at anti-bribery checks and all sorts of systems that help to manage governance, compliance and risk,” said Brandts. “There’s a lot of companies out there in the financial services community who still use a lot of manual processing, and we can help them in a number of ways.”
Those ways encompass moving structured data, reports and figures onto automated platforms, as well as incorporating unstructured data such as inputs from social media where applicable. Such data could be useful when it comes to mergers and acquisitions, as well as stock market movements and investments.
Part of the impetus for joining Nasdaq was the global focus of the larger company. According to Brandts, BWise was looking to capitalise on some of the opportunities presented by developing economies, including in regions such as Asia Pacific, where he believes there is an opportunity for financial services firms in those countries to “leapfrog” the more established players in developed economies, using newer more efficient technology.
“They don’t have such a burden of legacy technology in some of these markets,” he said. “In five years’ time, we expect to see the use of data running deeper into these organisations, with deeper shared risk ownership, more use of mobile devices and less division – both between business units and between technology interfaces, such as laptops and mobile devices. The world is changing fast, and the silos are coming down.”
Despite the competition among exchange groups to sell technology and services, some of the main competition for BWise is not so much the other exchanges but more the IT vendors that seek to offer specialist products of their own, according to Brandts. That, he says, is why knowing the specifics of each global market and being able to operate a global business were a key part of the original acquisition by Nasdaq.
“These markets are all different and they have different needs,” he said. “The French are more process-driven, the Germans more risk driven. Being part of Nasdaq is an exciting opportunity and we benefit from combing that scale with our specialist expertise.”