By Lauren Tara LaCapra
NEW YORK (Reuters) - A startup backed by Wall Street banks plans to create a digital marketplace for research and data products in a potentially ambitious foray into the financial technology and information businesses, people familiar with the matter said.
The firm, called Symphony Communication Services Holdings LLC, is trying to solve a problem investors often complain about: too much information, some of which is irrelevant, coming from too many places.
Instead of research reports, news and data coming from different touch points - email, the web, or proprietary systems like those offered by Thomson Reuters Corp and Bloomberg LP - they would instead flow into one central hub. Rather than an investor needing to sift through a barrage of reports, databases, and news items, the hub would seek to zone in on information about specific securities, markets or subjects of interest to them.
The idea is in the early stages and does not yet have a name, people familiar with the matter said. It could be abandoned if information providers balk at collaborating with Symphony. It would be funded from the $66 million (43 million pounds) Symphony received in capital from a group of Wall Street banks led by Goldman Sachs Group Inc in October. On Jan. 5, Symphony rolled out its initial communications system that combines chat, email and social media accounts onto one platform.
Senior Goldman executives, including Chief Information Officer R. Martin Chavez, are keenly interested in the new initiative, said the sources, who spoke on the condition of anonymity. Symphony CEO David Gurle, who previously developed communications platforms at Microsoft Corp, Thomson Reuters and Skype, is leading the development effort.
Spokeswomen for Symphony and Goldman Sachs declined to comment.
Symphony's latest idea is not new: it echoes the business model of Thomson Reuters and Bloomberg, which dominate the financial news and data market. Other startups have tried to upend or improve upon that model before, with little success.
"It's really hard to change habits," said Kevin McPartland, head of market structure and technology research at Greenwich Associates, a consulting firm to the financial industry.
Even if large banks like Goldman Sachs adopt the technology, they will still have to continue with older ways of distributing information to accommodate clients who have not yet switched.
And at least some customers will likely be suspicious of a product that comes from a group of banks, said Peter Appert, a senior equity research analyst with investment bank Piper Jaffray. "You want the data and analytics coming from independent third parties," he said.
Information providers will also have to agree to plug their "wires" into the central system. Some data, research and news providers will see Symphony as a rival rather than a partner and will not want to engage in something that threatens to cannibalize their businesses, industry analysts and consultants said.
But some Bloomberg and Thomson Reuters' banking and asset management clients, who declined to be named, say the two companies aren't adapting quickly enough to a broadening fire hose of information that clients care about.
Bloomberg has been criticized for its "closed architecture" that does not allow customers to adapt Bloomberg technology to their specific needs, and for requiring customers to purchase a full package of services even if they only want to use small parts of it. Thomson Reuters has been more open to cutting specific deals with clients, but it still does not offer fully "open architecture," the clients said.
COLLABORATION IN QUESTION?
Two people familiar with the matter said Thomson Reuters and News Corp's Dow Jones, which offers similar services, have informally expressed interest in partnering with Symphony, as have some smaller subscription services. Big dealers that have invested in Symphony are also likely to distribute research and data to paying clients through the platform. Bloomberg does not seem as interested and has not had direct communications with Symphony about collaborating, these people said.
A Bloomberg spokesman declined to comment.
Thomson Reuters spokesman Brian Mairs said the company is working with Symphony and is supportive of the principle of "open messaging" that is embodied in its own chat system, as well as Symphony's. "We believe in open, cross-industry collaboration and we will be pleased to work with Symphony to develop the best solutions for our clients and the wider financial services industry," he said. He declined to comment on the company's ability to adapt quickly to client demands or on any future threat that Symphony's research and data plans may present for Thomson Reuters.
A Dow Jones spokeswoman did not respond to requests for comment.
Symphony says that its investors now using its system include: Goldman, Bank of America Corp, Bank of New York Mellon Corp, BlackRock Inc, Citadel, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, Jefferies Group LLC, JPMorgan Chase & Co, Maverick Capital Ltd, Morgan Stanley, Nomura Holdings Inc and Wells Fargo & Co.
Another 2,000 companies have signed up to request access, people familiar with the matter said.