How Many Utilities Does the Industry Need?

What started as enthusiastic talk within the reference data industry about the benefits of utilities is increasingly being put into practice, with the announcement this month that Swift is working with a group of large banks on a utility for know-your-customer (KYC) data.
When it is launched in December, Swift's KYC Registry will join a growing list of reference data utilities—at the end of 2012, Euroclear and SmartStream teamed up to create their Central Data Utility; GoldenSource has also partnered with IBM to create the Global Data Utility; and the Depository Trust and Clearing Corporation is working with a group of banks on a client reference data utility.
There are good reasons for this scramble to establish utilities, the most obvious of which is cost reduction. At a time when financial firms are trying to make the most of reduced budgets, utilities create the potential for significant savings because service providers perform a common data management task only once and share the results with a group of users, rather than doing the same work separately for each user.
Utilities can also lead to greater standardization—because a larger number of users will be sourcing the same data from a common source—and improved levels of data quality, because this group of users will be available to provide feedback on the same data.
However, these benefits only become significant if a utility attracts a large number of users. If it secures only a handful of users, the hoped-for economies of scale and competitive pricing will not materialize, and there will be less of an impact on data quality.
As more utilities become available in the reference data space, the benefits of each solution are likely to be reduced. This is because the market will be spread out thinly across a wide range of utilities, each of which will find it harder to secure a critical mass of users.
As vendors look for new operating models, questions have to be asked about how many utilities the industry really needs. It will be interesting to see, in the coming month, how vendors differentiate their utility offerings and which of these rises to the top.
For more on this topic, see this feature and this video interview with Euroclear's Martijn Groot.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: https://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Data Management
Exchange M&A, US moratorium on AI regs dashed, Citi’s “fat-finger”-killer, and more
The Waters Cooler: Euronext-Athex, SIX-Aquis, Blue Ocean-Eventus, EDM Association, and more in this week’s news roundup.
EDM Council expands reach with Object Management Group merger
The rebranded EDM Council now includes members from industries outside financial services.
As datacenter cooling issues rise, FPGAs could help
IMD Wrap: As temperatures are spiking, so too is demand for capacity related to AI applications. Max says FPGAs could help to ease the burden being forced on datacenters.
Bloomberg introduces geopolitical country-of-risk scores to terminal
Through a new partnership with Seerist, terminal users can now access risk data on seven million companies and 245 countries.
A network of Cusip workarounds keeps the retirement industry humming
Restrictive data licenses—the subject of an ongoing antitrust case against Cusip Global Services—are felt keenly in the retirement space, where an amalgam of identifiers meant to ensure licensing compliance create headaches for investment advisers and investors.
LLMs are making alternative datasets ‘fuzzy’
Waters Wrap: While large language models and generative/agentic AI offer an endless amount of opportunity, they are also exposing unforeseen risks and challenges.
Cloud offers promise for execs struggling with legacy tech
Tech execs from the buy side and vendor world are still grappling with how to handle legacy technology and where the cloud should step in.
Bloomberg expands user access to new AI document search tool
An evolution of previous AI-enabled features, the new capability allows users to search terminal content as well as their firm’s proprietary content by asking natural language questions.