Over the past couple of years, we've seen a fundamental shift in who can influence the trading experience of the client, and how it's affected.
Roughly ten to fifteen years ago, what I'll call "the innovation value chain", for the lack of a better term, was linear. The product development department of a big online broker or bank would devise new ideas for the bank’s proprietary online Trading Platform (s); their internal IT staff would implement them;the features would either be warmly received by clients with open arms - or they would sit back and wonder why such a strange new feature was implemented that fewcould imagine anyone actually asking for.
Alternatively, in the case of brokers that didn't have their own IT resources, the broker would request new features from their Liquidity and white label provider (which were typically one and the same), who would invest in technology to present an out-of-the-box, one-stop-shop solution for brokers. Brokers in turn, were left only to focus on marketing and servicing clients and affiliates, leaving the product development decisions in the hands of their suppliers.
The latter solution seems like a more convenient model for the broker. And for many years - it was. Getting a turn-key white label completely offtheshelf makes it very easy to do business especially in a fast-growing industry where differentiating the products and services from others was not a requirement. Just being there to get a piece of the pie has been enough.
Fast-forward 10 years - that model isn't valid anymore.At least not in the western-world. Many of these markets are now moresaturated, and brokers need to differentiate. They need to evolve.
And that is perhaps the key reason that the innovation value chain is in fact changing - from a linear model like the one outlined above - to a model where various industry participants may help each other evolve. Any service or technology provider can both develop solutions for traders directly, or service brokers which in turn service customers. Companies like Autochartist, Traders Toolsetand NetDaniaare all examples of companies that has adopted to this new paradigm.
Why is this so important for our industry?
Because it means the input could be coming from anywhere - including from the brokers and even the traders themselves. When you open up a platform to outside development - the whole world can go nuts with ideas and you start to channel all of those ideas into concrete applications that people can use to trade, without the pre-screening and idea-filtration which may have been present in a closed innovation model where you would pick 1 or 2 ideas per year from your R&D department. Instead, this new model allows for traders and brokers to start pushing input to tech companies in a direct feedback loop to tailor their trading experience - as opposed to traversing a hierarchy that starts with the trader telling the broker, who in turn must tell the platform provider, who ultimately tells the service provider/developer,– which is a cumbersome/time-wasting process that bears a huge risk of key information getting lost along the way.
All this occurring in a peer-to-peer network might seem chaotic and it could become very messy –which makes it important for the industry to gather around a clear/structured network or marketplace that is streamlined and designed specifically to avoid this outcome, in order to help facilitate more (and better!) innovation across the industry.
Eventually, this will prove an effective change that will empower the industry to innovate better, faster and just might bring differentiation for brokers back in the game.
