GoldenSource Blog
International Regulatory Strategy Group, Asset Servicers, fatca, data scientist, edm vs mdm

Reading the Tea Leaves for Data Utilities

7 April 2014, By GoldenSource

The benefits of data utilities are fast becoming apparent to the financial industry.

Firstly, an ongoing flow of regulation is creating a concrete demand for standardized data, as financial institutions struggle to meet required levels of transparency; secondly, those same institutions are trying to do more with less – and data utilities present the possibility of considerable savings.

Nicholas Hamilton wrote recently about “the scramble to establish utilities” and the reasons for this market trend, with the view that a large number of competing utility models would, in fact, be to the detriment of their effectiveness. The question he raised was simply: “How many utilities do we need?”

Although we agree the current number of utilities may not prove sustainable in the longer term, and that it is likely that the number of utilities available is likely to increase in the near-term, competition is crucial to this market in its nascent stage. Competition promotes innovation, and each provider will be pushed to hone their offering. In its current phase, the market is full of disparate offerings – in that way, it is not too dissimilar from the early days of electric power, where AC and DC power were competing to be the standard.

In that example, the market eventually gravitated toward the better model; and we anticipate a similar trend in the utility space.

Once the winning models become a matter of general consensus across the industry, we’ll see the less successful models fall by the wayside – either by going out of business or by being bought – and a small number of service providers dominate the market.

It is here that the electric power analogy falls apart. We don’t expect the market to tend to a single provider. Rather, offerings will differentiate themselves according to data type, region, and market segment.

The future for data utilities is a pattern of proliferation, followed by consolidation.

Contact us to learn more

All Posts