The Synergy of Market Infrastructure and Fintechs

A recent report by the World Economic Forum, or WEF, has shown that partnerships between well-established market infrastructure and more modern financial technology companies are the key to gaining shares in today’s tumultuous market. The report states that over-the-counter products are shifting to electronic trading.

A great example of this teamwork is Algomi. News is that Euronext, the pan-European exchange has invested in Algomi. Algomi has had three further investments from separate companies in the last six months.

The WEF report states that brand new platforms don’t often challenge incumbent institutions and that partnerships and collaborations between the new and the older technologies are the most successful path to growth for both parties.

Fintechs bringing banking up to date

The co-author of the report, Rob Galaski said in a statement: “Fintechs have changed the basis of competition in financial services, but not the competitive landscape. Fintechs now define the tempo and direction of innovation in financial services, but high customer switching costs and the rapid response of incumbents has challenged their ability to scale.”

Only recently have the market incumbents began to embrace the latest technologies. Fintechs haven’t really started to challenge them in a dangerous way, but their partnerships have changed the financial landscape and the way people work in the industry forever.

Even when fintechs have developed trading platforms with much higher rates of efficiency, financial institutions may prefer to not switch due to the high cost of doing so.

The big banks and institutions are built mostly on the relationships they have built that characterise capital markets, so disrupting these relationships would be bad news for them. This is another reason why partnerships may seem like a better choice.

Algomi news: developing products for Euronext

Back in March, Euronext invested $10 million in Algomi. This deal involves the development of software that can help Euronext establish a foothold in the North American market.

Algomi has been expanding extremely rapidly, having three investments in the last six months. The latest was is with data and analytics company S&P Global. For the latest Algomi news, check back at fintechwebnews.co.uk