Six banks team with Expand Research to create data vendor catalog

Six global investment banks are collaborating with Boston Consulting Group-owned Expand Research to create an industry-wide data catalog covering all data vendors and their services, which would make it easier for firms to manage their data spend and to find new or alternative sources of data to meet specific end-user needs.

The data catalog aims to provide a comprehensive listing of all data sources and services, mapped against similar services from other providers based on function and content, and against those services already used by firms. The hope is that this will give firms greater control over the services they already use, and more transparency into comparable services available in the market. Sources say it could also help save firms millions of dollars per year.

“To me, this is a unique industry in terms of the leverage that vendors have,” says a senior operations executive at one of the banks involved in the initiative. “This will give us leverage over vendors.”

We’ve all been around long enough to know that if we can’t solve these issues ourselves, regulators will do it for us. This is a chance for the industry to think about transparency before it’s forced on us.

Senior operations manager at a bank

Other areas of spend have very different dynamics, the executive says. For example, if a bank needs to buy laptop computers, there are a large number of suppliers, manufacturers and models to choose from; the specifications are readily available and precise, and there are plenty of reviews and recommendations available. So, buyers have choice, transparency, and leverage. In contrast, the executive says, those qualities don’t exist to the same level when buying data or related services.

“The variety of vendors is smaller—comparison doesn’t exist. Also, documentation about the data, as well as how you receive the data, is inconsistent, and the opportunity to peer review isn’t there,” the exec says, adding that data providers “thrive” on a lack of transparency and comparability. “We’ve all been around long enough to know that if we can’t solve these issues ourselves, regulators will do it for us. This is a chance for the industry to think about transparency before it’s forced on us.”

The banks—whose names remain confidential, but whose spend on market data makes up an estimated 10% of overall industry spend, officials estimate—pushed Expand to develop the catalog based on a taxonomy that the firm created to support its data benchmarking service.

Users of the catalog will see a list of vendors, products, and descriptive fields—all described to the lowest possible denominator, such as type of data, frequency of data, and delivery mechanisms—mapped against their existing data inventory.

So, for example, when a data consumer asks for a specific data attribute, a data professional can easily find datasets that meet that need and compare them on cost and other factors. End users can use the catalog to see what’s already available in their firm’s inventory, and what services are recommended for them, based on their profile. It would also reduce the time needed to onboard new hires and set them up with access to data services, by linking user profiles to their inventory platform and granting them permission for services so that they can be set up and trading on day one, rather than having to wait two or three days to get access to data.

The large banks that comprise the founding members of the project are accessing the catalog’s data via an API that connects to their existing data inventory platforms and user interfaces for viewing the data. Smaller firms and others without their own existing systems will likely access the catalog via a user interface—which Expand plans to release in the first half of next year—to create a searchable front-end interface with product descriptions and links to vendors’ websites, allowing them to search for and investigate products similar to what they already use.

User-driven

For more than a decade, Expand has offered benchmarking services around firms’ data spend—where it captures a bank or buy-side firm’s data inventory and what it pays for services, and compares and ranks them against an anonymized peer group. It created the underlying taxonomy to map data vendors and services that may be referred to by different naming conventions at different firms, to enable a like-for-like comparison.

“Several companies are already harnessing the power of our Taxonomy API to elevate their inventory reporting practices,” says Damian McCarthy, group managing partner at Expand. This has resulted in automated inventory reports, regular cleansing and maintenance of the inventory, uniformity in product type classifications, informed spending forecasts, and granular insights that help inform decision making, he says.

Expand had already leveraged its taxonomy to grow its benchmarking service from just providing PDF reports in advance of a firm’s budget cycle to offering a portal that can capture and map a firm’s data on a quarterly basis to provide a cost optimization tool.

“The benchmark report provides a complete diagnostic of the firm’s market data spend, identifying areas where they could be leaner. The optimization tool then allows them to try to tackle some of these cost reduction opportunities, and track the progress of this activity throughout the course of the year,” McCarthy says.

The banks then asked the company to expand the taxonomy’s coverage to as many data sources as possible—not just those already being used by a firm—so they could use the same comparisons to identify alternative sources of data to meet their criteria. These discussions began in the middle of last year and Expand spent the tail end of last year validating the proposition, working with the banks to collect requirements, before presenting formal proposals around March or April of this year.

Expand took a two-pronged approach to building the catalog, with its existing team contacting vendors to supply their own data catalogs to map and include, and a new team built in parallel to manually collect information from vendors’ websites on their product portfolios.

It also engaged UK-based consultancy Greenbirch Group to build the API that the founding banks will use to access the catalog. Greenbirch has already worked with Expand and its clients to take the results of benchmark surveys and implement technical changes to achieve cost savings.

“The reason why this is being offered via API is these banks already have an application on their desktops for managing their data, and they don’t want another app; they want their existing app enriched by this new, comprehensive data source so that they can build a catalog supercharged with the Expand data,” says Greenbirch CEO Alex Wolcough.

But what those firms’ existing inventory management systems don’t have is an element of discoverability: they know what they have in-house, but not what similar alternatives may be available elsewhere. For this, firms may have previously employed business analysts specifically to go out and look for new datasets, Wolcough says.

Greenbirch is also assisting Expand with technical outreach. “When you bring a new API to the industry, you need to do a certain amount of preparation,” Wolcough says. “So, we’re pre-empting questions so that the onboarding of the new service is as smooth as possible. Also, we’re coordinating the technical workshop so that the right people at the banks are being presented with the right information in the right way.”

Reception

McCarthy says it’s especially been the smaller vendors who have been most enthusiastic and cooperative, as they stand to gain greater visibility. “Anyone outside the top 10 vendors sees this as an opportunity to get more exposure for their products.”

The enthusiasm from vendors overall may come as something of a surprise since proprietary taxonomies have been a way for providers to maintain incumbent status by making it harder to identify and compare potential alternative products on a like-for-like basis.

Yes, there is some level of commitment required from participating firms in terms of financial and resources, but … firms don’t need to allocate full-time employees or project teams to this

Eddie Molloy, Expand

Wolcough says another use for the catalog and API will be to help create standardized reports for internal cost management and billing.

“It can help clients map data usage from their inventory management platform into an industry standard taxonomy to deliver standardized reports to, say, the heads of equities, fixed income, or foreign exchange, so they can understand their costs,” he says. “All vendors have their own codes for billing clients, so coming up with a comprehensive report that shows overall usage costs broken down by vendors—right now, without the API, that takes a long time.”

The bank operations executive says that the catalog will also assist in reconciling invoices and in negotiating new contracts, as the taxonomy will make it easier for firms to provide detailed and independent information about their data consumption and identify their spend with individual suppliers and services. It will also allow firms to present viable alternative sources while sitting at a negotiating table, placing them in a stronger negotiating position.

“The reality is, every bank we deal with has tried to do this but has been hampered by a lack of interoperability and transparency between vendors in the past,” says Eddie Molloy, a director at Expand. But bringing firms with such significant spend together behind a common goal tends to make vendors more receptive. So too does the fact that Expand has spoken to at least another 30 financial institutions who have all expressed interest in the catalog, and that it takes the heavy lifting associated with creating a product like this off the hands of both end users and vendors.

“Yes, there is some level of commitment required from participating firms in terms of financial and resources, but it’s along the lines of one meeting per quarter for the steering committee and one meeting per month for the technical committee, so firms don’t need to allocate full-time employees or project teams to this,” Molloy says.

In addition, new users will need to go through a mapping step to ensure that what’s in a firm’s inventory system today matches correctly with what’s in the catalog. Existing clients of Expand’s benchmarking service will have already performed that step.

And for vendors, if they don’t have a structured internal catalog but want to build one using Expand’s taxonomy, the company can partner with them to create one, Molloy says—though he adds that isn’t a priority in the short term; the focus right now is on a successful launch with the initial founders, then expanding the base of participants more broadly. The more firms that sign up, the more resources Expand can devote to making the catalog as comprehensive as possible.

“Those founder members are shaping a product that we will take to market more broadly in the future, and which will solve problems for all financial firms going forward,” Molloy says.

And while that initial focus is on six of the largest firms, the catalog offers value to firms of all sizes—especially those with fewer resources, where it’s even more important to get the most bang for their buck.

“The need for a catalog is probably greater at smaller firms with small budgets who have been managing the same vendors and datasets for the past 30 years,” Molloy says. “A catalog would open their eyes to what else is out there.”