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Symphony Faces Stiff Obstacle: Bloomberg
In the two years since Symphony’s launch, users haven’t found enough in the start-up messaging service to pull them away from Bloomberg.
Symphony, the messaging platform for financial market participants designed to compete with Bloomberg, has intensified its effort to gain traction, with co-owner BlackRock encouraging its customers to use the communication service.
Despite this new push, potential customers and analysts see little chance of the two-year-old, Silicon Valley fintech upstarts success. Bloomberg offers users a conjunct way for messaging, trading, research and news, and market professionals arent eager for a second messaging service to take up space on their computers.
Bloombergs one-stop shopping is important for people like me, says Art Ayzerov, senior portfolio manager at Alpine Partners, a global event trading firm in New York. I dont want another messaging app on my desk when I already have one integrated with my trading and research platform.
Fifteen financial institutions, including Goldman Sachs and BlackRock, founded Symphony Communication Services in 2014. The company in turn acquired Perzo, which was started by David Gurle, who is now CEO of Symphony. He was previously an executive at Skype and Thomson Reuters. The founding companies had noted concerns about Bloombergs virtual monopoly in messaging and data. Goldman in particular was upset with an incident in 2013 when a Bloomberg reporter tracked the terminal usage of one of the banks employees. Google also has invested in the company.
BlackRock has moved all of its chat messaging to Symphony and is urging banks, brokers and others with whom it does business to communicate with BlackRock personnel over Symphony. Goldman has deployed the service widely for internal messaging. Its not used much beyond those firms, even at the institutions that own it, though.
Workers at those firms arent enthusiastic about the service, says Douglas Taylor, founder of financial consulting firm Burton-Taylor in Osprey, Florida. Symphony has an advantage in that its supported by financial institutions that want a change away from Bloomberg, he says. But professionals are resisting change even at those institutions, and the institutions arent forcing them to change.
For its part, Symphony reports that it has more than 100,000 users. Money management firm $764.6 billion T. Rowe Price Group is one nonowner that recently decided to use Symphony. Were excited about the potential of this platform and the benefits it can bring to the buy- and sell-side community, Ryan Burks, chief operating officer of global technology for the firm, told Institutional Investor in a statement. T. Rowe Price declined to comment further.
A big selling point for Symphony is price. Its messaging service costs $15 a month, whereas Bloomberg terminals cost more than $20,000 a year. But thats not swaying many Bloomberg users. The chat service comes with Bloomberg, says Mike Nappi, a senior fixed-income trader for Boston-based $325.6 billion money management firm Eaton Vance. No one is paying $20,000 just for chat.
Symphony faces a Catch-22: Potential users dont want to get onboard unless all the other people in their ecosystem are on the service. That dynamic obviously keeps most people from joining Symphony. Most everyone working in financial markets is already on Bloomberg, and it would take virtually everyone leaving at the same time to give Symphony critical mass.
I think Facebook is the best comparison, Ayzerov says. If Facebook had only one fourth of your friends, you wouldnt use it. The advantage of Bloomberg is that every financial person has it.
Bruce Falbaum uses Bloomberg to trade high-yield and distressed bonds, along with leveraged loans, as a senior portfolio manager at $1.6 billion Cohanzick Management in Pleasantville, New York. He hasnt been tempted by the newer upstart.
I see the entire market going on in front of me on Bloomberg, he says. All the broker-dealers are putting up quotes on bonds. The constant stream of messages on Bloomberg from trading desks is vital for making his trades. And it has been this way for the last 25 years, Falbaum says.
He also relies on Bloomberg for analytics, such as bond calculations for corporate and mortgage securities. Falbaum would be interested in a cheaper service, but it has to have the same or more capability than Bloomberg, and it has to have a critical mass of users, he continues.
Symphony does hope to expand its services to offer true competition to Bloomberg providing data, analytics and news after users are drawn to its messaging service. Symphony has forged partnerships with Dow Jones Newswires and financial information services FactSet Research Systems, Markit, S&P Global and Selerity.
Market participants and analysts remain skeptical, however. Im not sure how they will leverage a messaging system for that broader reach, Taylor says. I dont think it will succeed unless people are told to use it by their institutions, or at the lower end of the market, where less money is at risk.
Many have tried to topple Bloomberg from its perch as the dominant financial information provider, and many have failed. Until I see someone knock out the champ, Im not sure anyone can, Taylor says.
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