One of the more common concerns we hear from casual observers is that a widely-adopted platform in the primary market pre-trade workflow might lead to a levelling of competition.
After all, if every bank worked off the same inputs, took into account the same parameters and processed them through the same platform, wouldn’t they all end up with the same conclusions? And why then should borrowers engage with 10 or 15 different banks at all?
It’s an understandable concern. There are startups proffering proprietary AI models that not only predict the next bond issuance, but deliver the “correct” pricing along in the same package.
Of course this misses the whole point of the DCM business, which relies to a large part on banks bringing together issuers and investors, positioning relative value and generating buy-in from investors based on well considered pricing rationales. Showing up with a spread “because the model said so” isn’t likely to win over either issuers or investors.
Our approach to a successful pre-trade platform is to provide banks with all the inputs (i.e. market data, proprietary intel and user inputs) they deem relevant and to give them the tools to leverage the full power of that data. Mostly this is about automating data queries and calculations, providing a platform to interpret and visualise the data and streamlining corresponding workflows.
Bots allows banks to feed in their proprietary data, input their own takes on deal stats or relative value and override just about any value. The inputs are as varied as the banks that use our platform and correspondingly the output is unique as well.
Just as Bloomberg, Excel and Outlook haven’t yet eradicated competition in Banking, we’re pretty sure Bots won’t either.
What Bots does do is give banks a much more efficient way to manage their data and workflows and to cover their clients in the best possible way. To step up their game and win more mandates with less effort.
We think there’s a considerable competitive edge to be gained. And if Bots does end up being the new market standard and you’re still concerned about a levelling of the playing field – what’s your strategy for that scenario?