When the banking crisis tore through Wall Street and the City of London there wasn’t much Devin Wenig could do, apart from sit and watch the trading screens in his office turn red.
As for any supplier to investment banks, a string of collapses including Bear Stearns was not good news for Thomson Reuters, even though the financial news and data provider claims to thrive on volatility.
Wenig runs the company’s markets division — essentially the old Reuters business plus Thomson Financial, which supplies legacy systems like Topic and Datastream. He knew a new banking elite would mean fewer potential customers.
However, Thomson Reuters has been dealing with another change in its market. Thanks to the rise of the internet, today’s traders are more familiar with clicking their way through YouTube than memorising a complicated series of codes for using Reuters’ trading screens and information feeds.
“You see very different behaviour from a 25-year-old just out of the London School of Economics to a 55-year-old who has been trading for the last 25 years,” said Wenig.
“People who grew up with Google have totally different expectations of how to interact with information and media. We can’t ignore that.”
Despite the recession, in the next few months it will unveil Project Utah, the final leg of a $1 billion (£613m) technology investment to upgrade its systems in four key areas.
“We are not going to be the greatest technology company in the world and nor should we be,” said Wenig. “But technology is an enabler. We have to put money into it. We can’t just talk about it.”
In the 158 years since Reuters began flying pigeons with news alerts tied to their legs, it has had to move with the times. But the company, which merged with Thomson last year and has delisted itself from the London stock market, has never really been known for its cutting-edge advances.
New versions of old systems have underwhelmed or been released late. Innovations such as offering instant messaging between users have often been introduced first by its nimbler rival Bloomberg, which has caused a headache for Reuters ever since it set up as a direct competitor almost three decades ago.
It recently trailed in Bloomberg’s wake in mobile, but the launch of a news application for the BlackBerry and iPhone was a hit, drawing 90,000 subscribers in its first month. However, long-term followers of the industry see a change of tack.
“The difference now is that Thomson Reuters is taking a more friendly approach to how it presents information,” said Douglas Taylor, managing partner at Burton-Taylor International Consulting and a former executive at both Thomson Financial and Reuters.
“In some cases they are playing catch-up but I think their expectation is to leapfrog Bloomberg.”
Clients also have high hopes. “This is a fiercely competitive market and I welcome any change that makes business easier to execute as long as quality isn’t compromised,” said Bryan Hotston, chief information officer at JP Morgan Cazenove.
In contrast to newspapers, providers of financial information that rely on subscriptions rather than advertising have held up well despite free news and statistics being readily accessible online through Yahoo Finance and other websites.
Despite the financial crash, underlying sales at Thomson Reuters’ markets division are still growing, although only by 0.2% in the last quarter.
Taylor forecasts that the $23 billion market for electronic financial information will shrink by 1%-3% this year, with Bloomberg holding a 26% share and Thomson Reuters 34% because it dominates in areas such as fixed income. Where they compete directly, the pair are judged to be roughly neck and neck.
Often it is not the news they convey that makes one or the other a must-have for City dealing rooms. If the information is market-sensitive, it is the immediacy of it and how it is packaged, including commentary and analysis, that makes all the difference.
For this reason, Thomson Reuters is trying to drive down split-second delays in its data feeds. Some investment banks have asked it to host their applications in its data centres to increase efficiency.
The biggest change to its news provision will be Insider, a video news service for the financiers who already use its news terminals. If they pay, they can call up interviews as if they were trawling YouTube and they will also be able to search quickly through transcripts for the key points. “I don’t want to turn us into a consumer company but you ignore at your peril what YouTube and Twitter have done to online behaviour,” said Wenig.
He invoked Apple and BlackBerry maker Research in Motion as the type of company he wants Thomson Reuters to emulate.
“We didn’t tend to think of ourselves as a product innovation company. I am trying to move the company forward and encourage people to think about new things,” he said.
The biggest technology bet he will place is Project Utah. Almost two years in the planning, and arriving early next spring, it aims to create a common platform for all of Thomson Reuters’ 200 financial products for the first time, making Reuters’ systems simpler to use.
It is likely to look and feel more like a conventional web portal and all its 500,000 customers will be moved on to it, replacing 3000Xtra as its flagship product. For a company that has previously tailored everything to different customers, it marks a new direction. So does the way that Wenig plans to introduce it.
“It is the first time we are going to properly launch a product,” he said. “We never really launch products. They just emerge. This will have proper marketing and advertising.”
Some of the changes mirror Reuters’ rivals, which are also investing during the downturn. Dow Jones — which is part of News Corporation, owner of The Sunday Times — is revamping its newswires’ arm by beefing up web applications so it is less dependent on data terminals. Meanwhile, Bloomberg has added news providers such as Associated Press to its terminals and a tagging system that lets users search across them more efficiently.
The challenge for all of them is a common one: to remain not just faster than the web but to make sure they still click with the newest internet-savvy generation of City workers.
Sunday, August 30, 2009
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