Bloomberg has rolled out a version of its Instant Bloomberg chat service—widely acknowledged as one of the “stickiest” elements of its $22,000-per-year Bloomberg Professional terminal—that allows professionals within financial institutions who do not subscribe to the Bloomberg Professional service to use the same messaging platform as colleagues within their firm who have Bloomberg terminal subscriptions.

Dubbed Enterprise IB and described by the vendor as “an intra-firm communication and collaboration suite of products,” the offering includes Bloomberg’s chat tool as well as its NOTE shared workspace and email capability, and can be used by anyone within an institution—regardless of whether the individual uses a Bloomberg terminal—so long as their firm has existing terminal subscriptions. The vendor began offering Enterprise IB as part of a beta phase last year to non-terminal users within select existing Bloomberg clients for $10 per user per month—significantly cheaper than the near-$2,000 per month cost of a Bloomberg terminal, even though reports abound of traders bearing the full cost of Bloomberg terminals despite using only a fraction of its features: reportedly often just Instant Bloomberg, not only for the chat functionality itself, but also for its market penetration and the breadth of market participants users can reach through the service. The vendor began its beta rollout last December, having offered standalone secure messaging to existing Bloomberg clients since 2013 as part of the post-trade  services used by firms to communicate between their front, middle, and back offices, and with counterparties’  trade support teams.

“Enterprise IB enables everyone in a Terminal user’s firm to communicate on single platform via add-on internal chat and collaboration tools. By building on prior enhancements EIB creates added value by connecting new communities into the enterprise-wide Bloomberg ecosystem,” a Bloomberg spokesperson says. “Communications delivered through Enterprise IB can utilize the same message compliance, administrative and archiving tools available to firms that have Bloomberg Terminals. Bloomberg provides granular chat and email monitoring tools that give compliance personnel a real-time view into firm-wide communications.”

But does Bloomberg’s move risk cannibalizing its existing terminal base, or even allow users to pair its prized messaging with cheaper terminal products from alternative vendors? Sources familiar with the situation say that because Bloomberg began testing the service late last year, it is not a reaction to the potential threat from secure messaging provider Symphony Communication Services, which is backed by a consortium of some of the world’s largest banks and financial institutions, including many of Bloomberg’s largest clients. Others, however, say the vendor may be rattled by this rival startup, or may simply have seen the writing on the wall about the opening-up of the messaging space and views this move as a way to consolidate and expand its existing footprint.

Symphony was created in 2014 via the $66 million acquisition of software vendor Perzo by a consortium of Goldman Sachs—ostensibly in response to concerns that Bloomberg might have access to confidential data communicated via its chat function—and 13 other financial institutions. Shortly thereafter, the vendor acquired assets—including a contacts directory technology—from Markit, which had been building its own secure messaging platform under the moniker Collaboration Services.

The vendor is more conservative now about how it presents itself than during its early days, when the service was openly touted as a “Bloomberg-killer”—perhaps because the service is still primarily an intra-firm messaging service, though it continues to gain traction in terms of connecting different firms, and its ultimate aims remain to become a vendor-neutral, industry-wide data delivery framework. To that end, it continues to sign up content partners. Most recently, at Symphony’s Innovate conference on October 4, the vendor announced the integration of data technology vendor MDX Technology’s MDXT Connect data distribution platform, enabling Symphony users to access commodities data available via MDX. This adds to a host of other information partnership that include Dow Jones, S&P Global Market Intelligence, Money.Net and Selerity. 

Symphony’s open approach is in contrast to Bloomberg’s traditional closed-box approach of not making its data available via third-parties, which has nevertheless seen Instant Bloomberg cement its position as the go-to place for the Street to communicate. However, a product head at a rival data vendor describes Bloomberg’s decision to offer an unbundled chat service as a reaction to the traction that she believes Symphony is starting to achieve. 

“Credit to Bloomberg—they have been hugely successful in generating a lot of revenue off the back of the fact that customers felt they had to buy Bloomberg because clients had Bloomberg messaging and it was the only way that they could communicate with their client. It became quite a stranglehold that Bloomberg used effectively to sell a desktop,” the product head says, adding that this latest move is a “strong indication that Bloomberg is now quite defensive in terms of what has been a very closed approach to their desktop and to messaging.”

Symphony costs $20 per user per month, and allows clients to integrate other data sources and functions onto its platform. Other terminal-based products, like Money.Net and Infront, integrate Symphony into their product set to offer a messaging service that provides faster go-to-market and broader connectivity and client base than individual vendors could achieve alone. However, to become a viable alternative to other messaging platforms, Symphony would have to step out of its primary use of an internal messaging and workflow platform and become more widely adopted as an interbank communication tool. To do this, it needs a bigger network of users, and has already taken steps to broaden its base and accelerate adoption by partnering with Thomson Reuters, announcing in June that licensed users of Symphony’s messaging network will be able to share charts, news and data from Thomson Reuters’ Eikon terminal. 

Symphony’s investors—including Goldman Sachs, Bank of America Merrill Lynch, BNY Mellon, BlackRock, Citadel, Citigroup, Credit Suisse, Deutsche Bank, JP Morgan, Morgan Stanley, Nomura, and Wells Fargo—also happen to be some of Thomson Reuters’ biggest clients, and most are heavy users of the vendor’s Eikon desktop. The integration of Symphony with Eikon is expected to be released in December, and a source familiar with the situation says that over the next six to 12 months, this collaboration will continue to gain traction in the marketplace. “I don’t think Bloomberg offering a $10 unbundled messaging response to that is going to have any impact on that at all,” the source says.

“Symphony has very powerful investors that really have the potential to change and move the community…. There is a real desire to really break open the closed desktop of Bloomberg… [and] the days of trying to hold a community captive with a very closed technology approach and a very closed business model is a dated paradigm,” says the product head at the rival data vendor, adding that cut-price, unbundled chat does nothing to address this broader issue. “It’s a defensive mechanism to try and keep the perimeter on this, but it’s not solving the central theme, which is that business across the board these days is based on co-innovation and collaboration and open platforms, which is what is scary to Bloomberg.”

Steven Moreton, senior technical director at market data consultancy CJC, agrees that instant messaging (IM) has moved on from basic chat offerings, and is now a staple part of client workflow at institutions and vendors, and firms are looking how to push this even further with the development of chatbots—a text-based interactive communication mechanism that allows users to initiate a process or type a query that they would otherwise have asked a colleague or intranet, which uses IM as the interface for the query.  “You could ask a question such as ‘Which of my traders are doing this?’ You could ask a vendor, ‘Do you provide this market data? What is the price?’ The chatbot could integrate with entitlement systems and come back with the answer. You can develop a lot of artificial intelligence when instant messaging is the portal—that could be Symphony, or it could be another service like Slack. From a vendor level, they probably don’t want to get involved in that huge business level of it, but there is a huge amount of potential with chatbots,” Moreton says.

Based on discussions with clients about messaging, “They’re not sitting down and thinking about Symphony versus Bloomberg, or Symphony versus Reuters; it’s Symphony versus Slack,” Moreton adds. “Bloomberg and Thomson Reuters have obviously seen a thing that they have to contend with, and Symphony has always had that potential to become a terminal: you can get news over it, MDX just signed on, giving it a commodities data angle… Obviously there has been some impact for Bloomberg to have done this—or they’re just laying the groundwork for a more open platform.”

According to a report by TP-Icap-owned market research firm Burton-Taylor International Consulting, Bloomberg’s worldwide installed terminal base fell by an estimated 3,145 positions to 324,485 terminals last year, though this decline was offset by 10 percent growth in its non-terminal business. Some see unbundling its chat function as a way for the vendor to stave off any potential threat that Symphony could displace further terminals by sneaking in the back door with an industry-accepted messaging tool without the Bloomberg terminal price tag. 

Not All as Rosy as it Seems? 

However, the startup still has a lot of work to do to convince some seasoned industry participants, who question whether all the financial firms (not to mention Google) that have invested substantial sums to get Symphony off the ground really want Symphony “to succeed in its own right, or whether it was about gaining leverage with some of the incumbents” to drop their prices or offer more flexible models. The industry-backed utility approach has proved effective in the past as a way to keep third-party providers in check, notably in the exchange trading and clearing worlds.

According to one industry expert, Bloomberg’s decision to offer an intra-firm chat strategy is not a signal that the vendor is panicked by the potential threat posed by Symphony, but is instead a clever sales strategy. “Even if all they’re trying to do with this is to get their existing clients to use more of the chat at a lower price elsewhere within their organization… that’s a different strategy than trying to combat or try and stop Symphony from taking their key users.” If anything, rather than signaling a sea-change in the IM space, this could be the start of Bloomberg being more “creative” with its commercial activities, the expert says. “This is new territory for Bloomberg to start offering deals.” 

Earlier this year, Inside Data Management learned that staff at Credit Suisse Asia were refusing to fund Symphony any further based on the lack of community and its inability to displace Bloomberg terminals, according to a source familiar with the matter. Although the parent Credit Suisse organization—one of the original consortium members to invest $66 million to acquire then-Perzo in 2014 and transform it into Symphony—will still fund Symphony, the source called this a vote of no confidence from the Asia-Pacific region, and a sentiment that “may be bubbling up in other regions.” The source says that Credit Suisse Asia made the decision because it did not believe there was “any chance” of Symphony reducing the firm’s spend on Bloomberg—which supplies around 800 terminals to the firm in the region.

They add that many saw it as “the key to removing Bloomberg, which I think is what most people agree was the initial reason the banks got involved [as investors], despite what their CEO says their goal is,” referring to Symphony CEO David Gurle’s reluctance to openly position the vendor as a direct competitor to Bloomberg.

“A lot of these banks have very short thresholds [to realize returns]. I think you’re seeing that already with this business decision—and it is a business decision—to not go ahead with Symphony. In Asia, they’ve made an assessment that there is no way that Symphony will get its act together to make this migration happen and yield a benefit,” the source says.

During a roundtable on the state of messaging at the North American Financial Information Summit (NAFIS) in New York in May, participants also discussed the displacement potential of alternative chat platforms. “Everyone at BlackRock and Goldman Sachs is supposed to have [Symphony], but how many have it and use it externally? Very few. If I’m on the sell side and I want to chat to my client and they’re not there…. The problem with displacing anything is community,” said one participant.

And according to the industry expert, observers should view Symphony’s user numbers—around 230,000—and targets with a healthy dose of skepticism. ”Symphony is going to hit targets with signing up banks because banks have already put the money in in the first place… [so] they have to be seen to be backing it. But there’s a difference between firms jumping in and paying for it and actively rolling it out aggressively internally.”

He says that from a displacement point of view, “when you’re trying to remove a Bloomberg terminal from a desk, firstly… you have to challenge the end user’s requirements. You obviously understand… the data they’re using on a day-to-day basis—what they are using it for, why they are using it, trade support—and if the data is going into Excel spreadsheets, etc. Then once you’ve done your needs analysis, you try to replicate what they’re using with other products and services that you’re already paying for and that you might have an enterprise license for, so it doesn’t cost you any more to give them the data. Then ideally you’d overlay that data requirement with a real good sexy messaging system, which would be Symphony. But that’s not happening. There isn’t a single firm at the moment that has managed to displace a Bloomberg with Symphony. Given that’s the case, why would Bloomberg be worried?”

A Symphony spokesperson says the vendor has not seen any impact on its traction as a result of Bloomberg unbundling its chat function, adding, “in fact, Symphony continues to see a strong growth trajectory.” However, in doing so, the spokesperson again emphasizes that Symphony is not specifically positioning itself to displace Bloomberg. “The financial industry is increasingly focused on security and product innovation, and we don’t see this as competitive. Symphony’s vision is to extend our collaboration platform to displace email and other legacy enterprise platforms as a whole, not to target any single offering,” the spokesperson says.

At the NAFIS roundtable, an executive director at a global bank said there could be ways for a messaging system like Symphony to help reduce reliance on—if not displace—the major vendors. “If it becomes a conduit delivering research and content, and becomes a way to unbolt some direct connections from other service providers… if your messaging system becomes your market data delivery platform, in the end it’s not so much about displacing Bloomberg; it’s about checking Bloomberg—so Bloomberg isn’t unrestrained, because everybody relies on their messaging. And just because you’re not reliant on Bloomberg messaging doesn’t mean that you have to unbolt from Bloomberg, but it might be three years until the next price increase, or they might throw in something to become more competitive in the market…. If the messaging piece has a competitive alternative, then it may influence Bloomberg’s pricing.”