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Big Banks and Tiny Fin-Tech Start-ups

Xignite

By Deena Zaidi, TheStreet.comthestreet.com fintech

"If you can't beat them, join them," Jim Henson, the legendary puppeteer best known for creating The Muppets, liked to say. And that's exactly what some big banks have been doing as they move away from their traditional style of banking to a more technology-driven environment.

In the past few years, financial technology start-ups have upped the ante as they have thrived in a low-interest rate environment. Big banks, including Bank of America, Citibank and Wells Fargo, paid attention and started pouring money into these "fin-tech" start-ups in order to meet their own challenges.

So much so that, by 2014, Stephane Dubois, CEO of market data provider Xignite, told Markets Media that financial services technology had become "one of the fastest-growing areas for venture capital investment." In the first quarter alone, $1.7 billion was invested and 167 deals closed. Goldman Sachs and JPMorgan Chase began working with Motif Investing, identified by CNBC as No. 4 on its list of the top 50 "disruptors" in financial technology start-ups in 2014.

Banks have followed different strategies in partnering and investing in "fin-tech" start-ups. While some banks already have their own venture capital firms, such as Wells Fargo's venture capital unit, Norwest Venture Partners, others preferred to partner with start-ups to reduce information technology costs. After drawing 200 participants to its popular annual innovation summit, Bank of America offered deals to 30 start-ups.

But banks are willing to pay big to invest in start-ups and to compete with each other, offering start-ups from $50 million to $250 million to get into the game. In 2014, HSBC agreed to invest up to $200 million to improve the bank's financial technology, and Citi Ventures, Citigroup's venture unit, invested in technologies to benefit its multinational banking operations. The start-up On Deck followed a different path altogether. In 2013, it got an approval of an additional $17 million in investment from Google Ventures and PayPal co-founder Peter Thiel, went public in 2014 and raised $200 million, and in 2015 teamed up with JPMorgan to speed up credit to small business owners, which is set to launch in 2016.

But the combination of fin-tech start-ups with some of the biggest banks may not be as simple as it sounds. The problem lies not in their collaboration, but in their complicated functioning.

One concern, which remains unaddressed, is the unregulated area of the banking systemknown as the "shadow banks". Shadow banks were criticized for their risky trading activities during the 2008 financial crisis.

In addition, big banks continue to be condemned for their size and complicated structures. Some of the biggest banks, such as JP Morgan Chase, Bank of America, and Wells Fargo, are already 80% bigger than they were since they were bailed out. Moreover, many were part of huge scandals for their alleged roles in the subprime mortgage crisis. Recently, Wells Fargo settled a claim that would require the bank to pay $1.2 billion over bad government-backed mortgages.

As a result, the future of tech start-ups remains unclear. By going public, the financial strength, business models and private valuations of many start-ups can be put to a test. With exorbitant valuations, many have delayed their IPOs and have been operating in a low-cost environment since the financial crisis. The December rate hike may force many venture capitalists to exit if the cost of borrowing gets more expensive.

Market discipline and rigor may compel many tech start-ups with weak financials to either exit through IPOs or through selloffs. But since these venture capitalists include some of the biggest banks, IPOs are not likely to happen anytime soon, creating a series of excessive, unregulated and unjustified valuations in the meantime.

Source: TheStreet.com

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With more than a decade of cloud expertise in building, scaling and operating cloud-based market data technology, it is no surprise that leading financial services and capital markets firms rely on this company to empower their journey to the cloud. Their Metals API Service offers real-time prices and quotes for metals including Gold, Silver, Palladium, Platinum and other base metals. In addition to real-time precious metals prices, the service provides daily London Fixing prices as well as historical precious metal prices and metal news. 

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Xignite, Inc., a provider of market data distribution and management solutions for financial services and technology companies, today revealed the results of its collaboration with StockCharts, a leading technical analysis and financial charting platform for online retail investors. The collaboration involved a move from an on-premise market data provider to Xignite’s cloud-native technology hosted in Amazon Web Services (AWS). Download the case study containing the full results.

StockCharts requires vast quantities of financial data to power its visualization, charting and tracking tools, which investors use to analyze the markets to help with investment decisions. The company was frustrated by the limits of its on-premise market data center, which was forcing the team to make architectural decisions based on what its data center could handle in terms of speed and storage, not on their technology. Its previous market data provider was just starting to build out some cloud offerings, but they were far away from what the business required. StockCharts decided to migrate its infrastructure to the AWS cloud and partner with Xignite to gain access to endlessly scalable market and financial data delivered through innovative cloud APIs.

The collaboration made an immediate impact as StockCharts was able to expand its offerings and customer base by pursuing growth strategies enabled by Xignite’s cloud-based approach, which provides easy access to data and eliminates architectural limits on storage and speed.

The pandemic provided further validation. Seattle-based StockCharts was in one of the first areas hit by COVID-19 and was forced to quickly shut down its office. Pandemic-driven market volatility followed and StockCharts customers wanted to visualize what was happening. The company’s ability to scale quickly and accommodate a high volume of new requests would not have been possible without Xignite.

“The move to the AWS cloud and Xignite has unlocked tremendous new potential for us in a lot of architectural ways, and has given us a lot of data options that we could not even consider before,” said Grayson Roze, Vice President of Operations at StockCharts. “It relieved us of the burden of figuring out how to source things. Instead, we know exactly where we need to go to get the data and can access it instantly. That is a huge, huge benefit for our business.”

“We are proud to have played a role in transforming how StockCharts approaches data,” said Stephane Dubois, CEO and Founder of Xignite. “The events of this year unleashed a massive spike in retail trading and a host of other unexpected forces that reinforced the need for financial services firms to leverage the cloud. Despite the disruption of this year, StockCharts was positioned for success, and we look forward to continuing to deliver our financial and market data solutions to the industry at large.”

Xignite

Xignite has been disrupting the financial and market data industry from its Silicon Valley headquarters since 2006 when it introduced the first commercial REST API. Since then, Xignite has been continually refining its technology to help fintech and financial institutions get the most value from their data. Today, more than 700 clients access over 500 cloud-native APIs and leverage a suite of specialized microservices-delivered modules to build efficient and cost-effective enterprise data management solutions. Visit http://www.xignite.com or follow on Twitter @xignite

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