The commoditization of equity trades is giving Web 2.0 open-source investment platforms a chance to win converts.
An increasing number of Web 2.0 companies are turning to user-generated financial and investing content to give them a strategic advantage in the cutthroat equity trading business.
The commoditization of equity trades means the technology driving online trading platforms no longer provides a strategic advantage to financial firms.
This is good news for the providers of open-source financial technologies, such as Zecco, a Web 2.0 stock trading and investment community. Zecco said its open-source platform allows it to offer its 75,000 customers 10 free equity trades a month, and to build up a community which generates financial content for the company.
"Free is nice, like open source, but there has to be more than that," Jeroen Veth, the CEO of Zecco Holdings, told eWEEK at the O'Reilly Money:Tech conference on Feb. 7. "It's about information and investors wanting to find and debate their investment options. The killer application for us is user-generated content, where our customers share their portfolio data and investment knowledge and expertise."
Customer blogs and forums are at the heart of the financial and investment content on the site, all of which is moderated by Zecco staff.
These tools also allow the Zecco community of investors to communicate with one another, share their portfolio data and trading strategies, as well as get activity feeds of the trading data for other members, if they agree to this.
This online investment community and user-generated content model has also opened the door for a new and innovative business model for Web 2.0 financial companies, which no longer just rely on revenue from equity trading commissions and paid research.
Revenue now comes from a number of sources, including interest, cross-selling and advertising, which Veth said is "the icing on the cake for us."
Zecco is also building a separate database so that it will be able to roll out a new, internally built, community platform when the need arises.
While an open-source trading platform is not in the cards for Zecco as yet, Veth says there are enormous benefits to this, as proprietary trading platforms get outdated quickly and the vendors often do not do what they promise.
Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.
He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.
He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.
He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.
He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.
He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.
His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.
For numerous examples of his writing you can search under his name at the eWEEK Website at www.eweek.com.