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not in the cards for Zecco as yet, Veth says there are enormous benefits to this, as proprietary trading platforms get outdated quickly and the vendors often do not do what they promise.