SocGen Brings Gig Economy to Banks With Smartkarma Research Deal
(Bloomberg Gadfly) -- The gig economy has arrived in banking.
French lender Societe Generale SA announced Thursday that it had struck a deal to provide Asian equity research to its clients from online financial research syndication platform Smartkarma. According to the release:
"Societe Generale is the first global investment bank to have an agreement with an emerging fintech company to provide equity research that is compliant with evolving research unbundling requirements, such as MiFID II."
If the letter soup in that sentence went above your head, here's a summary: Europe's proposed new investment regulation, the Markets in Financial Instruments Directive, will require equity research to be paid for independently, instead of bundled together with trading commissions. As they start looking into how to separate the areas, banks are finding that research can't always pay for itself, partly because of the competitive nature of the business.
Enter third-party providers, such as Smartkarma. The platform has found a niche aggregating and distributing research produced by small brokerages and, more often, by independent analysts who may use it as a venue to retain visibility and land consulting work after leaving positions at big banks or funds.
Until now, such services had been gaining subscribers but had not replaced in-house research desks. Societe Generale's announcement may indicate a bigger shakeup is coming. It makes sense under the new European rules so expect more such notices. With many jurisdictions considering emulating MiFID, it could even become the norm.
The bad news for employees is that if banks are using syndicated research, they will need fewer in-house analysts. The silver lining is that more third-party providers can be expected to pop up as funds seek diverse opinions, which means there still will be jobs in the field.
For all the talk about retrenchment, banking research seems to have survived. Data from the U.S. Bureau of Labor Statistics show that there were more financial analysts -- the job description that covers most equity and credit research people -- working in May 2015 than five years earlier.
They're also earning more, if the U.S. data are to be believed.
So worry not, equity analysts, you won't be driving for Uber anytime soon. You may find yourself at an internet startup without much job or wage security, but at least there'll be no shortage of work.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
To contact the author of this story: Christopher Langner in Singapore at firstname.lastname@example.org.