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The client is a leading electronic exchange for securities. A wave of new electronic exchanges emerged in the mid-90s and created vicious price competition. SecuritiesCo* had recently acquired its primary competitor and needed to integrate the two technology infrastructures. Also, SecuritiesCo was under significant pressure to reduce costs where customer interfaces accounted for ~30% of technology costs. Bain was asked to advise on the following issues:
- How should we integrate the technology infrastructures of SecuritiesCo and its recent acquisition?
- How should we restructure the organization to best compete in a consolidating industry environment?
Bain team set up two primary work streams: strategy and technology.
Bain recommended the following solutions in a complex realignment of the IT architecture:
- Front-end customer interfaces to be fully replaced with a new architecture that is in line with business needs and capabilities.
- Back-end systems to be consolidated utilizing the best components of SecuritiesCo and its acquisition.
- Matching engines to be integrated into a single system to support a single quote and to optimize speed and functionality.
Bain recommended an aggressive transformation plan to support organizational alignment along businesses, while maintaining trading synergies: Two businesses, Agency Brokerage and Exchange, to maintain separate business organizations while sharing certain technology platforms.
- Redesigned technology platform allowed SecuritiesCo to realize 50% cost savings
- Organization restructured around value added broker, exchange and technology
- 100% increase in market value
- Stock price doubled over case period
* We take our clients' confidentiality seriously. While we've changed their names, the results are real.