Secure communication platform Symphony, which has raised $166 million in two rounds and counts Google as one of its marque investors, is targeting the encrypted communications between companies dealing with sensitive data like financial information.
While enterprise messaging apps are highly competitive, the encrypted communications space is still niche.
Led by CEO David Gurle, whose background is in business software central casting, with stints at Microsoft Lync, Skype and Thomson Reuters, The Economist noted that interest in such communications platforms increased on Wall Street in the aftermath of news in 2013 that journalists at Bloomberg might have gleaned some information from monitoring individual customers’ usage of the company’s terminals.
However, according to TechCrunch, in an interaction with Martin Chavez, CIO at Goldman Sachs, Symphony originated in efforts by Goldman Sachs when “architecting a new communications platform”, building it systematically using open source components, while accounting for the regulatory setting of financial services.
October 2014 saw 15 of the world’s financial majors – a group including HSBC, Deutsche Bank, Credit Suisse, Goldman Sachs and JPMorgan – publicly announce their investment in and deployment of Symphony, cloud-based communication platform featuring end-to-end BYOK (Bring Your Own Key) encryption. This was released at no cost to individuals, teams and work groups, in conjunction with a tiered-cost enterprise edition.
By then, it had evolved to become an alternative to Bloomberg LP’s terminals and was meant to function as an online collaboration platform for financial services firms. Its encryption technology was a key selling point, but this attracted regulatory attention from the New York State Department of Financial Services, which was concerned about record-keeping.
However, an agreement with New York’s Department of Financial Services will see all messages on Symphony copied and held by an independent entity for at least seven years. Encryption will mean that these can only be read with the permission of the company involved. However, this arrangement also guarantees that the data will be preserved, with a court order able to force co-operation.
Due to its nature as a critical conduit for correspondence between traders, bankers, and even officials, in addition to the realisation that an external entity controls a key element of their communication infrastructure, Symphony emerged, with a chance to become an industry-wide platform. Fundamentally, it is an effort to consolidate communications on a single secure platform by the banks and enabled executives to communicate, collaborate and share content.
The primary consortium of backers investing in and initially supporting Symphony are Bank of America-Merrill Lynch, BNY Mellon, BlackRock, Citadel, Citi, Credit Suisse, HSBC, Deutsche Bank, Goldman Sachs, Jefferies, JPMorgan, Maverick, Morgan Stanley, Nomura and Wells Fargo.
According to the Wall Street Journal, the latest round put Symphony’s valuation at $650 million and saw the addition of Google Inc., Lakestar, Natixis, Societe Generale and UBS with existing investors, as well as Silicon Valley venture firm Merus Capital.
To date, Symphony has raised two round of financing worth $166 million, with its seed round led by Goldman Sachs. It acquired the startup Perzo last year, which specialised in private personal networks. The technology and brand has since been incorporated into Symphony, which was built so that internal user groups created on Symphony can be expanded to include employees from other firms.
Customers can also be included in such electronic correspondence and conversations. In addition to enterprise messaging, it will also provide access to a stream of financial information, with three firms agreeing to provide news and data for Symphony’s initial release: Dow Jones, Standard & Poor’s Capital IQ and Selerity, an information aggregator offering a filtering system to provide relevant content based on a user’s interests.
A primary advantage of Symphony is its price point at $15 per user per month, compared to the $1700 a month that a Bloomberg terminal costs. However, this significant price advantage and its consortium of backing is no guarantee of success.
It also faces significant difficulty in disrupting Bloomberg’s messaging and information service, which also serves as a vast repository of data – central to how many financial products are evaluated, priced and traded – that informs the decision markers of many major financial firms.
In an interaction with Business Insider, Gurle’s response when asked about Symphony in relation to messaging platform Slack was cautious. He stated: “Slack addresses the internal communication scenarios for business communications, whereas we address any communication requirements, both inside and outside. I think that’s where the difference is, with a big difference obviously around security and compliance.”
He added, “Nobody wants a telephone that talks to a subgroup of people, you want a telephone that talks to everybody. Why should that be different for your communication platforms at work?”