Banks take on Bloomberg with new instant messaging service

Symphony Communication Services will launch its new secure instant messaging service on 3 August

Bloomberg’s domination of instant communications in the financial world is under threat from a new technology challenger firm funded by a powerful collection of Wall Street banks and fund managers.

Symphony Communication Services will launch its new secure instant messaging service on 3 August, and its founders hope it will ultimately replace Bloomberg as the default medium for real-time communications between financial sector workers around the globe.

In May 2013, it emerged that Bloomberg reporters had abused their privileged access to the firm’s international network of terminals to snoop on the activities of some high-profile users. Bloomberg quickly apologised, but the incident dealt a severe blow to trust in the company.

Symphony, which is based in Palo Alto, California, will soon start selling its encrypted messaging product to clients, and its founders hope to capitalise on the lingering irritation of financiers over Bloomberg’s past privacy transgressions.

The Bloomberg snooping scandal erupted after Goldman Sachs executives figured out that reporters for the company’s news service had been looking up details of when users had last logged on to the Bloomberg terminals and were able to see which search functions users had been accessing.

Symphony began life last autumn when Goldman merged its own in-house messaging product with a tool that was being developed by the former Skype, Reuters and Microsoft veteran David Gurle. Goldman and 14 other financial firms have invested $70m in Symphony. They include the giant banks Citigroup, Bank of America, BNY Mellon, Deutsche Bank, JP Morgan and HSBC. Fund managers Citadel and BlackRock have also put up seed capital.

Around 320,000 people use Bloomberg’s “Instant Bloomberg” platform, while around 240,000 use the rival Reuters’ Eikon Messenger.

Bloomberg’s terminals – which provide instant access to virtually all of the world’s financial information – can be found at banks, hedge funds and financial regulators’ offices across the world, with users paying about $20,000 a year to rent each terminal. The firm was founded by the former New York City mayor Michael Bloomberg, and made him a dollar billionaire.

Symphony has been testing a beta version of its platform since April. Larger clients will be charged at a rate of $30 per user per month from next month. A cheaper version will be made available to smaller firms later in the year.

However, there is a danger that a new secure messaging platform could make it more difficult for regulators to unearth evidence of wrongdoing by traders. Investigators from the UK’s Financial Conduct Authority found evidence of collusion between City of London traders from different banks to rig key interest rates in online chat rooms. Some banks have since tried to ban staff from using any kind of non-secure online messaging services.

Technology firms have attempted repeatedly over recent years to dislodge Bloomberg’s tight grip on the financial messaging market. But this is the first challenge from an outfit with such powerful backers.

Symphony will be able to plug into existing systems, or it can stand alone. But the encryption technology means that the user will control the data.