Driving digital transformation beyond capital markets with exchange models & technology
Throughout the pandemic, we have witnessed accelerated digital transformation in various industries — some forced — as businesses reimagined how they interact and transact with their constituents absent the ability to connect in person. Making products and services available online to the usual customers — whether B2B or B2C — in the usual format is only the first step. As we come out of the pandemic, consumers will be even more accustomed to highly flexible, customer-centric digital experiences that let them engage with companies on their own terms. Businesses must consider the impact of an even more digital economy with dynamic buyer behaviors and determine how next-generation customers want to consume products and services and interact with them.
From where we sit at Nasdaq — with 50+ years of experience in exchange operations and over 25 years of experience in providing exchange technology to markets in 50+ countries and in multiple industries — the electronic marketplace business model with stock exchange dynamics can be a driving force for digital transformation and can lend itself to many other industries by forming the foundation for standardized assets and transparent, two-sided transactions. These models empower buyers with ownership over their experience and drive new participation and affinity for brands. This is a completely new approach to transactions, business models and market infrastructure of the future that can attract the next generation of investors, constituents and consumers, even from across Main Street.
We are focused on democratizing marketplace technology by offering essential components of matching engine technology traditionally used by financial markets and bringing the capabilities to a cross-asset, cross-industry environment via the cloud.
Why exchange models?
Transparency, reliability, fairness and integrity are all critical attributes that drive the effectiveness of a marketplace and the capital markets ecosystem. We have observed that without a transparent, efficient electronic mechanism for matching, or connecting, buyers and sellers, organizations oftentimes need middlemen that drive higher fees, less transparency surrounding pricing and various other inefficiencies that keep the power away from buyers. Without price transparency, one person could end up paying much more than someone else for the same product or service.
If you can apply the dynamics that govern capital markets — such as known and vetted buyers and sellers, full transparency around price formation, consistent monitoring for abusive behavior — you can build a platform powered by trust between all active parties. The authentication of the participants buying and selling helps develop trust in the other side of the transaction. Transparent pricing and publishing of historical prices helps participants formulate an educated opinion on the value of a particular good or service that they are willing to pay. All of this makes it easier to conduct commerce in a way that provides buyers and sellers assurance while encouraging participation.
We have collaborated with companies in a wide range of industries — sports, shipping and logistics, health care, real estate, agriculture, luxury goods — and many recognize that dynamic electronic marketplaces can:
- create liquidity in illiquid assets
- help them transform with agile, future-forward business models
- monetize excess inventory
- capture data for monetization opportunities
- differentiate from their competitors
- improve trust and integrity in the transaction chain
- attract new investors and consumers
By digitizing and issuing goods or services into a tradeable asset, companies can create trust in their ecosystem, putting power in the hands of consumers, improving brand affinity and expanding their customer base. Aided by tried and proven processes, structures and technology used for decades in one of the world's most highly regulated industries, businesses and consumers can benefit from a smooth customer experience with more transparent and efficient transactions that was once reserved for global financial markets.
The concept of what a marketplace is has radically evolved over the past few years, something that Nasdaq as an operator and builder of markets has played an important part in firsthand. We are focused on democratizing marketplace technology by offering essential components of matching engine technology traditionally used by financial markets and bringing the capabilities to a cross-asset, cross-industry environment via the cloud.
Democratizing real estate, carbon offsets and more beyond crypto
While crypto assets arguably started the digital assets revolution, today anything that can be traded, will likely eventually be traded through a digital asset. Historically, commercial real estate investing was open only to institutional investors or the very wealthy. Meanwhile, the highly regulated process for selling commercial real estate required months or years of negotiations and paperwork. Not only did this exclude everyday people from the asset class, it made it harder for developers and landlords to access liquidity.
However, with the Nasdaq Marketplace Services Platform, our technology platform that powers more transparent and efficient trading of all types of assets, we can for example enable trading in a commercial real estate securities marketplace that allows developers and investors to quickly and easily trade shares of commercial properties via a fractionalized share model. Investors are given the flexibility to create a customized and diversified real estate portfolio while property owners can unlock equity without sacrificing control of their properties — something that could become critical in a post-COVID-19 environment.
In another vein, many ESG-focused companies are using marketplace models to deliver on their environmental goals. Acquired by Nasdaq earlier this year, Puro.earth is the world´s first marketplace to offer industrial carbon removal instruments that are verifiable and tradable through an open, online platform. The platform already provides carbon removal services to some of the world's leading corporations, including Microsoft and SEB.
Similar examples are emerging across industries with a wide variety of business cases, goals and objectives powered by digital assets trading and exchange-like models. As a growing number of organizations opt for this route, accelerating their digital transformation and implementing a business model to futureproof their existence, the first step, and possibly the most important step, will be choosing the right partner: a trusted, experienced provider with the technological knowhow and market operations expertise.