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Level of growth
We can speculate that this may be because the tier-1 banks have offered e-Commerce in FX for many years, and that the majority of their clients that want to trade electronically have already migrated. For a variety of reasons many tier-2 banks are still in the adoption phase of FX e-Commerce and their clients are still in the process of migrating from traditional trading channels.
e-Commerce is driving growth
Te research identifies that adoption of e-Commerce is driving a substantial increase in trading volumes. Whether that is because more clients are at ease with the technology and so the availability of an electronic trading interface makes trading easier or whether there was already a pent-up demand for trading which couldn’t be handled by existing channels is not revealed.
Te result however, is that 16% of respondents said they had observed “dramatic” increases in e-trading volumes, and a further 60% of firms reported that the impact of e-Commerce on trading volumes has been “somewhat significant”.
Differentiation is key
Every bank, regardless of size, must continue to enhance their e-Commerce offering and capabilities in order to differentiate themselves in the market. Most of the banks interviewed have undertaken, or are undertaking, major initiatives in this area, and this is driving investment.
Differentiation initiatives can be grouped into four main areas:
1. Visually appealing and intuitive tools: Many banks are using user experience (UX) design and UX expertise to enhance their e-Commerce offerings. Tis varies from improving “look and feel” as one tier-2 bank described it, through to a radical redesign of the entire user interaction and workflow in the application to make it more “intuitive” for the user.
2. Reduced latency: Clearly when trading, the time it takes to process and transmit trade data and other information is critical. One tier-1 US firm explained that it is increasing its investment in low-latency technology and its e-Commerce infrastructure because it sees this as an opportunity to differentiate itself from its competitors.
3. Bespoke trading applications: Te general improvement of UX also involves analysis of particular client types, their workflows and the types of products traded most frequently. Tis allows provision of tailored services for individual classes of clients and even for individual clients. Banks are now placing far greater emphasis on analytics, metrics and other key performance indicators around e-Commerce. In fact one tier-2 European firm cited this to be its top priority, while another bank is accomplishing this by increasing the depth and level of analytics it offers.
april 2011 e-FOREX | 33
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