Standing out from a crowd - how are FX e-commerce services being differentiated? >>>
Standing out
So what does O’Flaherty believe is the key to making one FX e-commerce platform stand out from another in what is an increasingly competitive marketplace? “When we built the Autobahn platform, the first thing we worked on was the pricing and risk management and that is still the most important part of an e-commerce FX service,” he says. “Not far behind is the platform itself – it has to be based on good technology, easy to use, responsive and available but there is no point having all the bells and whistles if you don’t have the right pricing.” It is also good to have a broad distribution of clients with different trading objectives, says O’Flaherty, as is a good sales team. “Some people think that the increase in electronic trading means there is less focus on the relationship but I don’t think that is the case,” says O’Flaherty.
Risk management can vary in the e-commerce world. Whereas a large franchise like Deutsche Bank will internalise or ‘warehouse’ a lot of settlement risk in order to create liquidity, a number of e-FX providers will take an agency-focused approach and clear any risk straight away rather than internalising. Tis is where a broad distribution can help the larger franchises to generate liquidity from its ‘warehoused’ risk. Although, if the market continues to use liquidity aggregation, this will erode the benefit of internalising and may prompt a rethink from some of the market’s largest franchises. Tis also underlines the continued importance of client relationships, says O’Flaherty. “It is no different to what happens in voice trading – find out what the clients want and provide a service that accommodates them.”
While a diverse client base is good for risk management and generating liquidity, it could create problems in term of delivering a client-focused e-commerce platform. “If we can deliver a product or some workflow that enhances their business,
Ed Mount “If clients choose platforms developed by
providers that are chasing short-term business but are not committed to the underlying market, then those relationships will be short-lived.”
then that’s good for us,” says O’Flaherty. “But it is important to create core services that can be shared across the client base and that only a veneer of the platform is used to provide customised products to clients. Te key is to do your homework early on and ensure that the majority of your resources are focused on the key services.”
Although O’Flaherty acknowledges the growing significance of new media and communication channels, Deutsche Bank is taking a circumspect approach to integrating mobile applications and social media into its e-commerce platform. “I think mobile is important in terms of having access to information
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