Standing out from a crowd - how are FX e-commerce services being differentiated?
providers chose as their strategy only a few years back where many banks were of the belief that the one-size- fits-all approach was the way to go. Te problem with this approach is that in the current e-FX markets you simply do not have a chance.”
Tis one-size-fits-all strategy can also be seen in those services which are overly product-focused, says Vinding, and is the reason why adding client-specific features and services become essential, especially where the platform is serving both top and lower tier customers. “Whereas FX professionals want a high degree of sophistication in the execution by using algos, limit orders, post-trade allocation and one-click streams with close to zero rejection rates, the lower tiers of users are better off with a simplified RFQ that works easy and consistently across the different FX products combined with appropriate charting and price updates and a range of typical back-office self-service features.”
Vinding also advocates a niche-led strategy when it comes to servicing an increasingly diverse client base. “Te right strategy is to grow in your niches both in terms of widening it to a larger audience but also at the same time to prudently select the clients that you expect will help you in making your e-FX offering more diverse
and thereby more robust. FX providers that want to grow everywhere I believe will find themselves in a tough position given the current climate where spreads are still narrowing, the growth in overall economy is not there, regulation is increasing and the number of players in the market is decreasing. Te ones that will survive are the ones that benefit from their niches.”
Technology arms race
Of course some providers may take a different path and look to gain market share by increasing their technology spend, something which Vinding compares to an arms race conducted behind the scenes. “I suspect that this arms race will continue, meaning that providers will continue to upgrade software and hardware when appropriate as well as consolidate and use third-party software in areas where it has been commoditised.”
Vinding does believe the use of new media channels – from social media services to mobile applications – offers e-commerce providers the chance to differentiate themselves even further. In terms of using social media, Vinding says it is about creating value on the well-established networks such as Twitter and also about enabling social media in the bank’s own proprietary offering. “For example, allowing clients to interact openly with the analysts, to rank the research content and to make ‘follow me’ kind of features.” When it comes to the mobile applications it is all about utilising the power of these devices, says Vinding. “For example, providing the option to notify a client instantly, irrespective of where he or she might be in the world and capitalising on the ease of access as mobile apps are easily started.”
Thomas Vinding
“FX providers that want to grow everywhere I believe will find themselves in a tough position given the current climate where spreads are still narrowing, the growth in
overall economy is not there, regulation is increasing and the number of players in the market is decreasing.”
If a bank really wants to be the channel of choice for their customers (as well as the customers of other banks), it is important to remember all the operational, service, regulatory and market-focused issues mentioned above, says Vinding. “A bank is no better than its weakest point so it is very important to balance your efforts across all these different areas.”
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