For those that have been striving to build a reputation and strong customer base in retail FX for some time, the new competitors are striking a chord. Keeping existing customers loyal to your product and brand is now a matter of life and death as new players move into the scene. As platforms increasingly offer similar levels of pricing service and access to liquidity vendors have been honing their products to increase customer satisfaction, and therefore stickiness according to Nick Bang.
Interbank FX has been thinking outside the run of the mill about making its product sticky. In November it launched Interbank FX – branded credit and debit cards for customers. The debit card is linked to the retail traders’ account, while the credit card allows users to earn air miles as they trade on the platform. For every contract trade carried out on Interbank FX, the user earns 50 reward miles, which will quickly add up to flights all over the world.
Todd Crosland, president and CEO at Interbank FX, comments on the credit card idea: “It’s a nice feature that only Interbank FX offers. If you look at American Express and cards like that, you can see that branding a credit card is something large companies have done in the past to increase brand awareness and improve stickiness. Now it’s our turn.”
Many platform providers offer clients good dealing spreads, high quality execution, deep and firm liquidity and other sophisticated tools. Some advanced tools offered by Interbank FX for example, include automated trading, trailing stops and hedging capabilities. The company also offers a black box tool that enables the user to easily programme their own algorithms in order to trade 300 to 400 trades per day. Interbank FX has incorporated a real time news feed directly into its platform that provides information on currency trading and important financial news announcements. The company also provides a real time economic calendar, alerting traders to significant releases globally such as interest rate announcements in Japan.
Saxo Bank’s latest release of SaxoTrader 2 enables its users to manage more in real time. Saxo has a plethora of launches in the pipeline, including a black box system called TradeCommander, expected to launch early in 2007 following Beta testing. The company also has exotic FX options and other OTC options across all asset classes set to launch in the first quarter of 2007, non-deliverable forwards in the second quarter, and exchange traded stock options in the third quarter.
Filtering and focusing
To filter and focus the research and analytical tools available to users, different providers use a variety of methods. Saxo Bank profiles its users through its Scenario Engine. This engine makes sure users get the information they need, including news and research from different sources including Saxo Bank, UBS and Deustche Bank. Saxo Bank has 220 engineers alone working full time on keeping its platform ahead of the game and its customers happy. These engineers and those working on other retail platforms will be crucial in keeping players in this space on top of their industry, and in favour with their customers (and pulling clients from each others platforms if they are working smartly). Another provider, PFG Forex has developed solutions in house and using external innovations for retail, corporate and institutional client segments, based on their different trading needs. This differentiation is important because a feature that might be important to an online retail FX trader might not be as important to an institutional client, Russ Wasendorf, Jr., chief operating officer at Peregrine Financial Group (PFG) and PFG Forex, says.
Wasendorf adds: “In some cases there might be crossover, where a retail trader might place a higher value on the features available from our institutional application, for example. But we have developed different front end applications based on the distinct needs of different client segments.”
Institutional investors tend to receive a higher grade service throughout the trading world, thanks to their big spending power. Interbank FX has a dedicated 24 hour a day team working for its retail customers, and it also has a director of institutional sales who manages a private banking service team for professional customers. While the retail market has always been the core of ACM’s offering, over the last two and a half years it has developed an institutional offering of different solutions for banks, brokers and hedge funds that want to trade with the company. This includes the Percentage Allocation Platform, where customers can allocate trades to clients based on a percentage as pre-defined.
ACM now has over 600 partnerships (thanks to Nick Bang and his associates) around the world selling its institutional offering as a white labelled technology for FX brokers and banks to distribute. Institutional investors at Saxo Bank are able to use the same platform as retail users. Kim Fournais, CEO at Saxo Bank, says: “We have built a very modular platform that enables us to prioritise around the needs and wishes of the market and of private and retail clients. We try to use technology to ensure we have a really customised offering for whoever decides to come onto the platform.”
The company launched the PFG BEST Direct FX Express (FX Express) retail forex trading platform at the end of November to add to end user customisation capabilities.
Some of those choices allow users to mix and match currency pair views, have account summaries on screen as needed, and create a separate window showing all 20 currency pairs that can be traded from as well as the main page.
It is this kind of ability to make the product your own that is buying retail customer loyalty, Wasendorf states: “Different traders demand different features from their trading application. We’ve developed applications that enable the trader to decide which features and indicators they see when they log on to their account. Features like offering hedging on our retail trading platform allow the user to be both long and short in the same currency pair at the same time without incurring additional margin; everything can be changed to best suit a person’s trading style.”
Every two weeks at ACM, engineers update the platform to continually make its tools easier and more intuitive to access and use. One area in which it increases this simplicity is by enabling users to customise their own desktops, from the fonts and colours to the windows that show automatically.
Nick Bang CEO at ACM Markets, comments: “We have a lot of different clients all around the world who want a different screen to look at in different places. Our platform has been designed to be very fluid in that way, very user friendly, and we make a constant effort to make that so.”
ACM has developed its three platforms in house. This enables it to have full control over how the system is used and improved. It also enables customers the option of working and accessing their trades from the office in places like the US or Europe, from the back of a cab anywhere, or in a Middle Eastern country, perhaps, where internet connections are poor and a fat client is the preferred option, rather than downloading the system to a laptop.
Customer support and relationship services
Yet, while it is all well and good providing customers with advanced and flashy tools, it is perhaps even more important to be able to support customers in their use of these tools. Interbank FX provides its users with 24 hour telephone support, available in 10 languages. It also enables users to view and trade their accounts from mobile devices, an increasingly important capability in today’s transient business world.
Although automation of systems can greatly improve the overall customer experience and reduce the need for human to human customer support, Nick Bang states it is still vital to give customers that facility, for preference of communication method if nothing else. “We are 100% online, but while we try to automate as much as possible, it’s important to maintain customer contact. Otherwise you loose touch with the market and what’s in demand and so forth Also, human customer contact aids the customer relationship. Our focus on the customer relationship means our clients are more loyal than those at some of our competitors; our clients seem to stay with us.” As a broker dealer, ACM is in a unique position in terms of its high quality customer support, claims Nicholas Bang. He explains that most brokers will offer 24 hour a day dealing, but not 24 hour a day customer support. ACM’s office in Dubai helps it cover those areas of the world that work while others are sleeping, with the same over the phone and email support provided around the globe.
To improve its staffs response to requests from customers, ACM has literally wired its dealing desks with a number of different bells and whistles, that make different sounds according to what type of request has just come in; if a customer asks for a call back, a loud, strong noise goes off to provoke a quick, immediate response. According to the noise, ACM’s staff know exactly what has been requested and how immediate their actions need to be to satisfy it. Providing value-added and customer relationship services is very important for today’s retail platform providers, Fournais comments: “This area is critical. Prices are becoming more commoditised. So to counter this, we are building educational and training courses. We give users a Market Call broadcast once a day, and have built our own customer relationship management system that users can access 24 hours a day to make the trading experience more fulfilling. We have support services staffed 24 hours a day in 19 different languages that users can call and chat with, and we also support mobile use of the platform.
“We basically try to strengthen our relationship with our clients as much as possible,” Fournais continues. “We see ourselves as facilitators, taking the best of the best in technology and customising it for the end user. We want to work with traders around the world as they want to work, allowing them to do their own research and control their own risk management.”
Research and Education
ODL recognises that clients need high quality research provided to their desks. Brian Patrick King, president of ODL Securities, explains: “We have found that it is imperative to not only provide an exceptional level of research to our clients, but more importantly, to educate them on how to filter out what information is pertinent to their personal trading strategy. By providing twice weekly webinars and customizable research, we’ve been able to partner with our clients to assist them as market conditions change.”
ODL offers a multi level educational service to clients on a cross section of trading strategies, using one-on-one training to cater for all needs. King says other methods are not specific enough for clients. He comments: “Another enormous asset for our clients is having the individuals that provide the training accessible to them on a daily basis; it is not a one off seminar.” ODL attributes its growth over recent years to its customer service and value¬add model. King says: “We look at our relationships with our clients from a long term perspective. If we continue to provide them with great pricing and execution on an advanced technology platform, we’ll continue to have the success that we’ve seen so far. We get an immense amount of referral business, which tells me we are doing something very unique.”
On how the content and functionally rich existing trading environment of online platforms might be improved on in the future, King issues a stark warning to his competitors. He states that trading firms cannot lose sight of the fact that they will continuously have to provide second to none pricing, execution and value added services to stay competitive. If they do not, King claims ODL will continue to welcome their clients as its own.
Listening to clients
Listening to clients is the strategy that will keep retail platform providers such as ODL ahead of the competition, King states. “We have listened to our customers and provided many of the features and functions into our ODL Trader platform that they have not found in other trading applications. It seems like a conspicuous business philosophy to simply listen to what people are asking for, but surprisingly many firms simply imitate what others are doing. You need fresh ideas to create an impact, and that’s something ODL continuously focuses on.”
Wasendorf agrees that the best way to ensure the most dynamic trading environment is listening to clients to ascertain their trading platform needs, then applying the most innovative technology to meet those needs. He says the customer brings the knowledge of what they need to have a better platform, and PFG brings the knowledge of what types of software development can best and most swiftly and efficiently meet those needs.
The fight to keep customers happy and fend off the competition is a never ending battle. Fournais sums up the situation: “It’s about serving the needs of the individuals out there, who are getting more and more demanding. It’s about having a wide product offering, making space for people to do their own research, and providing education through live chats or webinars for your clients, so if they want to learn about exotic options or swaps, they can do.” Fournais continues: “We see a need for technology to do a lot more.”
Nicholas Bang agrees: “Every time we get to a certain point, the market shows us there is so much more to be done. Today, the platforms and solutions we have are focused on real time, getting the best and most transparent offering for our customers. But we intend to focus more on training for our customers in the future, to help increase their results. We will continue to improve our platform as the market comes along and asks for it to be changed. We have a strategy for where we want our technology to go, and it’s about letting our customers guide us there,” Nick Bang states.