One of the emerging trends in the e-FX market sector is that a growing number of banks are setting their sights on providing services to smaller customers via their e-FX platforms. Significantly, many are indicating that, partly as a result of under-estimating the volume of customers at this tier, the rewards for providing services in this way are greater than envisaged.
Over the last 10 years the key strategy driving e-FX platforms has been to meet the needs of the banks’ larger profiles of customers. The primary reasons for this are:
- The customers’ high value
- The customers’ value being more definable
- The relationship is stronger and therefore each customer’s requirements are typically better understood.
Having delivered this strategy, many banks are asking where further opportunities lie. The natural consideration is to determine whether the banks’ existing e-FX platforms can support the needs of smaller customers and whether the justification exists for doing so.
Where there is already an e-FX platform in place, the cost of ‘on-boarding’ a small tier customer should be quite easy to justify. Where there is a more mixed profile of customers by size and type, one challenge may be to ensure the e-FX platform can meet the needs of both the larger style corporation and the SME. Typical differences include:
Product coverage - in recent years small customers have shown an appetite for things such as CFDs. In contrast the institutional markets have remained mostly static on the more traditionally traded products.
Connectivity - institutional customers typically require post deal feeds, which the smaller customers often drop, solely relying on tickets displayed and printed upon execution.
The smaller style of customer is often looking for quick, one-click functions such as position/deal close out, or to deal directly from charts and graphs.
In many ways this is further fuelling the closer migration (integration?) of the wholesale and retail sectors
