Why to participate in retail Forex market
The growth of online trading has driven rapid evolution of the market. Price competition has quickly commoditized basic trading executions, driving firms to expand into new services and sectors - like online FX trading to gather new assets and generate new revenue streams. The National Futures Association says customer funds held by member foreign-exchange dealers and brokerages more than quadrupled in the two years ended Dec. 31.
More information about current state of retail FX market can be found in the "Forex for All" article by Rachel Koning, a reporter for CBS.MarketWatch.com in Chicago.
The dramatic increase in discount brokerage activity, driven by online trading, has created a new investment sector – retail FX, diverting funds from traditional banks and market-makers. Online trading has accelerated the spread of FX trading, and it has favored the growth of small-to-midsize financial services companies - at the expense of larger institutions. As the FX trading sector has shown already, new service propositions offered by the financial institutions can quickly move market share and reshape competition, leaving traditional players at a severe disadvantage and it’s having the greatest impact on retail FX trading markets.
Many start-up and small financial services companies have already exploited this first-mover advantage at the expense of large banks. And it’s not too late for your company to explore this advantage.
Redefining retail FX trading markets
Retail financial markets transformation
In the last seven years, e-trading has fundamentally reshaped retail
financial markets. It has accelerated the trend toward direct delivery,
spurred price competition and introduced new online services that
are beginning to transform markets. The most remarkable trend,
however, is that the Internet is promoting the rapid adoption of
retail financial innovations, such as FX trading and discount brokerages.
Large institutions challenge
Early evidence suggests that in the next two years
e-trading will facilitate a massive transformation of retail financial
services. This transformation will pose a radical challenge to online
trading and its domination by large, diversified institutions that
sell their clients a wide range of products and services. These conventional
institutions now face a plethora of small and mid-sized financial
companies who can steal their best customers by offering better products
at lower prices. Big institutions will also face the unnerving prospect
of continuously cutting prices and shaving margins, as e-trading
lowers process and distribution costs and spurs sustained price competition.
New breed of players
The advent of online financial services is rapidly reordering these
markets by introducing new players and new value propositions.
Already, online trading has boosted the growth of specialist FX
trading institutions at the expense of large banks. In the
next two years, there are indications of sweeping disintermediation
in the investment sector as online financial services companies
and new multi-provider platforms bring new wave of customers as
they increase choice and customization.
How to distinguish your company on the FX trading market?
How can financial firms continue to provide for differentiated services to their clients even as the world of money grows more open, fluid, and decentralized? How can they build brand equity while barriers crumble and lines blur? How can they increase client loyalty as competition intensifies and online FX trading services become ubiquitous? How can they provide these services in a cost effective manner?
• By maximizing transaction automation and utilizing industry leading FX trading technologies.
• By giving partners and customers what they need, and anticipating what they'll want.
• By providing service levels that turn users into lifelong clients.
• By creating an extensive online reach that binds users to a brand.
• By building customer loyalty and satisfaction.
