Article
Written by Mark Andrew
Posted on 17/06/2020

It’s a mad world: the rush for onboarding and customers in FX

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What is the challenge in the FX market?

The Foreign Exchange market is one driven by the need to complete quick transactions, if you’re in the market, this won’t be new to you. Your organisation probably already finds that customer loyalty is low as their behaviour is driven primarily by two key factors: speed of trade and price. 

Did you know $6.6 trillion of trades are made globally, every day? 
High demand is great for your business, there’s lots of customers around, and with little existing loyalty, you can easily tempt them away from your competitors.

But there’s a catch.

Along with high demand, comes a high level of customer expectation. Specifically, around the speed of transacting. These customers, particularly commercial SMEs, are looking for a quick trade at a price that suits them. Often, for these businesses, getting a preferential price now and hedging against future rises in currency is a key competitive advantage for the business, and a way to boost profit margins and strengthen balance sheets.

The expectations from these would-be customers is that their Foreign Exchange partners can react quickly in all areas, from the initial onboarding process to settling invoices with overseas beneficiaries. 

Paperwork and manual processes
To satisfy these customer requirements, it’s not as easy as adding more heads and speeding up applications. Many organisations are reliant on a manual, even paper-based approach when it comes to onboarding. 

Driving improvements in the commercial onboarding process isn’t without pain. FX companies need to balance increasingly strict legislation from regulators such as the European Securities and Markets Authority (ESMA), with the above customer expectations of seamless onboarding. 
While sales, commercial and finance leaders want to drive revenue and margins, risk and compliance leaders with personal responsibility quite understandably don’t want to bear the brunt of non-compliance.

There is a way of satisfying the challenges all of these different roles, and I will touch more on those, in the second article in this series.
The answer in short, is a single case management system. The last thing you need, is more data to wade through, and the costs involved in getting hold of it. To succeed, every team has a part to play, but right now, with a manual approach, there’s no control and little transparency. 

What does the future hold?
This arms race to acquire customers at all costs, without considering future sustainability or scalability will, in my opinion, cost some firms dearly. 
The firms that will succeed in the future are those who fully embrace automation and digitisation of the client onboarding and compliance process, when done properly, quick efficienct onboarding can be a real game-changing competitive advantage, just look at what has happened with in the banking industry with the arrival of challenger banks like Starling and Monzo. FX could well be at the start of its own customer-focussed revolution.

I hope you enjoyed this article, the first in this series, with each article published fortnightly. If you have any questions or want to know more about onboarding for commercial FX companies, you can get in touch with me directly, by emailing mark.andrew@graydon.co.uk