The foreign exchange brokerage market has become saturated with new firms that were attracted by the sharp rise in trading volume. Vastly improved technology reduced entry costs and made it possible for them to compete with the established players. In this interview on Dukascopy TV, Andrew Saks-McLeod (CEO of Finance Feeds) and Bart Burggraaf (head of the London office of Media Group Worldwide) look at the advantage that older and more established brokerage firms have over later entrants, and how new companies must evolve to retain their customers.
Most of the large FX brokers were among the first to enter the market. Their size and perceived stability combine with their in-house publicity and technology departments to reduce the amount of high touch retention marketing that their brokers need to do. These brokers developed proprietary trading platforms that customers like, so they’re unlikely to go elsewhere. They have account managers who know customers by name and can provide tailored solutions. It’s a high touch solution that successfully retains customers.
Newer brokerages have succeeded by utilizing low touch marketing of their operational efficiency and tight spreads while using white label trading products. Without ongoing advertising, their business would dry up. Successful customer retention will require them to find a path to company differentiation and a way to create value for customers. It’s a high touch solution that will require creative and innovative approaches to work within their model. The next interview in this series will take a look at that important issue.