Over $6 trillion is traded daily in forex by around 11 million people, many of them inexperienced and new to the industry, having entered this market via online trading. This presents challenges for the registered brokers, who now face increased competition for new clients and an assault on existing clients.
There are tried and trusted ways to overcome these obstacles and to maintain a reliable, trustworthy business, particularly for smaller brokers.
Global regulators such as FCA, ESMA and the ASIC are introducing new and stringent regulations, almost daily, to protect retail clients against high-risk speculative investments.
According to Mo Awada, Senior Business Development Officer at PayPugs, good brokers are investing in their internal compliance systems and processes to keep in line with tighter KYC checks when onboarding clients and investing money.
Technology and trading tools
“Brokers need to ensure that their technology is flawless,” says Awada. He says that an option for bigger brokers is to develop their own platform, CRM, back office and workflow systems and have their own compliance and legal teams. Others may opt for licensed software applications such as MT4 or MT5 trading platforms, while smaller brokers may look at acquiring a white label program as their best solution. Whatever the system option, online trading requires speed and security to reassure clients of the reliability of the broker.
“Clients,” Awada says, “are also looking to trade in more and in different kinds of instruments than has traditionally been the case, such as gas, oil, futures, contract for differences (CFD), stocks and the new kid on the block, cryptocurrency, thus increasing the need to invest in the newest technology.”
Keeping existing clients
While every company has to work on increasing its client portfolio, keeping existing clients is both easier and more profitable. “This is still a major challenge in a highly competitive market, as many brokers are now offering various incentives, such as bonuses, to gain new clients.”
The ESMA ruling, which forced EU brokers to lower leverage to just 1:30, made it even more difficult to retain clients, as clients moved accounts to brokers outside the EU to enjoy higher leverage.
“If clients have more of a choice elsewhere, why should they stay?” Awada asks. According to him, the answers to that are straight forward — they stay for the best customer service, for a close and trusting relationship, for the personal touch and for the reputational management provided by the best trading platform. So, forex brokers should be attending to these matters. Ensuring quick and easy access to client funds is also a fundamental asset for any broker.
According to Awada, clients want the maximum returns at the lowest investment but this may lead to unacceptable risks and this has to be explained so that all parties benefit from judicious investment decisions. “Caution is the keyword to retaining clients.”
He reasoned that as with the hospitality industry, one bad review can outweigh the 99 other satisfied clients. Swift response to even the most trivial of comments is essential, as is seeking a mutually acceptable solution.
Awada states that the demand for forex continues but managing global payments requires time and resources and can be very costly, which takes away valuable resources in other key areas of a business such as gaining and maintaining clients.
Each country has its own procedures and systems when it comes to sending and receiving funds around the globe, especially forex transactions. Certain countries will not allow clients to send and receive funds for forex related investments, thus leaving clients frustrated and looking for alternative avenues.
“Having an effective and trusted payment partner is key to overcoming these issues. One that can offer multi-currency accounts by incorporating the latest technology to ensure seamless and automated payment systems without adding to one’s headcount. At PayPugs, we provide a personalised payment solution to help overcome these issues” concludes Awada.
PayPugs is a family of companies registered across the globe working together towards one common goal – to provide transparent, trustworthy and personalised financial services to those challenging the status quo.
PayPugs aim to enable customers to do business in the new economy on a basis of earned trust. Enabling them to do business without borders – where decisions are based on choice and behaviour.