Brokerage, White Label and Saas API
Great to see that the hidden fees issue I wrote about in a previous posting is being addressed… (See the full article on the BBC site)
Hidden card charges for travel tickets to be banned – Travel companies have been ordered to end the use of hidden surcharges for passengers paying by card.Most of us applauded when the low cost airlines first arrived on the scene. I say “most of us” as I am sure the management of various flag carriers were not very happy.
For the first time the customer could see a full break down of the fees they were paying – cost of flight, airport taxes, credit card fees and others. They really drove innovation in a what was a cabal orientated and stagnant industry.
What do we have today? Well, they now use this “innovation in transparency” to start playing “the shell game” with consumers and over-charge the un-suspecting. The cheap airlines, understandably, will phrase this in other ways (or at least their PR machine will).
Examples I have come across (names withheld to protect the “innocent” although you can see an old personal blog entry on the subject here):
- when booking a return flight, the return leg is more expensive than if booked separately
- when booking with children, the fare is more expensive than without children
- debit card fees are marked up 1000′s of percent (I believe 5-10% of one airline’s profits are card processing fee mark-ups)
So, why am I discussing this on a Foreign Exchange site?
Well, our industry has traditionally relied on opaqueness to hide margins from customers (e.g. in forward points, not having a central “pricing venue” for smaller transactions etc.).
The industry is now at a point where we need to go through the “transparency phase” – which, I am proud to say, is a move we are championing (see here) and getting great feedback from customers.
What we must learn from the “shell game airlines” is not to become what we set out to change.
The recent Reuters article concerning the SEC in the USA expanding their probe into foreign exchange trading, did make me smile, “not another custodian caught with their fingers in the cookie jar”.
Now, Custodians are meant to be a conservative, safe and honest pair of hands to hold the assets of investment funds and the likes of you and me, so seeing behavior like this (relying on opaqueness) does give cause for concern as this behavior is totally unnecessary.
There is no reason (other than “it has always been done like this”) for a Custodian to rely on opaque FX pricing to make money. The Custodian holds the assets and FX flows are generated by the assets (e.g. corporate actions on equities). Therefore, the Custodian already has the flows captured so is guaranteed the revenue anyway! It’s like having a pocket full of cookies and still raiding the cookie jar “because you can”.
So how do we fix the situation for both the Custodian and the client?
It is very simple – pricing, automation and transparency.
1. The Custodian and customer agree a clear pricing schedule
2. Automate trading of all FX flows in real time
3. Book each trade showing the customer rate and the mid-market reference rate
All three could be implemented using a platform like theCurrencyCloud.com – custom pricing for each customer / currency / trade size, automation of the FX trading, and all trades are booked with a mid market reference rate and the customer rate.
That way, the Custodian still gets the business (and can put their ethical hat back on again), the customer has a fully auditable FX trade history and the regulator can be certain that they will not be called in again – a win win all around!
This really should be a “no-brainer” for the Custodians, additionally they will save costs through automation and deliver better customer service.
Nigel Verdon, CEO and Founder, FX Capital Group
London, 11 May 2011
FX Capital Group, a technology-led deliverable currency broker committed to introducing clarity to the currency markets, is pleased to announce the launch of FX2.0 – a new style of brokerage for transactions from £1 to £1 million, which is 100% aligned with the customer.
Using sophisticated technology and the ‘power of platform’, FX2.0 removes opaqueness from the currency markets for transactions in the £1-£1 million range by:
FX2.0 technology has created a new landscape for deliverable FX by empowering customers to make informed decisions when purchasing currency. Customers can now see their true currency costs in real-time or historically – whether trading with their existing bank, broker or with FX Capital Group.
The goal of FX2.0 is to re-establish trust in the SME/broker relationship.
Nigel Verdon, CEO and founder of FX Capital Group, says ‘FX Capital Group is delighted to evolve the currency brokerage market by being 100% transparent and consistent with customers. Many existing brokerages and banks claim to offer great things to their customers that are simply not true, for example “commission free” – so we invite all SMEs to take a closer look at these claims and realise they now have the opportunity to fully understand the true cost of their currency with FX2.0.’
For more information:
http://www.fxcapitalgroup.co.uk/takeacloserlook
Martina Doherty E: martina(at)md-comms(dot)com T: +44 (0)7951 057146
FX Capital Group will be launching FX2.0 “a new style of currency brokerage 100% aligned with the customer” at the IOD Annual Convention in London, 11th May 2011.
The team will be at the event and we invite you to come and “Take a Closer Look” and see what FX2.0 can do for you.
Our CTO, Nick Bourner, demonstrated a pre-launch preview of FX Capital Group’s TheCurrencyCloud.com at the Venture Capital / technology start-up conference GeeknRolla 2011.
We are also pleased to announce that Nick and TheCurrencyCloud.com won the “demopit” competition for the best start-up demo and technology platform.
GeeknRolla is the annual conference to bring together Europe’s technology startups to network with investors and talk about how they create and build themselves. The watchwords are: Launch startups; give investors dealflow.
Well done to Nick and the team!
FX Capital Group CEO/Founder Nigel Verdon, will be speaking at the Technology Innovation Summit: Eastern Europe 2011 ( TISEE 2011) on the subject of the future of banking and the role technology will play in this.
The 2011 TISEE Conference is hosted by New Europe Venture Equity, a Technology, Media and Telecom focused venture capital fund (the first VC fund based in Bulgaria) and Anthemis Group a specialized holding company focused on innovations in the financial services sector.
For real-time updates from the Summit, see the Summit Facebook page
If you are attending Sibos2010 in Amsterdam, please come and see our CEO/Founder Nigel Verdon pitching FX Capital Group in the start-up “dragons den” competition.
Quoting from the Sibos programme…
The best start-ups and ideas from various 2010 events are brought together in this “dragon’s den”. In front of the audience and a panel of judges, the best start-ups and ideas are presented from: the SWIFT Operations Forum Americas (SOFA), the CPA conference Canada, EPCA/Florin Awards Paris, and the Innovate!2010 Tour. The main objective is to share and discover what kind of ideas and dynamics live on the edges of the SWIFT eco-system.
