In 2007 Royal Bank of Scotland and Barclays stood head to head, as they tussled for control of ABN Amro. In the end, RBS won that scrap but Barclays has been winning most battles ever since. In foreign exchange, the two banks have developed very similar global markets franchises; they shared a very similar footprint, spoke to a similar set of clients, and also established themselves as top-five players.
As this year’s FX poll shows, Barclays is now pulling away from RBS and the reason could very well be e-commerce. Barclay’s Barx platform has gathered substantially more support than the RBS platform, RBS Marketplace (RBSM), finishing second in the poll, while RBS fell five places to 10th. RBS has been hampered by the loss of key staff, while continuing uncertainty over remuneration policies became a drag on morale.
Most of those issues have now been resolved, say RBS’s relatively new, and youthful, management team of Mark Barnes and Chris Leuschke. They maintain that trader staff retention is relatively unchanged but admit that they have lost some key sales personnel. Nonetheless, they say it presents an ideal time to bring about change in their sales culture and the way they, the traders, and the clients interact; an essential dynamic in the world of e-commerce. “We have product, we have client footprint and excellent risk management systems, however we recognize we have work to do on our distribution portal, and we’re committed to doing that, work is well under way,’’ says Leuschke, who became global head of FX sales in October. He and Barnes have started integrating their internal trading systems with that of RBSM, meaning its clients¸ traders and salespeople will use the same electronic platform. Leuschke says his real money and hedge fund sales team are still primarily accessing prices and executing by voice, rather than via its electronic platform. They’ve also now merged their spot, forwards and options businesses into a more client-friendly integrated FX product, with more uniform functionality features. Until recently, they were run as three separate product lines, each with separate technology teams.
The bank is also rolling out its new emerging markets e-commerce solution. The ABN Amro acquisition rewarded it with a vast retail branch network that stretches through central and eastern Europe, and out through southeast Asia and Latin America. RBS quickly capitalized on its ability to trade FX and money markets products on RBSM, including onshore and offshore currencies, which Barnes argues is a distinctive offering. That might allow them to compete on an even keel with Barclays in the emerging markets, but getting the basics right, such as liquidity, functionality and ease of use, will be the key to winning the market over.
