A number of FX white label market participants have established partial solutions that offer a pick and mix menu comprising of products, risk management, back office administration, customer account openings and custodial services. The merits of this approach include access to products at lower initial cost and it has found favour with clients.
Platform diversification is a driver for some clients to work with multiple providers, says Muamar Behnam, head of sales at Swissquote Bank. “More or less all the major FX players offer MetaQuotes platforms and in common with a number of our competitors we have other, proprietary platforms that we offer on a white label basis,” he says.
BMFN CEO, Luis Sanchez, reckons this trend will continue. “Clients need to consider the products and platforms available from each broker,” he says. “Only the customer can determine the importance of any limitations of trading technology they may experience if they open an account with a particular broker.”
 Luis Sanchez, BMFN |
Institutions are putting more and more resources into digital relationships with their clients, reallocating capital to develop their own client-facing apps. But these apps are just part of the overall white label solution, which covers the provision of a range of services including trading, IT and hosting, reporting and retail accounting.
“All these services require technology, skilled people and mature processes to deliver,” says Chris Truce, head of fintech global at Saxo. “Regardless of whether a client chooses to work with one or multiple providers or perhaps even build a solution themselves, these decisions are often driven by readily available resources (capital, or lack thereof in most cases) but also in some cases by internal policies or procedures on outsourced services.”
Open application programming interfaces (API) that allow the owner of a service to give universal access to developers and other customers have enabled platform-as-a-service providers to offer easier integration with other cloud or enterprise solutions. The technology has changed the way platform-as-a-service is delivered by allowing clients such as institutional traders who use their own platforms to integrate easily without losing the trading features of the interfaces they are trading on.
“Also, it is not uncommon for some providers to offer better price feeds for certain products, so if an API is being connected to a broker’s bridge it allows them to tailor their stream with the most competitive prices from multiple providers,” says Tyson Calvo, director of sales at Royal Financial Trading.
Customization
Warren Macdonald, UK head of digital at Capco, is confident that demand for customization will continue to grow. “Technology innovation is at a point now where integrated platform-as-a-service can provide economically feasible mass customisation,” he says. “Low fixed costs, minimal capital expenditure and flexibility allow businesses to adapt their solutions to their business models rather than adapting their business to their platforms.”Customization is more applicable in a partial white label environment where brokers will constantly ask their providers for new features rather than for a full white label solution, where changes are more complex to implement and demand more time, given the need for integration with other tools such as customer relationship management systems.
One of the first questions prospective market participants will ask is how easy it is to change provider. Unfortunately, there is no straightforward answer — replatforming and migration programmes are the longest, most complex and expensive of IT change initiatives and still come with a high failure rate. Sanchez says change should be a last resort and only made when the white label partner’s technology has proven to be unreliable or unstable or the provider has serious business problems.
 Chris Truce, Saxo Markets |
Adding liquidity providers or channels should be part of the overall specification and well-designed systems should allow customers to add or remove liquidity providers or distribution partners in a matter of weeks rather than months, according to John Ashworth, CEO of Caplin Systems. “Changing from one multi-vendor stack to another is much more difficult, though, and is likely to be measured in multiple quarters,” he says.
Open APIs can further simplify the migration process as they decouple the data from the underlying technology and vendor and allow for a more modular architecture.
White label solutions used to mean being locked long-term into technology platforms with little ability to influence strategies and roadmaps, says Macdonald. “Now, customization options and open APIs allow customers to cherry pick the best parts of multiple solutions without suffering from integration or inter-operability risks.”
