Outsourcing to an organization whose primary function is building financial technology has long held appeal for banks.
Whether they are looking to offer a trading platform for their underlying clients or want access to tailored liquidity based on a wider cross-section of the underlying foreign exchange market than their own prime broker can offer them, they may find that white-label trading solutions produce a better financial outcome, particularly in the wake of the Covid-19 pandemic.
Earlier this year Bank SICH in Ukraine launched a retail FX service, the first regulated banking forex platform in the country, using the trading technology of Switzerland’s Dukascopy Bank, which provided the trading platform, liquidity and support.
“The changes in working practices brought about by coronavirus have been a catalyst for banks to ask themselves whether their business model in FX needs a major rethink to deliver the returns expected by stakeholders and shareholders,” says Keith Hill, advisory board member at Caplin.
He suggests regional banks in particular are wondering if they can justify the cost of a modern desktop and mobile FX trading platform alongside the expense of maintaining a trading team and market-making technology as the revenue potential over and above the client commercial margin shrinks.
