We talk to a good cross-section of the global FX market each week. It is a very competitive space and as always, the old adage holds true: “It is easier to hold onto a customer than find a new one.” But as COVID-19 has taken face-to-face networking off the table, the spotlight is firmly on exactly what FX customers are getting from their banks…and there is a lot of deer in that spotlight.
While banks still have a hold over some clients through the provision of debt facilities, currency brokers have made big in-roads into what has previously been seen as the banks’ market share. It’s now not unusual for customers to have both a bank and currency broker supporting their FX strategy.
And while this sounds ideal, for most FX customers it effectively adds to the admin load – particularly if they can’t all securely access the same or share information. COVID has also meant most banks and currency brokers must rely on heightened customer service and more competitive pricing – as opposed to networking – to keep their customers’ business. But lockdown has made building those customer relationships a whole lot harder.
Even harder to keep FX customers
In a recent Hedgebook survey of leading UK, European and US banks we learnt how much they are missing that in-person interaction with customers. It is certainly harder to build a new FX customer relationship without face-to-face contact.
But while new business is hard to win – stopping the churn of existing customers is proving even harder. That COVID induced spotlight has given customers the chance to look around. Now, more than ever before, you need to offer something different to your competitors. And that is usually where Hedgebook enters the conversation.
91% of our customers surveyed in 2020 said they would like to be able to share FX hedging information with their bank or broker through Hedgebook. It is the kind of digital innovation customers are now demanding and to be honest, brokers appear to be a lot nimbler when it comes to offering up new, innovative, services and products.
You would think it would be something of a no-brainer for any FX manager to want to be on the same hedging tool as their customers. It means you can be more effective and responsive when you engage with FX customers. And it makes it a whole lot harder for them to leave.
The bottom line
Banks especially talk a good game about digital innovation, but it has taken COVID to force many of them into fully enabling remote banking. Sadly, the same can’t be said as to the remote experience for many FX customers. Unless banks move quickly those same customers will be lost to leaner, hungrier more technically savvy competitors.
While it seems obvious – if you look at the insights from our survey discussions you will see even the banks are hesitant in backing themselves to meet customer demands.
“The pace toward digital nativism has increased sharply across all client groups and, to be brutally honest, the bank is going to have to work very hard to meet these new user
experience expectations.”
But no matter how introspective they may be – the bottom line remains; a customer rarely tells you they are going to churn. So, if you aren’t offering up anything new to make your FX customer relationship stick, don’t be surprised when they suddenly decide to get up and leave.