Features : White Label Partnerships: Co-operation v. Competition
Daniel DarstExecutive Marketing Director at Saxo Bank
White Label Partnerships: Co-operation v. Competition
White label partnerships work because the market is hungry for FX.
Complementary skill sets exist in the industry such that the proper
alignment of local marketplace strengths with liquidity and
technology capabilities benefit all concerned. Revenues are shared.
Start-up costs are minimal. Local providers gain rapid acceleration
into online trading while larger providers gain local distribution
which is inherently designed for in their scalable platforms.
Imagine a B-School case study in which key players in a dynamic
industry needed to choose between direct competition by fleshing
out the technical requirements, back office and risk management
tools needed for success or combining strengths and competencies
among themselves to accelerate the provision of product to market.
Imagine a scenario in which cooperation proved rewarding to all
participants. Imagine an industry in which the alignment of
strengths and weakness can create a more powerful and lucrative
business model for almost all participants.
The online capital markets industry is coming of age. Dominant
banks and market makers are nestling with smaller retail brokerage
firms and distributors. Elite, niche technology wizards are
aligning their applications and trading tools with the behemoths of
the financial service world. The word that once quickened the heart
rate of so many of the barons of capital markets in the past,
transparency, has evolved into a term near and dear to the
industrys commercial soul.
Transparency suggests efficient and faster routing of information,
of pricing, and of delivery. It suggests clear view-through, which
in turn, suggests a more egalitarian and accessible industry. With
the escalation of cooperation among participants in the FX
industry, the online capital markets industry is reinventing itself
in time with the pulse of the FX consumer. After all, who wouldnt
want to trade currencies or derivatives on a real-time basis with
narrow spreads, based on streaming news and data from the markets?
The Rebirth of an Industry We have entered an era where the
challenge is speed to market. How can more and more retail
providers, banks, brokerage firms, licensed financial
intermediaries, bring their clients the value and advantages of
online trading in FX, CFDs, Futures and Options? The answer is
played loudly and clearly each day: cooperation and complementary
alignment of strengths, rather than competition and
self-sufficiencies. This is the commercial organism known as the
white labeling partnership. By working together rather than against
one another, businesses in similar industries with unopposed
competencies or ranged along complementary stages in the value
chain, can and will generate revenue, income and success. For
years, the traditional business thinking involved a set of zero-sum
definitions in which competitors challenged one another for a
finite set of rewards. Thats changing, and changing quickly.
More and more businesses see the advantages inherent in combining
capabilities to meet the demands of a dynamic and growing
marketplace. In our industry, a number of naturally congruent
capabilities cry out for combination. And when they are engaged
properly, the commercial consequences are far-reaching. Applied
data delivery technology and currency dealing are two that have
been brought together through the agency of a number of
forward-looking firms including Bloomberg and Reuters. Businesses
that specialize in the routing and parsing of data should combine
with businesses whose forte is the application of that data. In
other words, the birth of online trading has been the evolution of
White Label Means...
...working with a complementary business to serve your clients
efficiently. The most common and effective white labeling
relationship we witness involves a local providers branding a
silent partners system with his own name and bringing that product
out to his local market place. In basic terms, white label
partnerships involve wrapping ones local brand around a proven
system that can deliver the products, services and account
management and credible risk management tools you require.
the birth of online trading has been the
evolution of cooperation
Its this marriage of local marketplace knowledge and world-class
technical applications that has most powerfully delivered capital
markets online to a wider and broader world marketplace. Twenty
years ago, discount brokerage revolutionized the idea of access to
the markets. Ten years ago, the internet began displacing the
traditional advice industry by creating a global forum for
research, data and execution.
Today, the internet and the continuous routing of data and
information have transformed the FX market. For a local bank or
brokerage firm with loyal, knowledge-seeking clients, the
opportunity to trade FX, CFDs or other derivatives such as futures,
online, is a natural. In a matter of weeks, a white labeling
partner can extend its product line significantly. Clients gain
access to a world of dynamic information and trading strategies.
Success is For Those Who Focus
What is needed to be successful in online FX through a white label
partnership? We would posit that the most significant ante in the
game is a sufficient commitment from executive management. Without
top-down endorsement and focus, the program can lie fallow. The
winners are those organizations that believe online FX is going to
play a significant role in client engagement, revenue expectations
and service promise.
The second criterion for success is an empowered and exclusively
dedicated management group charged with implementing serious and
well-coordinated business. This may be a professional from the FX
desk; it may be a marketing or sales executive with a passion for
building a new business. The dynamics of the industry suggest that
client management and service are most critical.
The third requirement is to fully partner with your provider.
Harness the experience of the partner. Their knowledge and
expertise in real-time pricing through aggregated, best bid/best
ask liquidity, risk management tools, account management and full
set up and technical support should be your key to success.
The fourth dimension is a true focus on building client
relationships. While your local distribution is invaluable, your
future base of online traders in FX is not necessarily contained in
your current mix of clients. It requires aggressive testing and
monitoring of the online media space to build a client base. For
most platforms, the critical paths lead to the download function:
prospects must download the trading platform if they are to
experience the value and benefits of FX trading.
The Nature of the Beast
What may challenge many new white label participants is the fact of
the Internet itself. Online FX trading means online behavior.
Unlike the 9 am to 4 pm bricks and mortar service regimen, the
online trading platform is a 24/5 environment. When the markets are
open, so is the white label platform. The challenge is to accept
that the online trader is self-selective. He or she is browsing the
Internet on their own time, at their own speed, seeking solutions
that meet their needs. Clearly, the best platform is the one that
combines multiple product opportunities, competitive pricing and
instant confirmations supported by a rigorous and accurate back
The Benefits and the Outlook
Combining capabilities works. White labeling speaks volumes about
the reasonableness of online capital markets business planning. The
white label partners share revenues, according to clearly defined
pricing grids. Complementary rather than competitive, the retail
market is just emerging as a source of new business
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