Björn, in Euromoney's annual ranking, Handelsbanken Capital Markets was the highest climber among the world's largest foreign exchange trading banks. Is the level of your investment in FX trading being matched by a similar one in developing your e-commerce services?

Yes, the development of our e-commerce platform is one of the key factors for us in order to be able to move our position forward in the market. We are putting a lot of effort in development both of our own platform, MarketOn-Line as well as the integration of multi-bank systems. It is also important to remember that the corporate customers are looking at your e-commerce offering as a whole. This means that the FX-trading service is just one part of what the customers require. Other electronic cash-management services are at least as important. We are therefore putting a lot of focus into developing other services within the cash-management and payments area, as well as development of our settlement and matching offerings.

How pivotal a role is e-commerce now playing in the acquisition and retention of your clients?

e-commerce is today an absolute must both in the acquisition of new clients and in our effort to enhance services for our existing customers. e-commerce has become a part of the basic services.

Do you still see some reluctance from some clients in adopting electronic FX and if so, why is that and what efforts are you making to overcome their concerns?

Yes, there is still some reluctance to adopt electronic trading from some customers but as a percentage of our total customer base, they are rapidly decreasing. It is absolutely necessary that you in the role of a sales-person put yourself in the situation of the customer and make a lot of effort explaining the benefits the services will give the customer. It is also very important to point out to the customer that the tools will give the sales-person more time in his advisory role rather than the opposite. Also, customer concerns about security issues must not be taken lightly.

Many banks are now reporting significantly increased e-volumes. Are you experiencing this and if so, are certain types of client fueling the demand?

Yes, we also see increasing e-volumes at Handelsbanken. All types of clients contribute to the increase. The customers are growing in numbers, and we also see that the users are becoming more mature and show more confidence in e-trading in general. There are more deals being done, but also the average volume is increasing for each deal.

Your own e-commerce portal, MarketOn-Line is part of Handelsbanken's online corporate services and can be used as an independent service. What sort of flexibility and functionality does it offer clients?

MarketOn-Line provides the customer with a flexible tool for FX-trading and deposits. It is designed to fit the needs of a wide range of customers, from small to large clients. Apart from real-time, automatic deal-execution it also offers streaming market rates and a real-time interface to the customers TMS systems. We have no minimum amount requirement in the system and it is also fully flexible when it comes to broken dates and amounts which make it easy for the customer to hedge their flows down to the last cent. MarketOn-Line also contains a flexible limit-order system, that gives the customers the possibility to manage both take-profit and stop-loss orders online.

In what way has electronic trading changed the role of your FX sales people?

Electronic trading is taking away the manual intervention in plain-vanilla deal processing. This development has started to transform the role of the sales person from deal executioner to financial adviser. A deeper knowledge of the client’s core business and of the structure of their balance-sheet is required in order to be able to present him/her with the proper business-proposals. Our customers require a broader competence from our sales-people. Good knowledge of the FX-market is simply not enough. They tend to see FX-trading as an integrate part of their cash-management process. This means that the FX-sales person now also will have to know something about payment-solutions, cash-pooling, zero balancing etc. The Sarbanes-Oxley Act and IAS has put operational risk and working capital management very much in focus with our customers.

You have a very strong research offering. How important is providing good advisory and research services going to be, as a means of adding value to e-trading services?

The quality of our research gives us a competitive advantage. It is very hard to differentiate from our competitors with the functionality in the system. Any new features are easily copied. And I don't think it is a coincidence that the look and feel of many e-FX systems is basically the same. The customers prefer a certain layout. With quality research we can build confidence in our e-offerings.

What areas are you currently focusing on to enhance your existing FX e-commerce offerings?

Developing the functions in MarketOn-Line as well as always seeking to meet the customers need to trade, regardless of platform. One area that I want to single out is to improve our limit-order functionalities. Bringing order-management out to our customers is one of our key developments right now.

You've introduced an additional Internet service called FX Transaction Confirmation. Who is this product aimed at and what prompted its development?

This service is designed for corporate customers who prefer to settle their deals directly with us, rather than using a settlement system like FX-Match. This system replaces the confirmations that we previously sent out via mail. The customer has the possibility to view their confirmation over the Internet and also to sign the confirmations electronically. The service also contains a search-engine where the customer can look at their outstanding deals with the bank, for instance the maturity structure of their forward book.

Handelsbanken is a liquidity provider to several multi-bank portals who continue to sign up customers in increasing numbers. Looking ahead, do you expect to see consolidation amongst these and other eFX providers and how would that change your own eFX strategy?

We are already trying to limit our engagement as a liquidity provider to as few portals as possible. However, we have to be represented where our customers prefers to meet us. I definitely think that we will see a consolidation among the multi-bank portals. The increased usage of e-FX systems has made the market more transparent and the difference in pricing between the liquidity providers is almost gone. This means that the FX-portals will have to provide the buy-side with other services such as settlement services and straight-through processing. I still think that our single-bank platform will be an attractive choice for our customers. Not only because we can provide the customers with settlement services and systems integration, but also because we can provide a broader cash-management service over the Internet. And by the end of the day, when the electronic offerings are becoming more alike, relationship will matter.