THE BIGGEST CHALLENGES FOREX BROKERAGE FIRMS ARE FACING TODAY
In the last 50 years, with digital technology evolution especially in the field of computerization, the financial markets of the world have changed considerably. This in turn has changed the role of a Forex Broker beyond the boundaries. Forex Brokers have turned online and offer easy currency trades and profits to average and expert people. The broker has to use the tools and resources which enable traders to manage and execute orders quickly and easily. But ultimately because of the online trading, working with traders who are lacking experience, and the worldwide competitive nature of the industry, the Forex Broker’s work has become more complex and challenging these days.
In this article, using our experience in the FX Industry for quite a few years, we have tried to highlight some of common challenges faced by Forex Brokerage firms. Also, we will discuss how to overcome them with the help of proper knowledge and guidance.
1)Regulation and Compliance
As all the regulatory bodies like FCA, ESMA, ASIC have come up with more tough regulatory conditions in the last few years, strict regulation and compliance to the same has become the most complex challenge. Because of such regulations, leveraged trading has been limited and average retail customers will find it difficult to trade because of its high- risk nature.
As a solution to this challenge, the broker can either move offshore and have a new jurisdiction and work with partners globally or the broker must meet the regulation requirements of his country of residence.
It is mandatory to keep documents and records of compliance with any regulatory authorities. The Forex Broker can use software or a back office tool that offers easy management of documents and confirm that their firms follow the law.
2)Deal with Market Competition and Win the Trust of the Client
With an estimated $5.3 Trillion trades every day, the Forex market has become one of the largest industries of its type. As the leading brokers of the world dominate the industry by having a major number of clients, new and start-up brokers finda relatively small market for themselves. In this scenario, the only option for a Trader is to stand out with unique features and services and win the trust of their clients.
The Forex Brokers should apply various marketing strategies to win in this competitive market. They should use digital advertising, SEO, blog posts, and informative webinars to get themselves ranked on top in the industry. The broker also should use social media platforms to showcase their presence.
3)Technology and Infrastructure
Forex Broker must have extraordinary technology as their prime offer is online trading. Apart from a powerful trading platform, the brokers need appealing back-office technology as well to support routine jobs. In this edge of automation, instead of wasting time on manual tasks, the broker needs to automate the process like KYC, lead management, IB Management, etc. Ultimately a well-designed CRM will come to the rescuefor the broker.
Choose a technology provider wisely is a key solution here. The broker should take care while automating things that his data is in safe hands and there is no risk of losing important information. Also, the Forex CRM should be crafted according to his needs and all the required modules should be integrated. Client Portal should provide an interactive platform so that the traders have a positive experience.
4)Knowledge and Financial Expertise
The broker will face this challenge if he or his team lacks knowledge of the Forex Market. Apart from providing services to the traders, the broker should guide the traders with proper market analysis, seminars, webinars, etc. Without thorough knowledge, this would not be possible.
Forex market needs you strive to learn continuously. A broker should learn and prepare some strategies which can help his traders to win the market. This can be done with the help of continuous market analysis.
With the new and strict regulations in the market, for Forex Brokers, it is difficult to attract clients without offering any bonuses or over the top fake promises of high return.
To overcome this situation, the broker has to use his expertise and with his proven track of success, he should attract the clients to invest with his firm. The broker has to notify the traders about the competitive nature of trading conditions on regular basis. Even he can make his trading statistics or publish an informative blog or webinar to catch more clients.
So, after going through all the challenges, we have learned that the Forex Brokers must apply strategies that are helpful to attract clients. Also, the use of technology and the development of appropriate tools is equally important. Using the proper tool will ultimately cut the cost and improve efficiency. New business plans and models should be implemented frequently based on traders’ needs and interests.
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