Frances Faulds
Frances Faulds

The Platform Provider Viewpoint

John Ashworth, CEO of Caplin Systems talks to Frances Faulds about the evolution, and the changing face of Single Dealer Platforms.

The primary objective of many banks in deploying a Single Bank Platform (SDP) was to get an electronic presence out to their end-customers in the hope of encouraging self-service trading. According to John Ashworth, CEO of Caplin Systems, “There was always the hope that certain segments of their customers would trade directly, but for regional and super-regional banks it was also about a real-estate grab as a defence mechanism against disintermediation from the larger banks. What has changed markedly in the last 12 months is the emphasis banks are placing on making the SDP a tool to improve internal sales efficiency.”

Recent investment in platforms has been driven by regulation, and making all the workflows handled by and through SDPs compliant with the new directives. However, Ashworth adds that the general need for cost control within banks is also causing them to think very hard about which customers they want (i.e. are suitably profitable), and of those they choose to retain, whom they want to offer a high-touch human sales interaction and whom they would prefer to service through a call centre.

He says: “The objective of the SDP to enable the customer to self-serve is as great as ever. But now SDPs are becoming very much more focused on internal ‘customers’ (the bank’s sales staff) and providing workflow and product support internally, to make the sales person’s job more efficient.”

John Ashworth

John Ashworth

“The objective of the SDP to enable the customer to self-serve is as great as ever”

Available technology

The availability of technology is narrowing the gap between what the larger banks and the tier two banks can offer. Furthermore, Ashworth says that by componentising the building blocks of the SDP, the technology has become more available to lower tier banks. He says: “We have spent a lot of time making out-of-the-box reference implementations which are then very easily customised. Ten years ago, SDPs were either phenomenally expensive, or looked very similar. We have put a huge amount of software architecture into making the components so that the front end can be easily tailored to each bank”. This component approach, using HTML5 technology, lowers time to market and Ashworth adds that with regulation and compliance taking up more time and focus, banks have less time to build to from scratch.

Greater regulation around best execution is having an impact on the use of SDPs. Bank providers need to be transparent about price construction and negotiation, and end-customers need to be very transparent about demonstrating that they have achieved the best price. Ashworth believes there always has been, and always will be, a place for multi-dealer platforms, to serve certain types of customers, who only really need a comparison capability, in certain markets, whereas in other markets, best execution will be accomplished from an SDP. “Banks are at pains, as part of the sales process, to demonstrate why the narrowest spread or best rate is not necessarily the best value because the probability of getting filled comes into play”, he adds.

As a result, transaction cost analysis and best execution analysis tools are increasingly being included in SDPs, as well as broader product coverage, in order to include block trading, flexi-forwards, time-options and regular options increasingly being offered by the banks, along with algorithmic capabilities.

With the increased news and research available from numerous different sources, and the aggregation tools being widely available, the regulations to separate news and research from SDPs are having less of an impact than expected. Says Ashworth: “The days of only looking at one bank’s view, published by a bank’s economist, are long gone. On the flipside, the more intelligent SDPs will increasingly include predictive and behavioural analysis. This lends itself to dynamic personalisation of the individual user’s experience. We are investing in this technology.”

A component approach, using HTML5 technology lowers time to market
A component approach, using HTML5 technology lowers time to market

Today, SDPs are built using Caplin’s suite of FX Motif solutions, which are a set of pre-built starter points for delivering highly differentiated and fully customisable single-dealer platforms, and include FX Professional, FX Corporate, FX Sales and FX Mobile. 

Future development

Going forward, Ashworth believes the most immediate focus is on further sales automation and presenting screens that assist the internal sales user in doing a better job in communicating with the trader or communicating with the customer, using links to customer relationship management systems, much better access to prior trading activity of the customer, and also in the area of product education. “Here technology can help them reduce the bottlenecks of having to go to the structuring desk or the head office of the bank to get that sales support advice. This frees up a log-jam and helps sales people to be more productive,” adds Ashworth.

SDPs will continue to evolve, in both functionality and use, whether they are being used to self-service, as a back-up for phone trading, or even not used directly by the end-customer at all but simply used by the sales person. The value proposition of SDPs continues to strengthen through this greater enhanced sales trader functionality and the MIS data mining available to support high value clients, which benefits both the banks and their customers.

With increasing platform consolidation in the FX market, more specialised liquidity provision, the burden of compliance increasing and a new focus on benchmarks and ways to minimise reputational and regulatory risk, it is becoming increasingly clear that SDPs, and the underlying technology, have still a key role to play.