Fabrice Benouaich Guillaume Spay
Fabrice Benouaich Guillaume Spay

White Labelled FX Platforms: An old story with a new ending

By Fabrice Benouaich, Finastra, Director, Product Management SeamlessFX and Guillaume Spay, Finastra, Director, Global Solutions, Treasury and Capital Markets.

White Labelled (WL) FX Platforms have been around for many years. In what ways have they evolved to become a much more attractive value proposition?

FB: Originally, White Labelling was the standard option for any bank or broker willing to enter the FX market. They could easily offer an efficient brokerage services, including multiple FX liquidity sources, while realizing significant cost savings on IT, infrastructure and staff. They could focus only on developing their client base by leveraging the platform. 

However, this model was preventing them from being involved in technological enhancements, launching new features and functions or influencing roadmaps. As providers’ partners, they ended up being confined into one trading system and tied to its strengths and weaknesses. This model was no more aligned with the evolution of the financial industry. Partners, end clients and regulators had challenging and demanding requirements for more everything: speed, complex products, reporting and compliance, fee modelling to match new business models. On the other hand, banks were less and less tied to their WL provider thanks to technical evolution and more and more willing to create a unique service to their clients. To be viable, WL platforms providers had to consider the potential uniqueness of their partners. They transformed to deliver services in a seamless manner via an enhanced flexible architecture that allows strong and deep capacities of integration and customization. 

How much flexibility do white labelled solutions now provide to help banks and other FX providers better define their customers and the pricing models and the other platform features they can offer them?

GS: Most WL solutions are now delivered “as a service”. That includes multiple “out of the box” customizable functionalities readily available to banks or brokers for them to adjust their services and offering based on their clients’ profile (e.g. liquidity management module). But more and more providers have decided to go one step further by opening their platforms through Application Programming Interfaces (API) and Service Provider Interfaces (SPI). 

These unlock all the possibilities for the White Labelled partners to integrate with any other third-party solutions (CRMs, analytics, price engines and algos, custom trading front-ends …). By leveraging such delivery model, WL partners have all means to create a unique value proposition for the current trading landscape.  

What range of features and functionality should a state-of-the-art FX WL platform be capable of providing?

GS: These are as follows:

  • Multi-channel access.
  • Solid workflow processes from execution to risk management and back office.
  • Best, fast and reliable execution based on real-time pricing with accurate reporting and low slippage.
  • Deep control of customers’ activity and customers’ data.
  • Flexible and sophisticated liquidity management to tailor the pricing to customers’ specific nature and behavior.
  • Effective risk management functionalities.
  • Powerful FIX distribution and trading APIs.

FB: WL platforms represent the best of two worlds: SDPs and MDPs. As such they can deliver a unique user experience as they permit to clearly differentiate from the competition. They combine simplicity and reliability with features delivered in a flexible mode via APIs (especially the Open API standard). This flexibility allows a better digital engagement with clients, and improved coherence through tailored enrichment.

How is new technology being leveraged to power the latest generation of WL platforms?

GS: We find new technologies everywhere. In hosting, connectivity, data storage, data processing, data distribution, high availability, high redundancy, and security. Even the front-end side is touched where many application frameworks, essentially based on HTML 5, can be leveraged to offer reactive and efficient portable UXs.

Liquidity management is critical function in e-FX. In what ways can liquidity flows be tailored by WL platforms to meet specific needs?

FB: Liquidity flows can be tailored, among others, with sophisticated and customizable functionalities as listed below. But the first step is a close integration with the Treasury Management System.

  • Liquidity aggregation
  • Smart Order Routing
  • Automatic management of market and resting order
  • Auto-hedge
  • Algorithmic trading
  • Liquidity management strategies (helping to tailor FX rates by client types or buckets)

In what ways can WL platforms help to facilitate the deeper digital relationships FX providers now have with their clients?

GS: That will happen mainly via open APIs which allow WL platforms aggregate and distribute easily multiple services from and to other cloud-based or SaaS third-party providers. Banks and brokers can then seamlessly and smoothly multiply user experiences and fully match all their clients’ needs. 

The same approach can be used in order to tailor middle and back-office processes or services. Another way is ability of the WL platform to capture, store, analyze and report client data (traffic going between the client’s UX and the service provider). These can be used to send custom content like targeted market news, targeted market analysis and transaction cost analysis.

In what ways is demand for more customized solutions shaping the way WL platforms are being engineered?

FB: Higher client expectations for speed, robustness and integration along with fintech competition led WL platform providers to reshape their commercial offering and service delivery model. This was only possible via re-engineering to deliver tailored and flexible services (APIs) at scale and speed. Indeed, end-users are today demanding for real-time responsiveness and customized functionalities. WL solution providers have no choice but try to predict trends and keep innovating to ensure they differentiate and stay ahead of other market players.

Time to market is an important consideration for many FX providers. What issues can impact on this with respect to how a WL platform is setup, hosted and deployed?

GS: The most common are:

  • Lack of technical flexibility
  • Poor integration capabilities
  • Poor customization capabilities
  • Physically presence not close to principal FX market places
  • Poor worldwide presence
  • Poor liquidity network
  • Not being innovative or not leveraging new technological trends (old hosting mode, old deployment model, old infrastructure management)
  • Not being able to add new liquidity providers in a timely manner (months instead of weeks)
  • Slow customer on-boarding

Security is another key consideration for WL trading platforms. What level of guarantees can now be provided about this?

FB: There is a real shift in the mindset here. All actors are working together and security is ensured through:

  • Industry-standard security measures (firewalls, web gateways, vulnerability scanning, penetration testing and patch management, SSO)
  • Internal and external audits
  • ISO Certifications (9001, 27001)
  • High availability
  • Scalability
  • State-of-the-art data centers
  • IT compliance

As a leading WL platform provider what are your key objectives when working with new clients?

GS: Finastra’s main focus is to provide our clients and clients’ clients the ability to reach their goals. That is why we are working intensively to reinforce our client understanding and client support experience.

In this regard, Finastra keeps investing in innovation, flexibility and new capabilities. This is valid for SeamlessFX, our e-Trading FX platform and FusionFabric.Cloud, which is Finastra’s Open and Collaborative developer platform and marketplace.  Our ultimate goal is to offer an even stronger and closer integration with our ecosystem.

Ultimately what factors should influence the choice of WL platform provider to partner with?

FB: On the technical side:

  • Strong technical flexibility with ability to innovate and leverage new technological trends (including hosting, deployment and infrastructure management)
  • Strong integration capabilities (delivery through APIs is mandatory)
  • Strong customization capabilities
  • State-of-the-art hosting 
  • State-of-the-art security
  • And on the business side: 
  • Worldwide presence and physical presence close to the main FX market centers
  • Strong liquidity network and relationships
  • Capacity to onboard quickly new liquidity providers
  • Efficient processes for client onboarding, execution, risk management, back-office, liquidity management …