The banking behemoths are ramping up their activity in emerging markets – and local mid-tier banks must fight harder than ever just to survive. Between an array of challenges – including the daunting complexity and cost of modern technology and the globalization of electronic trading – the competitive pressure is growing by the day. The structural and technological disparities between mid-tier banks and their larger, better funded counterparts are magnified when it comes to foreign exchange (FX) trading, which trails other asset classes in terms of digital transformation.
With the stakes high and in-house resources limited, many of these local banks have turned to outside vendors to open doors for them – often in the form of access to global banks, hedge funds and liquidity sources – in order to keep pace with larger competition. The exact challenges these local banks face can vary – some do not trade electronically at all, while others need to replace a legacy system or consolidate an existing hodgepodge of rudimentary tech – but all are in search of differentiation and maximum control.
The catch? Many large vendors insist on selling mid-tier players “out-of-the-box” trading technology that claims to be all-encompassing, but ultimately lacks competitive differentiation and fails to deliver the technical functionality local banks require. In the view of these vendors, there’s not enough money to be made in building customized functionality for banks of this size, forcing them to take a generic solution as-is or bear the extra development burden themselves. For a local bank with minimal technology resources and budgets that are already stretched thin, this is a non-starter.
Enter EdgeFX Custom, Edgewater’s approach to developing white-label trading systems. By enabling unique workflow customizations and branding, all on a global scale and via a single platform, EdgeFX Custom empowers clients to inject their own liquidity sources and preferences to create a unique, flagship trading system, one complete with a robust set of features and a large capacity for automation. By putting their own stamp on our high-performance technology, our white-label clients can better serve their own customers and start winning back market share from the increasingly global competition.
How? Let’s explore the process in detail.
Our work with EdgeFX Custom clients typically begins with a deep dive into their business – their history, current situation, strategy, goals and requirements. During this period, we work with them to build a custom UI that preserves their brand identity, including logo, colors, fonts and specific widgets.
We then work with them to build custom, globally sourced liquidity pools, with the option of standing up advanced workflows, such as algorithmic price discovery, that local banks are often hard-pressed to build themselves or procure from other vendors. Other potential customizations include best execution (complete with advanced execution algorithms and maker/taker capabilities), as well as targeted functionality for stakeholders across the trade lifecycle, from traders to salespeople to credit and risk professionals. As with all our offerings, our top-notch speed and execution quality ensures minimal market impact and reduces operational risk.
We like to say that our technology is as powerful as it is flexible – the EdgeFX system is built for this level of customization, as well as seamless implementation and regular enhancements. What’s more, as a neutral, conflict-free third party, we have zero reservations about connecting clients to any venue of their choosing, so the possibilities are virtually limitless.
Over our 10-plus years working with clients in emerging markets, we have an established track record of building solutions to support any level of technical capability. We’re also adept at navigating difficult credit environments. Our on-the-ground presence in emerging markets around the world gives us a deep understanding of unique market dynamics and an intimate knowledge of the local settlement and custodial processes.
In delivering white-label solutions for our clients, we are building on the same technology that powers our own trading system. With $20 billion traded daily on average and data centers located in major cities such as New York, London, Singapore, Mexico City, and Tokyo, we are proud to offer a feature-rich and extremely stable product. We forge consultative relationships with local banks in emerging markets to help them bring truly differentiated and personalized FX trading solutions to their customers – and that can have a powerful leveling effect on the competitive landscape.
By executing trades affordably and effectively, mid-tier banks in emerging markets can in turn deliver exceptional performance to their own customers. But it’s not just that – by bolstering the platform with their own secret sauce and injecting it with their own brand identity, these banks can effectively take back ownership of their market share and currency. Their customers get the same sense of familiarity, proprietary offerings and tailored client service they have always received – the only difference is that Edgewater is providing the technology in the background. This is powerful on multiple levels, and we take pride in paving the way for our clients’ success.
Ultimately, our goal is to serve clients efficiently and comprehensively, and we do so at a cost that works for their budget. And the relationship doesn’t end after the initial implementation phase is complete – Edgewater provides ongoing support to clients as they leverage our white-label technology. Our multilingual, on-the-ground presence enables ease of communication and efficient iteration upon request.
As a global leader in FX execution, Edgewater is steadfast in our mission to educate emerging markets players on how electronification can transform their business – without sacrificing their own identity in the process. Empowered with features, workflows and personalized liquidity sources that work for their specific users, local banks can not only persist despite competitive pressures, but flourish in the face of them.