What Kind of Back Office do You Need? - LeanWork

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What Kind of Back Office do You Need?

19th October 2018

With the development of economic globalization, the foreign exchange market is increasingly favored by investors, and forex brokers are also emerging as the market grows. In this process, the brokerage background is crucial to the development of the brokerage business, which is why some brokers have stayed, and some brokers have disappeared silently.

 

Today LEAN WORK show what kind of Back Office the broker needs to deal with the problem.

 

Business development and acquisition of target customers

 

1.Retain customers, increase deposits, and extend the life cycle

 

For forex brokers, customers are the key to success. The number of customers and the quality will indirectly affect the operation of the forex broker. Especially in the case of the rapid development of China's foreign exchange market, the competition among brokers has become increasingly fierce. It is especially important to let new customers trade more and extend the life cycle of old customers.

 

Brokers need to have an innovative trading system to increase the average life cycle of traders and increase the trading volume.

 

2.Reduce customer costs, increase conversion rate

 

With the enhancement of competition in the industry, the Cost of Customer Acquisition is increasing while the Customer Conversion Rate does not increase. It will directly introduce pressure to the operators of the platform. 

 

Brokers need a Back Office that can manage the acquisition process, use software to collect customer sources in real time, and find ways to improve customer conversion and reduce customer acquisition costs based on data analysis.

 

3.Systematic brand marketing and communication management

 

Forex brokers should have a brand concept and awareness. Through brand management, effective supervision, and enhancement of the relationship between brands and consumers, ultimately forming a brand advantage, so that corporate behavior is more close to brand's business value, to enhance business competitiveness.

 

The back office of forex brokers should have a systematic brand marketing and communication system, save labor costs, control marketing processes, automate marketing, and increase brand awareness.

 

Risk control system

 

In foreign exchange margin trading, risk control plays a role as gatekeeper. Forex brokers need reasonable technical and too to manage the risks of the transaction,  customer behaviors and other factors.

 

Forex brokers conduct different risk strategy depending on the platform model. In the MM mode, the trader and the platform trader are the counterparties. To control the risk, the foreign exchange broker will continuously monitor the stable, profitable traders, especially the traders with relatively large capital. For these traders, the broker will set some trading thresholds to limit.

 

In STP mode, the forex broker transfers the trader's order to the LP, and the LP conducts an instant transaction at a price close to the customer . When the market volatility is relatively severe, exchange rate fluctuations are relatively large. At this point, the order may be left floating, which means that the order has been processed but still stays in the pending order window and waits for the LP to trade at the appropriate price. In a shock market, too many orders waiting will affect the LP to confirm, and even refuse the order. Brokers are exposed to the risk of price volatility. At the same time, because the amount of funds involved is relatively large, the LP generally strictly limit the leverage. If the broker's leverage exceeds the limit, it needs to bear the burden. Therefore, in the STP mode, brokers generally introduce leverage and trading restrictions on traders with large capital.

 

In the ECN mode, brokers do not survive on spreads, but instead, charge traders an appropriate percentage of transaction fees.

 

Therefore, the forex brokers' risk control system needs real-time statistics on risk exposure and can set the order execution and risk control strategy.

 

IB management system

 

Foreign exchange IB is a role between investors and trading platforms and is the channel of the platform. It is a sales role in the industry, responsible for expanding the dealer market, acquiring more customers for traders, and getting a certain commission from dealers as a reward.

 

IB focuses on finding cooperation platforms and developing customers. Depending on the mode of operation and profit model, IB includes rebate IB, customer service IB, transaction signal IB, social media IB, and white label IB. Some platform vendors set different levels for IB, and the rebates that different levels of IB can get are also different.

 

Forex brokers need to have an IB management system.

  1. The clear and user-friendly IB levels management.
  2. The flexible commission set.It can apply a variety of commission policies (spread percentage, point value, net profit share, and more), and can achieve an automatic settlement.
  3. The professional data center whichcan show multiple indicator data. Both traders and agents have the corresponding right to view their trading performance, such as account opening volume, deposit amount and transaction details.

 

Account opening and fund processing

 

The general process of opening an account is to select the account opening platform, prepare the account information, log in to the official website to register, wait for the account to activate, make a margin and deposit. Many traders feel that the standard processing is too complicated to start.

 

Brokers need to speed up the review of customer information and seamlessly integrate customer information into the CRM system.

 

Trading platform operation and maintenance

 

Stable operation and maintenance are essential for platform users. The most basic factor for a good platform is the comprehensive setting, fast execution, low latency, and high-quality user experience. 

The broker needs to easily update of the symbols, the setting of SWAP and the filtering of abnormal prices.

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