The first days of 2017 have brought big news for the binary options industry. One of the biggest brokerages, Banc de Binary announced that it is closing doors.
After clients of the brokerage receive their deposits back, they might start looking for an alternative venue to place their bets. Since Banc de Binary didn’t sell its client book and states that it intends to exit the business completely, a number of clients might be up for grabs.
Big brokers from the binary options industry are already charging ahead with renewed campaigning efforts. However with the new marketing requirements heavily limiting advertisement messages, their efforts could be in vain.
Binary options brokers have been employing a very successful model to attract deposits in recent years. They have been providing big ticket clients with big bonuses in order to entice them to deposit their funds. After the bonuses were credited to the account, the terms and conditions associated with the bonus took effect and the client had to roll over his deposit amount up to 30 times in order to withdraw funds from the account.
The binary options industry underestimated the consequences of this. Clients that deposited substantial amounts, upwards of €10,000, have been vociferously complaining to financial regulators around the world. The biggest clients also started exploring legal action against the companies that took their deposits, claiming that they were treated unfairly.
Few of these clients have been reading between the lines of the terms and conditions to which they agree when opening an account, if they read them at all. The modern culture of clicking ‘agree’ and ‘next’ whenever the choices are presented on the screen has played against their rational interests and they were forced to trade their way out of the predicament in which they found themselves.
2020 Global Market Outlook: How the “Known Unknowns” Can Affect CurrenciesGo to article >>
After the clients lost their funds, many times fairly, regulators received a critical mass of complaints. The only reason that bonuses were banned and binary options regulated to the extent that they are now is the huge number of complaints that regulatory authorities across Europe have received.
Targeting Clients of Banc de Binary
Under the new regulatory framework, brokers are no longer allowed to solicit clients with generous bonus offers. At the same time clients that are looking to place binary bets might already have an affinity towards a certain broker. The sheer size of Banc de Binary was massive enough to cause a stir in the industry, so targeting its former clients could be an opportunity.
The main goal of brokers should be to shift away from going after high net worth clients. Those are the most problematic for the industry and frequently complain to the authorities regardless of whether they have the legal grounds to do so. With the pressure on binary options brokers in Europe rising, marketing and client targeting should be shifting towards smaller clients that are looking for opportunistic bets.
The target group of such clients will provide binary options companies with enough clients to be able to maintain a certain level of deposit flows. The gambling crowd is not a small one and financial markets have gained popularity in recent years due to the big changes in the political spectrum of the world.
Media attention to the financial markets can outweigh the negative attention that binary options brokers get because of certain brokers that have abused their clients. The key to success is more transparency and less misleading statements.
The affiliate messages about flashy cars, new houses and new lives should remain in the past if the binary options industry is to succeed. The gaming industry has been successfully growing in recent years without employing such misleading adverts, even after being heavily regulated across the world.