Increased Automation, Proactivity, and Single Dealer Platforms

What drives sales productivity and how does automation impact forex ECNs?

This article was written by John Ashworth, CEO, Caplin Systems

Transformation is occurring at investment banks: systems are being consolidated, client interactions are becoming automated, and costs are being cut.

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

Register now to the London Summit 2017, Europe’s largest gathering of top-tier retail brokers and institutional FX investors

There is also significant impact on forex ECNs. But what is causing this transformation, and what’s its effect on traditional bank sales teams?

Tech savvy customers have higher expectations

Banks face increasingly technology literate customers with high expectations of technological delivery. Retail banking ecommerce permits checking balances or transferring money, but rarely wow for user experience.

Most Single Dealer Platforms (SDPs) fall somewhere in between, but expectations of what can be delivered by banks to their corporate clients far exceed what they get. Many banks now have senior ‘digitization’ roles with broad remits spanning traditionally siloed product and client organisational structures.

They are driving digitization and automation throughout the bank. Our recent survey found that client-facing systems are the second highest priority for technology spending in the next year, behind regulatory issues but ahead of compliance and cost savings.

Political impact on competitive pricing and price construction

Global political landscapes increasingly control the way banks conduct business. To protect bank shareholders and customers, regulatory authorities limit the amount of bank capital available for speculative investment, and demand greater price transparency throughout the trade life cycle.

Areas of transparency specifically relate to: competitive pricing (how bank’s prices compares to the broader market), and price construction (amount of premium over basic cost a bank adds for risk, service and margin). Different regimes have different rule sets (Dodd Frank, Volker, MiFID II), but these are the underlying principles.

Decreasing opportunity and increasing costs

The implications of these regulations for banks are that they withdraw from some markets in which they’re not allowed to allocate too much balance sheet risk capital, and to drastically reconfigure internal and external systems to remain compliant. The former reduces opportunities to generate profit and the latter adds cost.

Regulation and digitization dominate the agenda for sell side institutions and are driving rapid transformation across the industry. Our survey found that in-house IT teams, traditionally viewed as facilitators, are increasingly seen as innovators.

More expected from compressed sales teams

In response to raw economics and natural economic evolution for businesses to compete, and partly to fund the costs of implementing the regulatory regime, banks cut costs. In white-collar industries, particularly banking, cutting costs means cutting staff.

In trading, greater emphasis is placed on systematic, or API based trading away from manual human traders. Trading rooms were thrilling to visit. Now they’re dull. In distribution, senior managers expect the same amount of client business to come from fewer sales people, or to protect and grow customer business with the same number of sales people.

The combination of regulatory and economic pressures make banks selective about customers and segments targeted.

Suggested articles

Ready to kick-off your Trading Game with Manchester United?Go to article >>

Sales teams need to embrace automation

The opportunity that automation presents is improved efficiency of manual and cognitive processes. Customers self-serving on e-commerce platforms (or in a supermarket), clearly reduce labor costs.

Much trading activity is API based, and e-trading technology has hollowed out massive efficiencies by eliminating human traders. The quest is now for greater efficiency through sales automation. Key drivers are improved customer service and empowerment of the sales relationship (retrieving power from the trading desk).

Our survey found an expectation for trading to become increasingly automated. The buy-side overwhelmingly prefers trading electronically, and is demanding digital services more than the sell-side thinks. Also 86 percent of respondents think it would be beneficial to move services to Cloud and Software as a Service models.

The sales person was at worst a relationship-savvy postman, sending interests to the trading desk with a fracture in client-specific knowledge about price sensitivity, the salesperson is now empowered to act in the client & bank’s interests. This is all manifested in trading-on-behalf-of (TOBO) functionality and carefully designed motifs.

Sales efficiency isn’t just about cost reduction, it’s also about getting more out of the sales people. To do that, it needs workflow improvement between sales and trading desks. With a quest for efficiency however, the ability to track and measure sales behavior (how much spread/discretion is being offered/traded away) is a critical control device.

It’s important to better hold risk within the bank rather than allowing it to be traded away outside (in the case where worst-of-all-worlds the sales person is empowered to send the risk wherever he likes).

How can sales teams do more with less?

Migrate smaller customers to Single Dealer Platforms (SDP)

Picking up the phone and talking to a bank has been the customer to sales channel preferred by corporate customers and smaller banks forever. It is the most efficient channel for high touch, structured products whose very nature demands an iterative, consultative sales process.

However, many corporate customers deliver little revenue or profit to the sales desk, so the trend has been to replace that relationship with a screen. We predict that human salespeople will only serve the biggest clients, and/or their high margin structured product needs. Banks will send lower profit customers to call-centre or SDPs.

Harness analytics to aid sales proactivity

Another trend is to force the salesperson to be more proactive, rather than waiting for the ringing phone. This is achieved by leveraging pre-trade and post-trade analytics.

By analyzing what a customer has done in the past, the salesman can nudge and suggest that they do the same in the future. Amazon has this nailed of course – it knows where people go after they’ve left browsing and buying footprints.

Increase the use of mobile technology to replace human admin

The use case for mobile technology is less about execution (although that is starting to happen) and more about eliminating cumbersome human processes. Banks are adopting mobile apps for order amendments, confirmations, settlement notifications and watch-lists. Already commonplace in their retail divisions, treasury functions are hurrying to catch-up and be ‘with-it’.

Jettison single product siloed sales teams to enhance cross-asset focus

Constraints on balance sheet capital at risk have turned banks through 90 degrees. Product silos were targeted to sell as much of their thing as possible, but banks now need to take a total view of capacity to inform how much inventory they can sell. Therefore, they must reconfigure their sales teams towards a horizontal cross-asset, rather than vertical single-product focus.


Computers have already changed the roles of traders. It’s only a matter of time before the low-skill tasks of sales people are eliminated too. Winners in sales will be those who can achieve distribution through SDPs, APIs and TOBO.

These sales winners will deploy feature rich tools that anticipate and meet the needs of customers as well as complying with the ever changing regulatory requirements. And the best part – the new tools deliver a better customer experience for clients, at a lower cost to the bank.

Got a news tip? Let Us Know