Why Retail Brokers Must Take Control of Their Tech to Survive


Retail has transformed due to the pandemic. Growing volatility and domestic investors have driven historic levels of participation, as have the potential traders who have taken to their phones and desktops with ambitions to capitalize on rising markets. For the trading platforms facilitating this boom, this presented an opportunity but also a challenge as record volumes and a new cohort of investors looking for the right trading platform brought their technologies and capabilities into a sharp focus.

Trading platforms need to be equipped with the latest technologies to attract and retain the army of new retail investors. However, despite some smart interfaces, quite often trading platforms rely on legacy systems, some of which are up to 20 years old, that support their business operations. While surface brokers will look different, under the hood they may look similar, using the same sales technologies and basic legacy systems. The challenge for brokers is, therefore, to differentiate and modernize their technology and offer their clients something truly unique in a highly competitive and commercialized market.

The pandemic has demonstrated how fast markets can move. Relying on vendors for innovation can therefore mean being late. With accelerating investors for new features, tools, and access to value classes, brokers must constantly adapt their technology to satisfy an ever-growing group of investors. This is quite difficult, yet the real problem lies in their competition, who, in many cases, do the same thing, looking at similar solutions from a narrow group of third-party providers. The result: a weakening of the competitive landscape as firms seek to satisfy similar requirements using the same building blocks.

Another critical problem retail FX brokers face lies beyond the world of finance. As smartphones have become a focus of our work and home lives, business handsets have grown in popularity. However, new restrictions through Apple’s App Store have come into effect. Apple has begun restricting downloads in certain geographic locations, requiring brokers to have complex and hard-to-obtain individual licenses. If brokers cannot comply, they are removed from the store. With such widespread reliance on the App Store and Apple’s application infrastructure, this is proving to be a major key in the works and has led some brokers to look into building web-based platforms to sideline the problem.

greentarget amanda harrison
Amanda Harrison, Senior Sales Executive for Adaptive Financial Consulting.

Facing pressure to compete with technology and the wake-up call of changes to the App Store, the argument for retail platforms to take their technology stacks indoors has never been stronger. Their choice is to either continue to build on a legacy infrastructure with vendor products or invest in a custom technology stack from the bottom that perfectly suits their needs.

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It is impossible to get away from the fact that rebuilding a technology stack of large brokers is a major undertaking. It requires time, investment and a clear idea of ​​the direction of the business, however the long-term benefits are clear:

  • Differentiation: Retaining ownership of their technology, retail brokers can focus on proposals that will enable them to truly separate themselves from the competition and respond more quickly to changes in the market, whether asset classes, access specific liquidity, or market events, or develop unique ones. business tools.
  • Innovation monitoring: Internment of their technology stack gives companies flexibility and control of the direction and speed of modernization. Vendors may be slow to develop and implement new features that may not meet the specific needs of a retail broker because the features are built for mass market appeal. Controlling this process, therefore, allows a broker to create tools and features specific to their clients.
  • Checking long-term cost: While businesses need to take the initial plunge, modernized infrastructure requires much less long-term investment and eliminates the need to constantly plug holes in legacy infrastructure. Having a powerful motor built specifically for flexibility, therefore requires much less maintenance and saves costs in the long run.

In the rapidly changing world of retail, brokers cannot afford to be late. The main popularity of retail attracts a whole new public looking for the trading platform that will be the basis of their future success. In such a lucrative market, there is a race between executives and new entrants to capture this market. Retail brokers cannot afford to leave their futures in the hands of sellers. To keep up with the rate of participation, platforms need to control their destiny by owning their technology.

Amanda Harrison, Senior Sales Executive for Adaptive Financial Consulting.



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