One of the traditions at year end is to take stock. Reflecting on the past 12 months is an exercise that brings clarity of thought. Going through a crisis can have a similar effect.
As the economy finally stabilizes following the events in the fall of 2008, we are looking over a changed landscape. There has been a lot of change in the FX market place, in the number of participants, and in how the survivors do business. In the world of financial services, we have noticed a renewed focus on core competencies. Banks and brokers who owned real estate, sold their offices and leased them back. They outsourced proprietary operations and are leasing back services that do the same.
On the positive, the state of the Internet economy allows for many business services to be delivered On Demand. While consumer-focused businesses embraced that trend and started to reap its benefits years ago, we see it finally taking hold in FX markets as well. A crisis brings clarity of thought.
Instead of investing millions of dollars in a proprietary IT infrastructure to run foreign exchange operations in-house, while simultaneously assuming operational and market risk, FX brokers and banks took stake and realized there is a smarter, low-cost way to do the same:
- Participate in a shared FX infrastructure that spreads operational cost and system risk amongst hundreds of participants
- Subscribe to On Demand services that scale seamlessly up and down in line with customer demands
- Only pay for services when actually using the system, i.e. generating revenue for oneself
- Free company resources to focus on marketing efforts to build one’s business