Gaining traction in challenging and competitive market conditions has always been an abiding concern for Forex (FX) traders. Growth depends on the ability to acquire new customers across key segments and induce them to trade more. However, with the evolution of Introducing Brokers (IB), there has been an amazing turnaround of fortune for FX businesses.
IBs can capitalize on their relationships with local cohorts and leverage their knowledge about preferences, spending habits, and market trends to convince more traders to connect and transact with an FX brokerage.
For years, commissions have been the driving force for IBs to deliver superior performance in drawing in traders. But over time, the massive growth in IBs has turned out to be a new challenge in the making.
Ordinary rewards in the form of commissions for every client transaction are no longer the most captivating remuneration that attracts quality IBs to any FX trader's business. There’s little to differentiate the value one brokerage offers them versus another. It becomes harder to build long-term relationships and there’s no great benefit to scale ever higher results. That said, without IBs, FX businesses will find it hard to penetrate new markets and improve their customer and business volume.
IBs today need more than just commissions from every client transaction at an FX business. The commission is only the bare minimum. In sum, IBs need to be empowered with better insights on growing their client portfolio, provided means to manage their targets responsibly and efficiently, and above all, rewarded beyond traditional commission models as they strive for results that are linked to the desired business outcomes of the brokerage.
Let us explore four ways in which FX traders can ignite better relationships with IBs by going beyond traditional commissions.
While commissions alone aren't the sole attraction for quality IBs, there is no denying that commissions make up the lion's share of the overall offering any FX trader can offer to draw in IBs. However, there is a different way to approach commissions today rather than just sticking to the old concept of transactional commitment.
IBs can be engaged better through multi-tier commission structures that reward them for different milestones or for different activities. For example, commissions can be a percentage of the overall transaction volume or fixed for a lot of transactions, or they could be different for different periods.
For example, in tough market conditions, there will be a massive opportunity for FX businesses to earn record profits from trading volatile currency pairs. In such instances, IBs can be motivated to bring in more trading volume through limited-time special commission models or rebate models that can be assigned flexibly. This is a win-win situation for both FX traders and IBs.
IBs, along with their affiliate partners, can draw large trading volumes instantly owing to their proximity and relationships with a multitude of clients. FX traders can diligently partner with several IB networks to set up sustainable and long-term constant volume contracts that offer a healthy compensation regularly for IBs while at the same time guaranteeing repeat business for the FX trader.
They can set targets and operating conditions for different IB networks based on the client portfolio each has, as well as based on the financial targets the FX business aims to achieve at any time.
Traditionally FX traders wait for IBs to bring in clients through their own marketing or customer acquisition strategies. Once referred, IBs often must engage clients from their side to enable them to transact continuously with the FX broker.
However, today's end customers are more digital savvy, and IBs may need to redefine their customer acquisition and engagement techniques. They may need a more integrated campaign and content support to engage existing and nurture potential customers. This is where FX traders can transition from being just a source of commission income to a full-cycle partner for IBs.
In concrete terms, FX traders can help IBs offer customizable digital tools that help with promotions, campaigns, and other digital customer acquisition channels. That said, IBs must be empowered to refer as many trading clients as possible to FX brokers who will handle onboarding and further client engagement.
IBs are often freelance contractors who run independent client relationship businesses. As explained earlier, Forex brokers can help them become more empowered in their customer conversations to convince clients faster to transact with the FX broker.
Additionally, FX brokers can enable incumbent IBs to adopt best practices and portfolio management strategies followed by leading IBs in their network. They can create amazing learning experiences and offer better rewards for IBs that progressively improve their client referrals by adopting best practices.
Going beyond commissions can help FX traders attract more IBs to their business and ultimately drive more trading transactions. But to make this a reality, they require a fundamental change in the way IBs connect to and collaborate on running their trading business. This is where digital platforms like FYNXT's IB Manager can be game-changers.
From enabling highly customizable commission structures to empowering IBs with collaborative learning and account management experiences, FYNXT can help grow loyalty amongst IBs and trading clients.
Get in touch with us to explore more.