Anyone that’s taken a stroll around Limassol recently is likely to have seen one of Exness’ mini coopers whizzing along the coastline. After investing in a fleet of branded cars last year, the broker has become something of a feature of life in the Cypriot city.
But away from Cyprus’ balmy shores, runs a fairly low-key set of operations. Despite its huge success, particularly in South-East Asia, the broker hasn’t done much marketing, with most of its site traffic arriving organically.
Aside from the mini coopers, one notable exception to this has been with Real Madrid. Exness has worked with the Spanish footballing giant for the past couple of years and a number of players have appeared in marketing materials for the broker as a result.
The deal has also seen the broker and football team embark on a number of charitable endeavours. Last December, for example, Real Madrid ran a ‘football clinic’ in Thailand with Exness’ support. The clinic saw kids from poor backgrounds playing alongside Real Madrid coaches and players at one of the biggest football stadiums in Thailand.
“This industry is in its infancy”
Of course, one of the perks of sponsoring a football team is free match tickets. And last week, at the Audi Cup in Munich, Finance Magnates caught up with the Exness team. Amidst penalty shootouts and some hearty Bavarian cuisine, we were able to sit down for a short interview with the broker’s head of product – Andrey Shamne.
Unlike most people in the retail trading industry, Shamne has not spent his career hopping from broker to broker. His background is in technology and, prior to joining Exness in July of last year, he spent time in product management roles at a software provider, an e-commerce company and the Mail.Ru Group. Perhaps as a result of this, Exness’ head of product has something of a unique perspective on the retail trading world.
“I actually think this industry is in its infancy – at least in terms of developing products,” said Shamne. “You look across the market and, up until the last couple of years, people were just making things up as they went along.
“What we are doing now is researching what our clients want and what problems they have, then developing products around our findings. This sounds like first grade stuff and in the tech world it is. But in the trading industry that’s not been the case, at least until very recently.”
Doing the research
One way that Shamne plans on building better products is by setting up a research lab in Asia. Researchers at the lab will try to identify areas where Exness can improve its marketing and set of trading products
The broker also holds regular meetings with clients. Some of those are in person but others are held over Skype. But, according to Shamne, these informal conversations – though important – are not enough.
“Again, speaking to your clients – not just in the tech world but in almost any industry – is such a basic part of product development,” said Shamne. “But it’s something that a lot of brokers don’t do, unless it’s their really big clients.
“Having a lab should help us a lot too. Look, I’m a Russian guy living in Cyprus. Yes I can speak to clients on Skype or if I am ever there in person. But I’m never going to grasp the nuances that exist in local markets. Having active researchers who do understand what’s going on means we can make better products and improve our services.”
A tailored service
One very simple way that Exness has tailored its offering to meet the needs of local traders is by handing control of its website to its country-specific teams. That means the user experience of a trader in China will be very different to someone accessing the broker’s site from Thailand.
Ultimately the end product and technology Exness offers these traders is the same. But what it takes to lead them to start using those products diverges significantly.
“The most interesting thing for me is how different these countries are,” said Shamne. “You look at Thailand, Malaysia and Vietnam on a map and they are geographically very close. But then traders there interact, trade and do business with you in completely different ways.
“For instance, Chinese traders like a website that, from my point of view, looks really clustered and chaotic. For traders in South East Asia, having a website like that won’t work at all.”
Finding the right partners
Picking out the right marketing strategies to reach traders may be difficult but both China and South East Asia have long been viewed as ‘Wild West’ markets. Payment problems, capricious government agencies and untrustworthy introducing brokers can make it hard for brokers to do business.
These are problems, however, that Exness has largely been able to avoid. And Shamne told Finance Magnates that’s mostly due to the broker’s ability to forge strong connections in the region.
“From a technological point of view, we have developed a very sophisticated set of anti-money laundering and know-your-customer solutions,” said Exness’ head of product.
“That helps [fend off dishonest clients] but more important are our partners. In the markets we are strongest in, you need to have good partners. You also have to make sure they are happy with you. In many cases, if an IB leaves a broker then his traders will go with him.”
Perhaps as a consequence of its forging strong ties with local partners, Exness has been able to gain a large set of loyal clients. The average Exness trader stays with the broker for just under three years.
That lies in stark contrast to many other brokers, who are quite content to churn and burn their way through clients. Again, Shamne’s background in technology plays into his having a different way of doing things.
“The model – for better or worse – has for a long time been to squeeze as much money out of clients as possible,” said Shamne. “I see us as a technology company. A technology company cannot last long if it operates that way.
“We have to build strong ties to our clients. That could mean lowering their default leverage, speaking to them and helping them out with their problems or building better products to suit their needs.”
Aside from servicing retail clients, Exness also has plans to expand its set of operations in the business-to-business sector. Until now, the broker has focused its efforts on growing its retail customer base.
The Cypriot firm does have a successful introducing broker system but it does not offer a white label. That’s about to change. With enough capital to grow in new markets and regulatory changes in Europe creating major shifts in the retail trading industry, Exness plans on rolling out a white label offering soon.
“I think B2B is a natural step for any successful broker,” said Shamne. “We’re probably going to be focusing on Europe first but we will look at other markets too.
“This is the best way for us to grow in new markets. If we want to enter a new jurisdiction, we may not know the market, the players, the payments provider or how marketing works. Providing a white label to someone that does understand those things is much easier.”
Though the broker may have a B2B offering in the works, that doesn’t mean we can expect it to be launched tomorrow. The broker is moving cautiously with the project and seeing how it can best deploy its new service.
“There is still a lot to do, we’re in the very early stages of soft launch,” said Shamne. “We are approaching this carefully and seeing what the interest is like first. Our prospective clients are our first priority, so we need to build the product with them in mind.”
Small group of LPs, large number of white labels
When they do enter the B2B market, Exness won’t be alone. A number of larger brokers have been focused on providing services to other companies for years. But after the European Securities and Markets Authority last year, there has been a wider move by brokers towards providing B2B and professional trader services.
Prior to ESMA’s regulations going into effect, many in the industry had predicted consolidation in the market, with smaller brokers, unable to meet the demands posed by the new rules, being snapped up by more established players.
Twelve months on that hasn’t really happened, although there is obviously still time for it to occur. For Shamne, the market is likely to change, just not in the way that some other people have said it will.
“I don’t know if there will be consolidation exactly,” said the Exness executive. “I think what we will see is a blooming in the number of white label offerings. So there will be a small set of big players providing technology and liquidity and a much larger group of white labels who can target specific markets.”
With enough capital behind it and a plethora of experience in the retail trading market, you can expect Exness to be in that small set of big players. So next time one of those Mini Coopers flies by you in Limassol, remember that its Shamne and his team’s hard work that is keeping them on the road.