LeapRate's Daily Forex Industry Newsletter
Join now to receive first access to our EXCLUSIVE reports and updates.
Screenshot of a breaking news alert e-mail from Q2 2017
South Africa’s ACM Gold is in the somewhat comfortable position of being located in a continent which has attracted the attention of many overseas brokerages recently.
The African continent is home to many emerging markets, within which an increasing base of enthusiastic retail FX traders reside, often conveyed to brokerages via an extensive network of introducing brokers.
As the trading ecosystem develops across continental Africa, ACM Gold has today combined the demand for new technology among Africa’s FX traders with a milestone in the evolution of trading platforms by taking the application-based Tradable platform into all regions of Africa, encompassing 55 countries, served by ACM Gold’s extensive network of 17 offices across the continent.
There is no doubt that the battle for supremacy in the platform segment is at its highest, and with Tradable about to extend its reach across an entire, and largely untapped continent, LeapRate today spoke to the key industry figures behind this advancement.
Irfan Pardesi, the avantgarde and forward-thinking CEO of ACM Gold, who pioneered the provision of domestic-market FX trading across Africa, and Jannick Malling, the hirsute and urbane founder and CEO of Tradable discussed candidly the rationale behind the move with LeapRate, as well as how to leverage the opportunities in Africa from a brokerage and technology perspective.
When considering what clients in Africa look for in a trading platform, and how Tradable’s app based nature forms a synergy with ACM Gold’s specific client base in South Africa, and indeed the continent as a whole, Mr. Pardesi explained “I believe the requirements from a platform are the same across the board. There is more similarity between what an experienced trader is looking for in Europe and what an experienced trader looks for in Africa than putting Africa’s requirements as a separate set. There is one difference, though. Africa seems to have skipped a bit of the desktop revolution, not so much in South Africa, but definitely in other parts. This has resulted in requiring more functionality on a Tablet and smartphone experience.”
“I believe that the ability to customize your experience using an app based model is key for diverse markets like Africa. Different countries on the continent are at different stages of their evolution in terms of looking at FX as an alternative asset. This strategic partnership with Tradable allows us to really micro segment our clients and offer them a unique experience. There is a lack of payment solutions on the continent and that’s where ACM Gold plays a massive role. Having a local presence ourselves or through partnerships, we are in a unique position to really get things rolling. We offer local deposit facilities in a lot of African countries and that will play a big role.”
From a technology provision perspective, it is of interest to consider whether Africa is a market of real value, and to investigate as to whether it is one of the emerging markets that can turn a good profit if a platform is positioned keenly. On this basis, Mr. Malling explained to LeapRate “Absolutely. Africa is a region that holds so many different countries within it, and if you look at markets like Nigeria, Kenya and South Africa, there are signs of strong economic growth and an increasing appetite for FX as an asset class.”
“It is true that there is more friction there compared to western world countries when it comes to delivering a trading experience. It requires the right brokerage infrastructure to facilitate partnerships, payments and local service − while also delivering continous innovation and a second-to-none trading experience. And that is what this partnership is all about” said Mr. Malling.
An important consideration for all industry participants in Africa is that the African market relies substantially on Introducing Brokers, seminars and partnerships. With regard to whether the onboarding of Tradable will assist further with this preferred method of doing business, Mr. Pardesi affirmed “The reason then African Market relies on Introducing Brokers and partnerships is because not many brokers are willing to come down to the continent to set up shop. We, on the other hand, have a presence everywhere yet we strongly believe in pursuing partnerships rather than acquiring clients ourselves. It works well because relationships are enhanced when you can meet people face to face and you get greater insight when you have more feet on the street.”
“Every country has had its fair share of issues within the forex industry and more often than not these issues have been caused by an unregulated forex broker offering MT4. Once some offshore broker messes up our markets, everyone except the people that messed up feel the pain. And as strange as it may sound, customers feel MT4 is forex, and forex is MT4. That puts a dent on the credibility of the partners.”
“With a unique offering like Tradable we will have the opportunity to be very specific and diligent on who we take on as a partner. For the partners, having the ability to offer something unique to their customers will definitely result in a longer customer lifetime. Having the ability to create training courses as apps for the partners will open up a different stream of revenue for them.”
In order to offer a diversity of products, it is important to establish which platforms will be offered along Tradable now that Tradable is entering the continental market on a widespread level, and how Mr. Pardesi views the percentage split in terms of end user popularity.
“We believe very strongly in Tradable’s roadmap and we believe in the way they are conducting business. MT4 has been a very popular platform over the years. However, in my opinion, it is the Blackberry of our industry. The real question is where in the cycle are we right now? There will be customers who will want MT4 as an alternative or Prodigy, which is another platform that we use. However in the coming years we see the majority of the business will be going through Tradable” he explained.
As a dedicated professional who clearly understands what attributes are necessary to remain at the forefront of technology, Mr. Malling detailed to LeapRate what the programming ability of traders in Africa is like compared to other regions, insofar as developing their own trading apps for Tradable. “This is not something we’ve really looked into, because frankly it doesn’t have a real impact on our business” Mr. Malling conferred.
“Generally, the easier you make it for people to learn coding languages, the more flexibility you take away from what they’re able to build. From the outset of creating Tradable, we made a concious decisions that if we are to deliver a fundamentally better experience by allowing third-party developers to build anything and give them the flexibility we feel they deserve, we can’t have it as a side-mission or a KPI that x % of the users need to be able to code apps themselves. So this is not something we are really focusing on” he said.
“The key thing is that we can get high-quality 3rd party developers to build amazing app experiences on top of our platform, with any sort of functionality that allows them to diversify themselves and build rich user interfaces that align with their visual identities − a stance which so far has been very well received in the 3rd party dev community. And while I’m sure there is lots of local innovation to be harnessed across the region, our appstore model is as much about delivering innovation across barriers and allowing clients in Africa to utilize the apps and services already build” he stated.
Indeed, capitalization is important, therefore Mr. Pardesi detailed the model by which Tradable will be provided to traders. “We are already a very competitive broker and with Tradable we will be in an even stronger position to offer a better trading experience. I believe most brokers are in the market of managing relationships because there isn’t much that’s differentiating one broker from another other when it comes down to their offering.”
“We want to be in a world where we can offer an experience rather than just a run of the mill product. We might see some fall in volumes initially because traders have resistance to change. In the longer term, you always find people who believe what you believe and the Tradable experience is exciting.”
It is well recognized that Africa is a vast continent whose consumers favor a localized approach, a matter which ACM Gold has mastered, therefore ascertaining which African country is home to the fastest expanding markets, and what the traders in such regions demand from their broker is an interesting matter. Mr. Pardesi concurred “Every trader is looking for security and local support. This is where we come in. It’s very important for traders to be able to deal with someone that is locally regulated and in the coming years this will become increasingly important. I believe Nigeria, Kenya and South Africa are the most rapidly expanding markets.”
Mr. Malling’s perspective reflects this line of thinking, and concurs that many clients in Africa like to have a personal relationship with their brokerage, via seminars and IB conventions. An innovative and interesting means of furthering this is Tradable’s prediliction for group programming events. LeapRate was therefore very keen to understand if Tradable has any plans to become involved in tech-focused events such as hackathons in Africa to further the development and bring in more Africa-specific applications. “The first forex and trading hackathons we started in NYC a few years back as an experiment, has really become a key activity for us” said Mr. Malling. ”
Aside from experimenting with new trading features, it’s grown to become a unique way of driving and harnessing local innovation from the markets we are present in. I think this holds true for all the markets we have entered thus far, and I’m sure it will be true for the various African countries as well” he said.
It is widely recognized that Africa has infrastructural challenges, therefore how Tradable can overcome internet connectivity issues that are prevalent in many African countries in order to give it a reliable execution cycle is a poignant issue. “Without going into too many technical details, I can say that the offering will include both desktop, mobile and tablet platforms, making the ACM/Tradable service available from wherever you are. We are working on a lot of next-generation mobile initiatives that we feel can make a huge difference particularly in emerging market” explained Mr. Malling.
With customer acquisition costs for new business in Western markets at an all-time high, it is perhaps a reasonable notion that ACM Gold and Tradable are at a substantial advantage by expanding their services via a modern platform across Africa. In explaining how Africa’s market differs from the high customer retention and acquisition costs of the West, and how the Tradable platform can be positioned to give an edge over that of competitors with b-book MT4 products from overseas, Mr. Pardesi shrewdly conveyed that “We look at things in a very different way in Africa. It is not a numbers game where a customer is just another number through the funnel.”
“We at ACM Gold not only know our customers’ family members, we also know a whole lot more about them. There will always be people who would rather go with an offshore broker with aggressive sales tactics, but we understand that people do business with people and as long as we are striving to give traders a better overall experience with local expertise, we are not worried. Tradable is a big jump towards a better experience” he concluded.
Perhaps not everything is down to cost, but it is a very important consideration, therefore Mr. Malling reviewed how he sees most important facet of a trading platform for the African market, and how cost factors into the decision of a broker and an end user. “I think there is a difference between how this question is answered today and in 5 years from now. Frankly, most brokers today simply compete on service and pricing” he explained.
“When spreads are a race to zero, the profitability of brokers worsen and many brokers look to “short-cuts” in terms of compliance and service to reduce cost, which ends up hurting everybody − even the end-user clients − as pointed out above. Therefore, I think the brokers that will last in the industry are the ones who commit to delivering competitive pricing, while sustaining a high-quality service level a second-to-none, differentiated trading experience.”
Mr. Malling concluded by stating that “You need a strategy for how you want to innovate and present new opportunities for your clientele on a continous basis (like with any business, really). Tradable acts as a platform for that, and we’re excited to work with ACM Gold who has the right beliefs for how a brokerage business should be run, both now and in the future.”
Photographs: Top Right: ACM Gold CEO Irfan Pardesi. Lower Left: Jannick Malling, CEO, Tradable.