The internet has had a stupendous impact on the financial services industry. Disproportionately so, in fact, compared to most other business sectors. But despite the many technological advances, the traditional online banking remains a very limited offering for many investors. And the number of players offering a truly integrated range of services – forex, futures, equities, FX options, not to mention ETFs and CFDs – are truly thin on the ground.
One player though that brings all these services together in one ensemble multi-product platform is Saxo Bank. Patrick Mortensen of Saxo, a global investment bank specialising in online trading and investment opportunities across all international financial markets, says it’s not just about a much broader range of capabilities.
“It’s about the easy to use practical features that each platform offers investors: professional, sophisticated features that allow retail investors the kind of access only professional and institutional investors enjoyed, until very recently.”
Sound deal
When you look at what Saxo’s trading platforms offers investors, he says, it’s a very attractive deal. “We offer embedded streaming news, research price alerts; price boards with research and search functions built into them. There are around 20,000 add-on instruments on our website that any investor can use. It’s a very sophisticated yet practical offering.”
It’s also a very fast-growing business for Saxo Bank. “In the period between 2005 and 2009 Saxo Bank saw total client fund deposits increase more than four times. During 2009, alone, deposits increased in excess of 70 percent. We’re very pleased with this result, especially in such a tough environment.”
Indeed. Part of the reason for Saxo’s success has been spurred by the international financial community’s track record. Many investors lost huge amounts of their wealth during the credit seizure. Increasingly, investors are not happy to leave their financial future to so-called financial ‘professionals’ when platforms like Saxo Bank offer the trading tools, huge amounts of information and assistance at a far lower cost.
E-Trade expansion
Saxo Bank is truly multi-product. Take a look at its home page. All trading options are clearly listed with no preference or weighting tilted towards any type of trading vehicle.
There’s also market news and in-depth analysis, plus an education section. “We best describe ourselves, I would say, as a facilitator,” says Mortensen. “We aggregate liquidity. And offer access to different exchanges, wherever in the world they are. This is a combination by which we build a technology platform.”
Saxo Bank’s recent acquisition of E-Trade Nordic cements this bank’s expansion programme and place in the Scandinavian market place, broadening its product offering and widening substantially its client base.
Crucially, this means Saxo now offers pension products – a big gain – as well as online accounts, bond offerings and, at some stage, a funds supermarket too.
State of the art
For Saxo Bank is very clear that a constantly invigorated product line-up is part and parcel of the bank’s product offering. “We aim to continually deliver new products and channels for our clients and market them at a steady stream.” He adds: “We’ve developed CFD Commodities and FX options board and earlier this year we enhanced our cash/equity product with a lot of new features that combine trading simplification with fundamental information on more than 11,000 stocks. In addition, in the Nordic region we’re providing peer analysis on the Nordic Exchanges and by June this will be expanded to the 1,000 largest stocks globally so that the retail investor will have that access to information only offered to professional investors. That’s a very big draw for many of our clients.”
The cash-equity product offering is broad and deep, as well as completely state of the art. It’s a gap that needed to be filled for a while and Mortensen is very pleased how it has been absorbed into the product line-up so successfully. “Previously we didn’t have a traditional equity offering that was state of art. We had a very sophisticated platform targeting the actual active traders but the more conservative investor trading in cash equities… Well, we were a bit behind the curve there.”
In future, Mortensen says clients’ will be able to trade online funds, possibly through a funds supermarket. But for the moment, the cash/equity offering is a breakthrough development for Saxo Bank. “It really is all what an equity investor needs,” says Mortensen, “as well as being a very good complimentary tool for the professional investor. It allows investors to take far more informed investment decisions whether by company, sector or theme.
Saxo Bank is increasingly seeing the rise of the self-directed client, particularly in the aftermath of the credit crunch. “Many private investors lost faith in their fund manager in this period,” says Mortensen. “In Merrill Lynch’s wealth report of 2009, almost half of wealthy investors reported they had lost faith in their wealth managers. That’s a huge number.”
And these investors are now asking a lot of questions from offerings like Saxo Bank – which Mortensen welcomes. “I’m very proud of being a facilitator in this respect. From a pricing perspective and stability of execution, having several providers gives a lot of stability to the end client. Also for our partners, knowing that there’s always a very high level of security in the operation. That’s also very important.”
Core values
Saxo Bank’s success is built on a number of core values, amongst them rationality, independence and integrity. Values act as principles against which all their ideas and actions can be tested says Mortensen.
“At times, it is not necessary to go through the whole thought process when an opportunity is presented because, if a productive activity meets all tests against these values, it is likely to be a success. But if it is in breach of integrity or honesty, it can be disregarded. Even if it appears to be profitable, because that kind of profitability would not be sustainable long term nor be appropriate to pursue.”
These words are refreshing to hear from a financial services professional. Mortensen is alert to the accusations fired at the industry in the last 18 months. Saxo’s banking model is different to the type of carnage and greed seen on Wall Street and in the City of London claims Mortensen. “We carefully explain our services to clients as well as the risks and opportunities they face. Saxo Bank’s actions are thereby consistent with our values. We do what we say and say what we mean.”
Talking to Mortensen, you quickly get the idea that being up-front and clear about his product offering is very important. He’s proud and pleased that, as a financial facilitator, his business provides immense client stability.
“The same is true for our partners. They know that there are exceptional levels of security built into our offering. That makes me proud to be part of Saxo Bank. We’ve achieved an awful lot from modest beginnings.”
Looking ahead
The market has gone into a fairly complacent phase currently thinks Mortensen. Trading ranges could indeed incur a dip later in the year. “I think that by autumn, reality will have returned.” But Saxo is confident that trading conditions will continue to attract many, whatever the external conditions throw at Saxo Bank’s business model.
“Our model was very resistant to the credit crisis generally. Sure, we suffered to some extent, along with everyone else. But our platform has many, many risk management features built in, coupled with no engagement in traditional lending activities and no dependence on traditional loan financing business, our business model has proven successful for Saxo Bank and our more than 400 partners world-wide.”
What Saxo Bank does:
– Provides investment and trading services catering to investors and institutional clients.
– Using SaxoTrader, SaxoWebTrader and SaxoMobileTrader, the award-winning, multi-asset online platforms, clients trade FX, CFDs, Stocks, Fixed income, Futures, Commodity CFDs, ETFs, Options and other derivatives.
– Saxo’s white label partner program combines the Bank’s technology, resources and liquidity with partner local market knowledge, regional expertise and language skills.
– Large institutional banks and smaller brokers, can offer their clients the best trading platform without investing in developing their own IT solutions – simply by using Saxo Bank’s technology and support, to quickly launch, effectively market, run and optimise an online trading business.
– Has fast execution (streaming of 3-4 prices per second on 160 currency crosses) and a reliable trading environment (99.95 percent avg. uptime in 2009).
Saxo Bank – a brief history
– Founded in 1992 by co-CEOs Lars Seier Christensen and Kim Fournais.
– Saxo Bank was among the first financial institutions in the world to develop an Internet-based information and investment trading platform. From the outset, the Bank emphasised technology as a vital element for being competitive in the online trading industry. Saxo Bank has built a global base of white label partners, retail clients, corporations and financial institutions from its headquarters in Denmark and numerous regional offices. – Since receiving European bank status in June 2001, Saxo Bank has positioned itself as a leading player in online trading thanks to its superior client service, competitive pricing and its focus on developing industry-leading trading platforms.
Patrick Mortenson is a director at SaxoBank
For more information email: pmo@saxobank.com
