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Site Allows Everyone to Play the Forex Game
Business Market Place by Pam Kershaw - Sydney Morning Herald, 02 February 2002Gaining businesses and consumer confidence in the finance, services sector is virtually impossible without a credible and trusted brand name.So when Matthew Gilmour launched his foreign exchange Web site in 1998, it would be three years before he would offer on online forex payments service. Gilmour, who has more than a decade of forex experience - his CV includes senior positions with BT Australia and UBS Warburg in Singapore - initially launched OzForex as a free "download of all my foreign exchange experience". To build credibility and a critical mass of traffic, he began offering syndicated forex information to other sites. "To build critical mass, you have to have a good Web site and you need the exposure elsewhere" Gilmour says. "So we build quite a few different tools we could offer to other Web sites in return for exposure." Tools, which were then typically offered free of charge, included currency converters and charts, each carrying links to the OzForex site. Gilmour, who now syndicates to more than 400 sites and customize content for major players such as Monster.com and Webwombat, is unsure how many visitors come via such links. "We know it works but we don't actually monitor how many people click through from other sites," he says. "Certainly, in the early days it was a big part of our site growth." OzForex now claims more than 100,000 visitors a month and, since launching its online payments system in April last year, aims to convert between 0.5 per cent and 1 per cent of visitors to transaction clients. Currency payments now account for about 40 per cent of income, site sponsorship for 40 per cent and data sales for 20 per cent. Ultimately, such payments are expected to generate 70 per cent of income, sponsorship 20 per cent and data sales 10 per cent. Because OzForex's transactions are carried out entirely online, Gilmour says he is able to offer small to medium sized enterprises (SMEs) and individuals more competitive rates than banks and other mainstream providers. For example, if the major providers were charging a margin of between 1.2 per cent and 2 per cent on the underlying interbank rate, Gilmour says OzForex would charge between 0.6 per cent and 0.8 per cent. Rates vary depending on the liquidity of various currencies. A comparison of rates from OzForex and major providers is available on the Web site, making the forex market as transparent for SMEs as it is for large enterprises and institutions. "The thing that made it grow so fast is that forex is quite an opaque market," he says. "In equities, you know where the price is. But in forex, unless you're subscribing to Reuters or Bloomberg, most clients didn't really know where the market was. "They trusted banks to give them the rate they thought was fair. What they did was take the information paradigm that the institutional investors were using and started delivering it to the smaller customers." OzForex also automatically alerts clients about currency shifts. "It comes back to bringing this big-end-of-town service mentality to smaller clients," Gilmour says. "If you're a big institutional investor and the currency moves half a per cent, you expect your bank to give you a call." Via the site, clients can enter a targeted rate for any of the currencies listed and will receive an SMS message when it is reached. OzForex offers a telephone service for site newcomers and regulars who have forex queries. Gilmour and his three staffers are automatically alerted when a new visitors logs on and will make a courtesy phone call. "Every single time we've done that," he says, "we find the client has at least one question as to how it works." OzForex uses Custom House Currency Exchange (CHCE) as it clearing partner in an arrangement that sees OzForex originate the business and manage customer service, with CHCE processing deals. About 80 per cent of dealing clients become repeat clients. A significant amount of new business comes from word-of-mouth referrals. Gilmour launched a non-transactional version of the OzForex site in Singapore in 2000. He will eventually convert this into a transactional site, a strategy he intends repeating in other markets, including New Zealand and the UK. "We will let them grow in terms of traffic until it becomes viable to implement e-commerce to those sites as well," he says. He is also forging new partnerships to boost traffic to OzForex, including an agreement with the Gift and Homewares Association that sees association members receive discounted fees. The OzForex payments service was integrated late last year to the UK-based ent-live.com site, heavily used by expatriate Australians. Individuals make up 30 per cent of OzForex users. Corporates account for the balance. Gilmour wholly owns OzForex. He has privately funded the business and has no plans for a float. pam@kershaw.com.au Original Article  Back to Media Centre |
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