Building a unique brand in a crowded market
An interview with OFX’s CEO Skander Malcolm
In an interview with FXCintelligence's CEO Daniel Webber, OFX’s CEO Skander Malcolm shares insight into a range of topics like positioning yourself in a crowded market and building trust in a highly regulated and competitive industry.
Having joined the company in early 2017, Skander has been part of re-building OFX’s share prices after a rocky few years prior. OFX continues to focus on providing strong customer support, coupled with leading edge technology to bring the best products to consumers, businesses and online sellers.
On building a differentiated brand in a crowded marketWe've done a lot of work to help clarify who we are targeting across both consumers and SME's, and, indeed, in the future more on the enterprise side, as well. We did a global segmentation of customers and some market research to understand what they valued.
Interestingly, what we found was that in what we do well and what our target segments want, it's actually not that crowded where we operate and it's also very, very deep, it's a huge space which you know very well.
We've been differentiating on at a minimum, a very competitive price, but, more importantly, what I would call a strong balance between human and digital. We've invested a lot in the last 18 months, in fact, the last three to five years in our digital platform. We’re also really driving up the human aspect, of the service, the 24/7, people being able to talk to someone. Particularly, consumers and SME's that we target, that's what they value.
A lot of the new entrants, as you know, have been doing a fantastic job on digital and are very strong in the marketing space. Probably, less strong on balancing that with human interaction and really, that's how we've brought the growth back in the company and how we feel differentiated today.
On how OFX has segmented its customer baseSegments are attitudinal, categories are factual, so attitudinally we've gone around the world and done a deep segmentation exercise and developed five segments, and this is for people, consumers, who are interested in or have done any kind of cross-border transfer over the last 18 months. We pulled further apart on how consumers feel, and their attitudes, and what they physically do.
It's the attitudinal segmentation that really drove how we go to market and how we build out our value proposition. Having a good digital experience, no question, was essential, you didn't get a ticket to play, but if you wanted to access the higher value category, then the service piece was what came with it. That's really what we've seen, particularly over the last 18 months.
"We've been differentiating on at a minimum, a very competitive price, but, more importantly, what I would call a strong balance between human and digital."- Skander Malcolm
How OFX uses Net Promoter ScoresThe way we think about the metrics, there are input metrics and output metrics. NPS is a really good output metric, it tells us about a customer who has been through our process or a sub-process and how they feel. We track that, in fact we've overhauled it in the last 18 months substantially. We used to do what a lot of what the industry does which is produce a single relationship number. We actually do transactional NPS now, so we go into the sub-processes as well.
As to the client experience, we look at clients differently who are less than 12 months and between one and three years, and those more than three years. We look at the customer journeys and we look at the scores within that. For example, traditionally we would have one score and we could say our NPS score is x, which by the way was always very strong. Now what we do is we say for a client who is less than 12 months old, this is the overall score but here is our score for the onboarding process. Here is our score based on the first transaction, here is our score based on 12 months of engagement. What that's allowed us to do is say "Okay, at an overall level we might be, say 63" which you would say "Wow, that's incredible." But actually, in the onboarding, it would be a lower number than let's say when they get their first transaction completed. That allows us to direct our capex [capital expenditure] particularly and our opex [operating expenditure] around where we should invest.
Other output metrics OFX focuses onWe actually use a whole bunch of other output metrics which give you good proxy for how your clients feel about you. For example, the number of active clients, the transactions for active clients, the number of referrals, all of those are good proxies for how engaged your client base is. You can then slice them up by the consumer clients, corporate clients, geography.
We have 500 people selling and 300 people building stuff, mostly tech, and all of these people in all of these markets are just filling the company with more data.
Input metrics OFX focuses onThe one that we developed, like everyone else, and always measured is conversion rate. This was the proportion of customers who had registered with us who have then gone on to deal within 90 days, and we call that a conversion ratio. That is valuable, because it tells you how efficient you are and how engaged the customer is because if a customer gets all the way through their registration process and they haven't done a deal that's a pretty quick signal that something is not going right.
We still track that, but what we actually built was what we call our choose-to-transfer ratio or CT ratio. Now what we do is we actually measure everyone who starts our registration process, at the top of that funnel and we look at every step along the way within the forms and we measure those. Step one registration complete rates, step two registration complete rates. You get a whole load of very, very valuable information around where are people dropping out even before the end of the registration process. Then you can measure conversion rates and the average values of those new dealing clients. In terms of the first-year revenue, you can obviously split that by region and between consumer and corporate.
That CT ratio, the thing that really surprised me when we really got into the details was the proportion that were dropping out along the way, even before they had got to registration complete rates. That was significantly higher than those dropping out between registration and new dealing client. That has given us tremendous insight.
When you look at the work that we've publicly talked about, the new website which rolled out in July, the new app came out in September, they have within those platforms analytic tools which allow us to look at individual behaviours within the website or within the app. That allow us to constantly tinker and improve the process. They also allow us, to run a whole range of AB testing within the forms to see what is actually causing a good experience or not good experience. That level of understanding has been fantastic, that's a good input metric.
We look at things like collapse rate now and again you can cut that straight by consumer and corporate, you can cut them by geo, and they're really good early warning indicators.
"What we actually built was what we call our choose-to-transfer ratio or CT ratio.""Now what we do is we actually measure everyone who starts our registration process, at the top of that funnel and we look at every step along the way within the forms and we measure those."
How Skander has changed the business over the past two yearsI'd say the first thing I found when I got here was this tremendous passion for the customer. I mean you can't, as it were, engender that. I found that as soon as I got on the phones, I could just hear it, I could feel it, and there was so much emotion in the customers too.
Before I got here my hypothesis was, it was kind of a trading platform that very savvy people like yourself would use to move money around, but it was far from that it was a retired Australian couple putting their life's savings into buying a place in the US. They are terribly worried about how this is all going to work and the people on the phones were doing an amazing job, not just technically but emotionally. It was the same for SME space.
Perhaps what I brought was techniques that helped people understand, essentially, to put it bluntly, where to make choices. What I found was, there was not much capex, but a lot of projects. Everyone was passionate, everyone was throwing money at all these different projects but none of them were getting completed because no one could decide which one was more important than the other. The data was always there but people weren't necessarily using it to guide which investments to make. What I'm seeing now is, no drop off in customer passion but perhaps a little bit more clarity around saying "We're going to do this because it has a bigger effect. This one here has a bigger effect on how clients feel about us. If that's our goal then we'll go with that one first then we'll get to the others later."
On the North American marketIn North America we grew at just over twenty percent in the first half, but within that, the U.S., grew 30 percent. We had a couple of little things to sort out in Canada, which are now resolved, so we expect to continue to grow strong in North America. Specifically, there, again, it's a balance of consumer and corporate, and we've also done a bunch of work in the online sellers space. In the first half, we won a big client out of New York, you probably know that actually.
Obviously consumer, as you know very well over there [the US] is better margin than other parts of the world. Still, I would say it’s at an earlier stage in terms of its development than the rest of the world. Really in the US it's incredibly fertile. We've been hiring, adding promotional expense and that's because we really see a tremendous set of opportunities.
My predecessors made the effort get all those licenses across the U.S. as it could give us a platform that not everyone else has. A lot of what you're seeing now, in terms of the enhancement on the website and the app for example is to cater for a U.S banking system. In the past what we've done is we'd say “Look, this is for an Australian or a British banking system, this is how a transaction works."
As soon as we put Mike Kennedy in the chair in North America, conducted a bunch of research. One of the first things Mike said was not “Let's go expand into the Latin American market” what he said was "Our core US client experience has not been designed for a U.S. client. It's been designed for someone else." I'm super used to a push banking system, [not ACH for example]. That's something that's already changed as of July on our website and September on the app. That will allow our U.S. clients to really operate the way they would expect to. It's a combination of product and commercial and marketing investments and it will go across consumer, corporate and enterprise.
On the Asian marketWe opened up Singapore in April with very positive initial results, interestingly both across consumer and corporate. We hired a guy out of WUBS who has already created a very nice pipeline. Hong Kong remains a very good hub for our online sellers business and we're looking at China but we're not, I would say, betting the company on China. We're going to move thoughtfully. We see the competition there being very strong and a very indigenous place that stays focused. Whereas, we want to make sure that we can support UK, Australian, American, Canadian businesses that are working across borders into China for example, as well as South East Asia.
And again, we've been adding solid people, adding marketing resource, starting up websites and so forth. You'll see more in Asia and really next fiscal year we're working on is what's the UK, European expansion.
What will OFX look like in five years time
Well, the first thing I'm saying is, who knows? You'll actually see a blog I'm about to put out on this. Anyone who tells you, "This is what it's all going to look like in five years." I'd hang a white coat on them. What I can say to you is, I think our effect will be more global. In fact, I'm certain of that.
The investments that we're making are very much around that. We've got a good platform in different regions that we have invested in. Therefore, all other things being equal we expect to grow in different regions. I think as well that we are going to be more trusted amongst our peers because we are very deliberately valuing and investing in what I call trust. There's this growth, we're making sure that the very strong, rich culture which is already invested in is also supported by better tools for our customers and that's what really builds trust over time.
You can't buy trust. You can buy a name and through virility be well known but that can very quickly be eroded. And perhaps we haven't grown as fast as some others but we've actually never really let our customers down, we've never really let our banks down, we've never let regulators down. That's something that over the next five years you'll see more and more
being an important part of our model.
I think we'll still be focused on those segments that we talked about. I expect that you'll see more enterprise clients, as you know we've been doing okay. We're building the API space. We're seeing at an enterprise client level, more and more of those clients, or prospects saying, "You know what, we'd really love to do business with folks like you, when three years ago we would have never considered anyone but a major bank. It turns out you have the capability, technically you've got a tremendous set of licenses, you've got a great service proposition, and you're very competitively priced." I think you'll see more of that from us. Fundamentally, it'll be more global, more trusted, and we feel like we've invested at a people level.
This article was originally written by FXCintel and published on ofx.com with permission.