How Tech Trends Affect Online Trading in Asia – iFX EXPO Asia 2023
Jon Light, Devexperts’ Head of OTC Product, took part in a panel discussion on “The Asian Century: Tech Trends In Online Trading” at the iFX EXPO Asia 2023 in Bangkok. In the following article, we’ll share his thoughts along with what Evgeny Sorokin, our Chief Product Officer, and Sergey Afanasiev, Account Manager, added on the topic.
Q: How has the rise of technology and digitalization impacted the growth and accessibility of online trading in Asia?
Jon: We are seeing a lot more brokers signing up to DXtrade from the APAC region. For the past year more than 60% of our OTC clients have been from this region.
Technology including fast internet speeds, mobile phones, and crypto have all been the biggest driver.
Looking at the age demographics of countries in this region like the Philippines and Indonesia they have a large number of younger generations in their teens and 20s. They are better educated than ever before, and the majority have a mobile in their pocket and this brings a lot of space for growth in online trading offerings. So these areas have already grown a lot, but I believe it’s just the start.
As well as crypto we have also seen a big interest coming from Asia for Exchange traded instruments, mainly US stocks. It seems everyone wants to be able to buy and sell Apple or Tesla, and the new breed of US clearing agents is helping make that much easier for brokers.
Social trading has also been a big driver, especially during Covid when users were even more glued to their phones. This really simplifies the trading experience, is easy to use, and increases adoption even more as users share their experiences.
Evgeny: Obviously, the rise of technology and digitalization has significantly impacted the growth and accessibility of online trading around the globe. Asia, in particular, enjoys a wide range of high-quality regional vendors, as well as global players who are present here. The mobile-first paradigm, social trading platforms, and robo-advisors have made it easier for individuals to manage their investments or trade on the go. Additionally, Covid has amplified the interest in online trading in Asia and pushed vendors to accelerate their tech upgrades regarding mobile trading
Q: In what ways have mobile trading platforms and apps influenced the adoption of online forex trading among Asian investors?
Jon: In Asia, you must be mobile first and you must have seamless integration with all services. You can’t have traders logging into different places for deposits, trading, and account management. it must be in one easy-to-navigate app.
Thailand, the Philippines, and Indonesia are 3 countries that spend the most amount of time on their phones. And most traders only have access to a phone, this is their primary device.
There are a few things to consider for brokers with an app:
Although these counties have an increasing number of people learning English, you must have the application translated into the local language, and it’s very beneficial to include localized education, news, and analysis.
Although internet speeds are fast and there is major adoption of 5g infrastructure in the cities, there are still many areas not covered by such fast internet, because of this its also important to have an app that is carefully built to handle these situations and not be too dependent on downloading all the time, this is one of the main benefits to having a dedicated application rather than a mobile website for trading or iframing to a website from an app.
In Asia more than anywhere we have heard the term supper app mentioned. these are the single apps that contain everything from banking, ordering a taxi, food, and trading, we have seen a lot of partnerships between tech companies and brokers, it gives brokers instant access to a large client base already with an app, access to funds, and trust.
Evgeny: Mobile trading has become a new habit for trading on the go. Research shows that the usage of phones in Asia is nearly double that of desktops, at 64% compared to 34%. Therefore, mobile trading apps have significantly influenced the adoption of online forex trading among Asian investors. It is perceived as something simpler, easier, and more convenient. Banking apps have also amplified this trend, as users have become accustomed to managing their funds on their phones, making it more natural to engage in investments or trade on the go.
Our own research has shown that, although this may vary among brokers, the number of trades placed by users can quadruple when a mobile trading app is introduced in addition to pre-existing web/desktop terminals. While it’s true that everyone now has an app, and the value of this increase has already been realized, mobile trading remains prominent, especially in Asia.
Sergey: In a lot of countries within the Asian market, mobile devices used to be the first and only computational device people had. Even though the adoption of computers is growing, mobile is still the main way of interacting with online services, except the cases where it does not deliver a proper experience. Current technology allows us to provide fast, reliable, and easy-to-use trading from mobile devices – thus, forex trading will remain mobile-first anytime soon.
Q: In what ways has the emergence of blockchain and cryptocurrencies affected forex trading practices in Asia?
Jon: I see the 2 types of asset classes driving a difference for the traders. CFDs don’t have the best reputation and are the opposite of everything that crypto purists are against. There are differences in the way platforms look and feel. A crypto trader will not want to trade crypto on a traditional-looking CFD platform. The crypto platforms and the way they interact were reinvented by the likes of Binance, Coinbase, and Kraken.
As Crypto traders during the crypto winter look to other instruments like CFDs, they want the platform to feel like a crypto platform. We had a lot of requests to “make the Web Trader look like Binance” and make it “much more simple to use”, so this is something we are now rolling out.
As well as brokerage software we also build software for exchanges, traditionally US equity exchanges, but we are seeing more Asian crypto exchanges taking this financial grade tech to ensure they provide a great service as their client base grows. One client particularly, who is the largest crypto exchange in their country, originally had their platform developed by the co-founder who had no experience in this area, it became very successful, so we had to swap out the backend with our low latency high-speed matching engine. For most of their clients, the concept of trading was not even known 10 years ago, now it’s part of everyday life.
Evgeny: Cryptocurrencies have introduced a new asset class for trading. Individuals who, for various reasons, were deterred from Forex and CFDs have embraced alternative investment assets such as spot crypto or perpetual futures. Interestingly, the same reasons that led these users to avoid CFDs still exist in perpetual, and the volatility of cryptocurrencies makes trading even riskier compared to forex. Nevertheless, this has attracted a different audience, and these neighboring trading segments have become closer, exchanging best practices
Perhaps we can mention some specific companies like Chainlink, who are leveraging blockchain to provide reliable and tamper-proof data feeds for forex trading
Q: What are the most important factors that traders should consider when choosing a forex trading platform, with a focus on AI-powered platforms?
Jon: There are many types of traders, and they will have different opinions about what is most important to them. The core part of a trading platform is to see prices, send orders and execute trades. At this most basic level, traders are not likely to choose a trading platform just because it uses an element of AI. The main factors are reliability, security, ease of use, and the range of trading tools.
But I believe that AI can definitely help get traders signed up, especially if you can make it seamless, and this goes across multiple types of traders.
The most basic trader who doesn’t fully understand the markets can benefit from AI to see market sentiment and place complex orders all the way through to the creation of algos without having to get very technical.
The more sophisticated trader is going to use AI to enhance their trading experience, helping to analyze datasets, compare different instruments and asset classes, backtest strategies, and enhance their algos.
I would say that AI has the potential to bring algo trading to the masses without having a full understanding, this can be great, but traders must also be aware of the downside, there is the possibility of losing more of their deposit here, these algos are untested, could have bugs or go rouge.
In addition, the majority of retail brokers are not running low latency, infrastructure that is co-located, so traders will run into issues if they expect all orders to be filled at the price. And if everyone is running the same type of algo could create systemic market issues.
One area that we have seen a lot of interest in is customer support and education. We added Devexa which is an AI tool for automating support queries and helping users get educated with the platform. This is used a lot for the younger generation as we can even plug this into Telegram and WhatsApp, then users can interact directly from a terminal they are used to.
Evgeny: There is a famous quote by Jeff Bezos that the company should focus on what will not change. When choosing a forex trading platform, traders should consider factors such as the platform’s reliability, security, ease of use, and the range of trading tools it offers. All this has existed before and is here to stay. AI can be applied throughout to help traders make informed decisions easier, more specifically it boils down to predictive analytics. And of course, EA trading of all kinds will receive a boost. The providers will be claiming that now their algos are AI-powered (although this is rarely true in the retail space). Traders should be aware of the risks and potential errors associated with algorithmic trading.
Q: What are the key technological factors that Asian brokers should consider, and how can they differentiate themselves in this competitive landscape from other brokers?
Jon: Asia has so many cultures, languages, and people. The most successful brokers have been the ones that really understand their local markets. So having a platform that is mobile-first, that they can differentiate themselves is crucial. You can’t roll out a standard app and expect it to catch on in Asia.
One interesting thing we have seen with our own clients is the difference of opinion in localizing the language. The majority of trading terms originate in English, and there are no direct translations in many cases. We have had clients speaking the same language with very different ideas on how the platform has been translated. This is why we let the brokers take direct control of all the translations themselves, which is a simple but effective process. It means that brokers can really tailor the platform to their exact client base, a simple retail trader is going to understand terms differently than an experienced trader for example.
Different cultures here have very different perceptions even when it comes to the colours of the bar charts. As I have mentioned already brokers must offer a mobile app, not a mobile website or mobile website pretending to be an app.
You need an open platform that can be plugged into 3rd parties or a broker’s own systems, to put the right offering together.
Brokers need to offer a seamless experience with the ability to have custom widgets directly embedded into the frontend, traders don’t want to have to go to another place to signup, deposit, see reports, or unique features that are supporting, it must be all in the same place, otherwise, you lose their focus and they start doing something else, a brokers priority must be to keep their traders in the platform, engaged with everything they need to make decisions and trade.
Evgeny: AI to engage with the clients, AI to manage the risks, AI to help the clients trade more and increase their LTV. As before, they should focus on providing a seamless user experience, robust security measures, and a wide range of trading tools.