Banks Receiving Healthy FX Competition in Asia

Businesses are increasingly managing their foreign exchange (FX) exposure with an FX provider or competitor of their primary banker, according to a report from East & Partners.

The Australian banking market research and analysis firm’s
Asia Business Foreign Exchange report
notes that the amount of “home banked business FX products has rapidly declined in Asia, due to a rise in competitive business FX offerings. Banks and FX providers are competing fiercely for dominance of spot FX, forward FX and FX options.”

Analysing FX customer dynamics across Hong Kong, Malaysia, the Philippines and Singapore, the report reveals trends in how banks approach existing and new FX customers. East & Partners surveyed 250 enterprises in each market, looking into FX product usage and importance.

Spot FX has achieved the highest average level of product penetration in Asia. Forward FX and FX options represent 21.0% and 19.4% product penetration respectively, highlighting a disparity between large and small businesses uptake of specialised business FX products. Singapore represents just over a third of regional penetration in both options and forwards products, followed by Hong Kong, the Philippines and Malaysia.

In order for banks to retain customers, improve wallet share and capitalise on an increasingly competitive market, East & Partners recommends banks improve on customer satisfaction. Smaller scale FX providers reportedly achieve the highest satisfaction levels.

The report identifies a handful of banks and FX providers who are placing themselves at the forefront of Asian businesses minds, with resulting market share and wallet share gains to follow. Australian bank ANZ has observed customers dispersing their business FX wallet across multiple providers.

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