Although binary options have been around for a long time, it wasn’t until 2008 that marketing of the product to retail clients began to pick. Since then, there has been rapid growth within the binary options trading sector with what seems like weekly announcements of new brands or tech providers coming to market. In last quarter’s Forex Magnates report, we took a look at the industry and profiled four technology providers that are helping brokers to offer binary trading to their customers.
When talking to technology providers about binary options, there are two advantages that nearly every company mentions; simplicity and conversions. Simplicity is based on the ease to educate clients of the product. Rather than customers needing to understand overall moves in the market, with binaries, the question boils down to “do you think such and such trading instruments is going down or up.” By simply creating platforms where you click this button if you think it is going higher, no matter by how much, binary providers are able to provide much easier to understand user interfaces. The simplicity leads to next advantage; conversions. By creating an easier to understand product, binary providers believe that brokers will see a higher percentages of conversions than with a standard forex trading offering.
For forex brokers thinking about providing binary options, there are four questions to consider before providing binaries. One, will a binary option offering be incorporated within an existing brand or be run as a separate unit? Two, how will the binary platforms integrate with existing company software? This becomes important for firms that prefer to consolidate their back office within one CRM.
Three, what is the anticipated CPA and LTV of each client? These figures vary on region; with estimates of LTVs ranging from $500 in countries with typically smaller accounts to $2000 for more affluent customers. Depending on how a company markets its binaries offering, it very well may not be worth it. Last, for companies planning on offering binaries and forex side by side, how will the two products affect each other’s revenues?
Launching in 2008, SpotOption views themselves as pioneers within the industry. The company markets itself as a providing an end to end solution for its white label partners. This includes a front end trading engine, risk management, payment processing, CRM, and CMS. SpotOption can also provide retention teams to help with client conversions. The company currently has signed on 70 white label partners and also has relationships with leading forex systems providers Leverate and Meta Quotes. According to Tammt Levy, SpotOption Director of Marketing, “We offer a stepping stone into traditional forex with our simple yet multi layered approach.”
Like SpotOption, Techfinancial’s co-CEO Eyal Rosenblum also views binary options as a hook towards educating clients to become full traders, and that “Techfinancials believes that binary options are a simple gateway to (the) financial markets.” What Techfinancials has done, is form their trading platform, OrcaPlus, into a financial analysis tool. By creating functions for traders to analyze the markets and receive probabilities for their trading strategies, it leads to greater customer engagement.
When speaking to Tradesmarter, one word that they will repeat is conversion, conversion, conversion. They claim to offer the industry’s highest conversion rates by creating a binary option platform that can appeal to newbie’s and trades alike. As Jonathan Leon Avital, CEO of Tradesmarter states, “By handling the “traders” with advanced features and the “gamers’ with simplicity to get involved, we are able to achieve the highest conversion rate in the market.”
Among the various providers, MarketsPulse claims to be the “only binary options technology provider focused on ‘enterprise class’ companies. These are brokers that have an existing customer base and don’t need a white label. They want a technology solution that can enable them to begin offering binary options to their customers quickly and integrates with their current backend software. As explained by CEO Racheli Esman, “The product is a lot more than just a website with a changeable logo hosted on our servers. We customize, integrate, and locally install the entire product. That means that the technology is installed on clients’ servers and no data is sent back to MarketsPulse.”
This article is an adoption of our much larger report on Binary Options in our Q2 Forex Market Report.