Serving clients in the right way sets best banks apart

Flicking through the results and write-ups of the Best Banks Awards of recent years, what is striking is just how many banks claim their differentiator in challenging market conditions has been to continue to provide liquidity to the market and to always put their clients first, staying close to them at all times.

Not to demean the performance of any of the winners, but it's tempting to ask exactly what banks tend to put first if not their clients – is it really enough for a bank to say it adds value just by serving its clients? That's probably a valid question in any sector, whether private or public. If an institution doesn't answer the needs of its users at all times, whether challenging or not, it's difficult to know quite how it manages to stay in business.

In the world of foreign exchange, 2011 has certainly been a challening year, that has at times baffled even the most experienced participants. The deteriorating eurozone crisis, central bank intervention in Japan and Switzerland and the resulting volatility, and continuing uncertainty over how exactly regulation will affect the FX market have all tested both the buy side and the sell side to the limit.

This year's Best Banks survey polled thousands of banks, brokers, investors and corporates between mid-August and mid-September. Given market conditions at that time and the move by the Swiss National Bank to impose a floor on EUR/CHF on September 6, there is arguably no better time to have asked clients about their favourite counterparties.

What has become clear from interviewing those banks that were ranked top in the survey is that success in FX today is about more than just serving clients at the expense of everything else. It is about striking the correct balance between a number of key factors – innovation, capacity and resilience to name just a few.

The 2011 story told by the top banks is about how they have used their expertise to be prudent in volatile markets without shying away from the volatility, and also about how they have carefully assessed the challenges faced by clients and tried to deliver the most appropriate kind of innovation. While it might not necessarily be the complex structured products that have won FX flow this year, innovation still has its place if it answers the needs of end-users.

It is too early to predict with any certainty what next year will bring for the FX market, but the ability of banks to answer the needs of their clients with the tools and trades that genuinely suit market conditions will be as important in 2012 as it was in 2011.