Rupert Lee-Browne: How I changed the FX industry

On a family holiday in Italy, Rupert Lee-Browne was shocked at the poor rate his wife was offered to exchange her travellers' cheques. She then "spent ages looking for somewhere that would accept them". Years later Lee-Browne, now 44, developed a foreign-exchange business that has "changed the industry".

It was in the early 1990s, working as a consultant to a currency firm planning its initial public offering, that he got an insider's glimpse of an "unregulated, shoddy and sales driven" industry. Having amassed a wealth of contacts and with the support of several 'angel investors' (who pledged to back him to the tune of £250,000), he set to work on a business model that would access the wholesale foreign-exchange (FX) market and offer "the best price" to retail customers. His plans were scuppered when "one by one, each for their own individual reasons, the investors pulled out".

With just £25,000 of his own funds, he pressed ahead with a "slimmed-down" version of the business. His problem was persuading banks to enter into currency agreements with such a small firm. "I spent months trying to speak to the right people but they just weren't interested." Eventually, a "small, private bank" decided to get involved and in 2003 Caxton FX was formed.

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Lee-Browne hastily spent money on advertisements in foreign property magazines, as "their readers stood the most to gain" from Caxton's competitive rates. He was also determined that his firm would have a "different sales culture". He ditched sales bonuses and rewarded "improved customer value". It worked. "In a nutshell we could offer better rates than the banks as we had much smaller overheads while our customer service made us more enjoyable to use than some of our exchange specialist rivals." In another smart move, Caxton become the first currency exchange firm to be regulated by the FSA. "Looking back it's unbelievable that unregulated firms were handling such large amounts of money." By the end of the first year the firm had handled £65m of currency and made a gross profit of £250,000. By 2007 these figures had more than tripled.

Next, Lee-Browne looked at cash currency cards. Customers had been asking "how they could avoid being ripped off" by Bureau de Changes and existing pre-paid cards. In response, he launched the Caxton Euro Card. "The advantages of an ATM over the Bureau de Change model were obvious", while the pre-paid cards on the market were "ridiculously expensive". His firm was able to incorporate banks' fees for using ATMs into the exchange rate while still "offering customers value". Expecting extra customers he decided to outsource the call centre for the new service a "disastrous decision. Our strong point was our customer service and we lost that." So he changed tack and installed one in the firm's Hyde Park Corner HQ. Now Caxton "must have the most expensive call centre in Britain".

The pre-paid cards fuelled growth for Caxton FX: in 2009, it handled £500m and generated £4m gross profit. But he's not finished yet Lee-Browne is convinced his cards "will replace travellers cheques in the pockets of every British traveller".