FX MANAGEMENT
management process means a treasury is doing much more than just a currency hedge,” she adds.
To achieve this though, requires working in partnership to build appropriate solutions, rather than a rush to market to buy a number of off-the-shelf technologies that have to be linked together. A consultative approach is needed, adds Whelan’s colleague Johnny Grimes, Managing Director and Global Head of Liquidity Product, Transactional FX. “Technological transformation has to compete with a lot of other items on treasuries’ ‘to-do’ lists. So transforming into the digital space needs to come at the right time for these companies. It is really about finding the right trigger point to initiate that transformation process, and that comes through open discussions.”
Growth strategies Perhaps the most persuasive argument for workflow automation is to help a company expand. Although many grow organically, as noted, others also build out through mergers and acquisitions – and this represents challenges for the corporate treasury as more complexity is introduced into processes. “As firms grow in this way it adds to the already disjointed data processes they need to support,” says Marchal. “Using automation to combine these data processes is key to developing the right solutions.
“There are more parts of the business delivering data, often over different time horizons. By working closely with corporates, we can understand their transactional data patterns and develop the ideal solution to access that data, and use it to maintain effective hedging and cash management.”
Geographical expansion also represents a challenge. Establishing a physical presence
The number of Asia 53 Pacific currency regimes
is difficult – and was even before Covid-19. As Whelan notes, Asia Pacific has many regional nuances and a wide range of currency regimes, making it more complex to do business in than other regions. A bank can help to overcome these challenges and open borders to new business.
Treasuries are highly motivated to achieve efficiencies
Yannick Marchal, Managing Director, Global Head of Autobahn Maestro, Deutsche Bank
This is especially important when it comes to restricted currencies where non- deliverable forwards (NDFs) are widely used for hedging. “A treasury using NDFs to hedge probably also needs to make and receive payments onshore,” she observes. “We can help by linking the hedging programme to the payment collection function, while ensuring that local regulations are observed. Removing a major pain point from the process allows the company to focus on what it does best.”
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For others though, it is about new markets. In the digital age, a growing number of companies are looking to deliver products remotely, without a local presence. “Many companies in the digital space want to see how their business goes in new markets before committing physical resources,” says Grimes. “These firms also still want to manage the financial side of the business at a central level. They don’t want to outsource small pockets of risk, they want to manage it from a central perspective, which requires a holistic solution.”
For many businesses, the current environment and length of the pandemic is putting treasury efficiency under particular scrutiny. Those adversely affected by Covid-19 could see a bounce back in growth, which in itself puts pressure on operations.
This means challenging existing perceptions about automation and being open to the potential benefits. What it does not mean is giving up control over cash management and hedging decisions. For some this will represent a big step into the unknown. Yet, as with so many successful solutions, the journey will start with a conversation about what is achievable.
Colin Lambert is a freelance financial journalist and publisher of
thefullfx.com. He was previously a columnist for the FX news and events website Profit & Loss
Sources 1
See
https://bit.ly/3uvpR6z at
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