There's no one-size-fits-all solution in forex, says Standard Bank's Richard de Roos
“Everyone has a different way of thinking about FX and settling and hedging their FX and we must solve and understand for each of these,” says Richard de Roos, Head of Foreign Exchange for the Standard Bank Group. In this, the second article in a series from Standard Bank specialists, Richard talks about forex trends in Africa, what Standard Bank is doing to stay ahead of the pack, and what CFOs should expect in this arena.
Who are you and what do you do?
"As the Head of foreign exchange for the Standard Bank Group, I am responsible for all aspects of foreign exchange within the group, which includes foreign exchange trading in all its guises. I am responsible for the distribution of this to the bank's franchise, which is all client segments from individual to SMEs to corporate and multi-nationals, institutional investor clients, as well as client banks. I manage this front to end, which includes regulatory aspects and a large leaning towards digital."
What trends are you seeing that finance leaders should be aware of?
"There are a number of things. The shape of liquidity in the market continues to change. The rand as a currency that plays an important part globally has a number of factors that can pull it in different directions -factors that emanate on the global stage and factors that operate domestically. Understanding and having knowledge of these flows and decisions on the future direction of the currency will continue to challenge traditional thinking. For example, in the recent downgrade, we've had very little move in terms of dollar-rand because that has been counter-weighted by a search for yield by international investors. This is an area of expertise that needs to develop both within businesses and in partnership with the banks they deal with."
"Coupled with this, we continue to develop hedging strategies that can meet these views, decisions and cash-flow scenarios. The banks continue to work to understand the CFO's future and current requirements, budget requirements, etcetera, to tailor what suits in markets that can create quite a bit of volatility."
"What we continue to work on at Standard Bank is to understand the end-to-end journey of a foreign exchange decision, where it emanates and where it settles, and everything in between, and to use that predictive behaviour to develop products that can digitise this process front to end, and assist in trying to ensure we are embedded digitally into the process of our corporate clients. This is an area of continued growth, helped by technological advances as well as the digitisation of all things, including regulations, which allows us to manage and solve digitally for some of the inefficiencies that have occurred in the past around documentary validation for exchange control purposes, for example. There is a large investment by the industry into modernising and integrating foreign exchange as close as possible to the clients' decision-makers."
How are you helping your clients with these challenges?
"We have ensured that all of our foreign exchange offerings are built into our payments systems. For example, our online system allows you to manage future cash flows by entering into hedges. This is supported by advice from specialists within the team - we have relationship managers within our business who focus on understanding clients' forex from cradle to grave. There's no one-size-fits-all solution. Everyone has a different way of thinking about FX and settling and hedging their FX, and we must solve and understand for each of these, and provide the right advice and solution."
"We work with clients - as a team within the bank - to brainstorm their forex exposures and their modus operandi, and to devise the best possible solution to meet their needs as seamlessly as possible, at a best-of-breed level."
"There are different versions of this for all the segments. We've done a lot of work in the SEM segment to bring in those types of solutions traditionally offered to our corporate clients. From an individual point of view, we have invested quite a lot of innovation there. For example, we recently launched Shyft, a mobile app that allows individuals to load currency onto a mobile app, create virtual cards, request delivery of physical cards, and make payments overseas through a few clicks. We've tried to innovate that thinking across every segment of our client base to ensure that, regardless of geographic boundaries, we are relevant not only to our franchise but elsewhere too. By investing in the tools that make us relevant to the global market we ensure we are at the forefront of markets where forex operates. We need to be relevant to all of that to be the best possible provider to our client base."
What should CFOs expect over the next 12 to 18 months?
"From a product view, you will find further enhancements in terms of how we are able to offer forex across the value chain, seamlessly, as well as to roll this out to all countries in Africa where we operate."
"We work closely with the ICBC (Industrial and Commercial Bank of China), ensuring we are optimising the natural links that we have to our franchises in Africa. This plays an important role for those businesses in Africa which do business with the rest of Africa or who are in the rest of Africa."
"Also, through our link with ICBC, we continue to provide solutions to clients dealing with China, a growing trading partner of Africa. We do this while still having our access reach and the ability to solve on a global platform."
"We've set a path of dominating the franchises wherever our bricks and mortar exist. We work to ensure strategies are abreast of developing trends in a market that develops quickly. We also ensure we invest the rights skills, tools and strategy and vision to stay ahead of the pack as far as being a forex provider on the continent is concerned."