Making FX work better for clients

In the retail world, this shift is seen in many ways, such as in the huge increase in the take up of digital sales - which has almost doubled in the past year.

In the wholesale client space, we are also seeing massive acceleration, again driven by both technological developments, and crucially the ability to self-serve an increasing number of services - ensuring clients can bank when and where they want to.

One example that illustrates where BBVA has seen this paradigm shift in recent months includes the ways in which our clients access BBVA´s FX (foreign exchange) services, more traditionally known as buying and selling of currencies.

There are three elements here which the FX team’s digital strategy has looked to solve - firstly reducing pain points by adding in simplicity, secondly improving customer experience by ensuring transparency in the processes and thirdly adding ease by making their solutions available 24 hours a day, seven days a week.

On the first element, one of the pain points clients see in their business is the timely implementation of their FX Risk strategy - either in terms of traditional FX exchange or in terms of cross border payments.

Getting the timings wrong when converting currencies can cause clients to lose substantial amounts of money, because the fluctuation between their home currency and the currency of their overseas business partner directly impacts their balance sheet and profitability.

Accordingly, clients often have to spend considerable resources either working to get FX guarantees in place or ensuring that payments come at the right time, or indeed conducting manual hedging exercises to optimise the payment timings.

So one of BBVA´s major client focussed service improvement programmes this year has involved automating the client experience, increasing control and transparency.

Ibai Urra, Global Head of FX Transactional Solutions, explains the changes like this: “Previously, when a client wanted to move money in different currencies among their own accounts or make international transfers, they would have to go to a BBVA office during office hours. This lacked convenience. Additionally, clients couldn’t see the FX rate applied until the movement was shown in his accounts.  In some geographies, clients could do this online, but would never get a pre-deal exchange rate.

“Now, clients can move their money between their accounts or to their suppliers 24h a day, seven days a week through the web and app. And clients know the FX rate before the move is done which allows them to know both the quantity the payment will cost them in their own currency as well what will their supplier receive in the destination currency.”

The impact for clients has been marked - for example in Peru, since the launch, now more than 50% of transactions are done out of office hours.

And the plans to build on those three themes of Simplicity, Transparency and Ease are continuing.

For example, the introduction later this year of an FX API which will allow for ERP’s to plug into BBVA’s core banking platform will enable clients who make regular currency conversion payments to directly control when their transaction takes place and to automate the process.

On BBVA´s Netcash platform, the bank has also automated the execution process allowing for dynamic hedging to take place. For clients, it means they can take a collective view of their FX needs by pooling data from their Enterprise Resource Planning systems (ERP), and then automating hedging with defined rules on pricing, for example, to ensure they always get the best value.

Commenting, Pascual Diego, Head of FX strategy and Business Development at BBVA, said: “The solution we have developed is not just in line with the digital transformation the bank is going through, but is utterly client focused in their design.

“We know that for clients, minimising any workload that isn't about business growth adds significant value to their balance sheets, as resources can be deployed elsewhere more effectively”.

“It’s about understanding those we work with, and using those insights to be better partners for them and help their business flourish and deliver results more effectively.”

Ultimately the proof is seen in the engagement rates, and here the trend is clear, with trade volumes and the number of trades having grown by 48% and 45% year on year respectively. Overall, transactional FX has experienced consistent double-digit growth for the last five years as a result of BBVA’s digital platform deployment strategy.

BBVA is the leading FX player in its core markets, and recognised as such by many market sources including Global Finance, Euromoney, FX Week and Bloomberg.

BBVA is also committed to promoting high standards of behaviour, and an ethical, transparent and robust development of the wholesale FX market, having been the first bank in the Eurozone to adhere to the Global FX Code of Conduct in September 2017.