e-Forex-May-23

The Nordics: Demand for digital FX services is now focused on more sophistication through proven technology
REGIONAL E-FX PERSPECTIVE
“Initially, treasuries focus on automating what they have
done before,but eventually, they discover that automation
enables them to do new things.”
Matti Honkanen
“Treasury automation is an
evolutionary process,” he says,
“with the most advanced treasuries
improving all the time, while others
start their automation journey. Initially,
treasuries focus on automating what
they have done before, but eventually,
they discover that automation
enables them to do new things. This
move from cost and time savings
to increased profits and decreased
risk is where things become more
interesting.”
When asked about broader
technological innovations that might
impact FX, Trujillo points to payments.
“There is a lot happening in the
payment space that will eventually
have an impact on FX,” she says.
“Some of these changes happened
a few years back but are starting to
materialise now.”
She highlights the example of the
PSD2 directive. “It has not drastically
changed the landscape yet but
changes are definitely coming,” she
says. “Nordic banks like SEB have also
incorporated the opportunities and
threats it represents into its strategy
and there is a big FX component in
that.”
Both Trujillo and Honkanen point to
existing technology as the primary
driver of change, both in the
broad market and in applications
like treasury automation. “The
technologies that revolutionise
treasuries are not necessarily
revolutionary themselves,”
Honkanen explains. “Rather, the
way existing, old, and “boring”
technologies are used is what
makes a difference.” He cautions
that getting the basics right is
more important than adopting
fancy technology. “Hiring people
with basic technical skills is more
important than hiring an army of
AI experts. Put them together with
the people who know the treasury
functions and practices inside out,
and the magic follows.”
As an example of existing or “boring”
tech powering innovation, Trujillo
cites the humble API, long a mainstay
of the technological landscape. “API
adoption continues to play a big role
in the development of future-proof
solutions going from the SMEs all
the way to our largest corporates and
financial institutions,” she says. “It
broadens perspectives and connects
systems from pre to post-trade in
a much more efficient way. At SEB,
we help our clients implement these
APIs, whether integrated or not with
third-party solutions, to fit their
challenges and automate as much of
their workflow as possible.”
“APIs have been available in FX for
many years,” she continues. “Smaller
clients have preferred Rest APIs for
some time now but even bigger firms
that were typically focused on FIX are
seeing the advantages of the versatility
and ease of use of Rest APIs.”
When asked about the impact of
this API-first approach on a client’s
choice of trading platforms, Trujillo
explains that integration, instead
of a platform’s size, is the critical
differentiator. “The popular platforms
are still the first choice in the region,”
she says. “They are established and
the plug-in is easier. They are also
very well connected to different
client systems. This means changing
main platforms is quite unusual and
definitely requires a lot of work from
the clients.”
Despite this, she says, smaller
players are having success. “It
usually happens when the client
is undertaking some major
technological change and is reviewing
the possibilities in their FX workflows.
In those cases, both smaller platforms
with good integration capabilities, or
APIs or a combination of both can be
the final choice.”
Honkanen notes that given the
relative familiarity the market has
with existing tech, getting started
is the most important step. “I am
not a great believer in detailed preplanning,”
he says. “You don’t really
know what lies ahead before you
start the journey. Instead, acquire
some basic technical knowledge and
collaborate with a team of seasoned
treasury managers and technology
experts.”
And what would this look like in
practice? “Identify low-hanging fruit
that instil confidence throughout the
company and provide the financial
means to fund the next stages,”
he says. “Don’t try mapping all
the possible needs you might have
now, let alone in the future, before
taking off. The greatest danger is
analysis paralysis when your plans
get increasingly more detailed, and
you realise there are even more
unknowns.”
26 MAY 2023 e-FOREX