Deutsche’s Leigh: ERPs changing FX management for corporates

Deutsche Bank is pushing the use of enterprise resource planning (ERP) solutions to help drive its foreign exchange market share, according to the German bank’s global head of FX spot and electronic trading.

“One of the things we’ve been working on is taking our wholesale institutional streaming FX price and plugging that directly into our clients’ ERP systems so that they’re actually able to use that for cross border payments, which means they’re able to process at end of day against fixed rates or otherwise,” said David Leigh, speaking on a panel at Sibos this week.

The bank has faced a troubled year: it announced in July that 18,000 jobs would be axed, with the amount of capital used by its fixed income sales and trading business being reduced. The bank also announced a pivot towards traditionally profitable business units – including currencies as key next steps. In June, it’s FX offering moved up from eighth to second place in this year’s Euromoney FX survey. It’s a competitive arena, said Leigh.

“There’s been a huge change in the FX business, particularly on the market side. If we look back historically hasn’t been that great at servicing corporates,” he said. “It was always a situation where the market would almost sit and wait for corporates to come with a trade it needed, to execute at the time it wanted to execute and then we would all compete fiercely for that deal.”

“What we’re seeing at the moment is a lot of investment coming in across the community to really move up into corporates’ workflow, and talk to clients about where a flow is originating from, how they are making their decisions on when to execute, and what sort of innovation we can give them.”

According to a recent report by Coalition the global daily electronic FX market is worth $5.1trn. Citi, JPMorgan, Bank of America Merrill Lynch, HSBC and UBS make up almost 45 percent of the market.

Deutche’s streaming service has held huge appeal for corporate clients, according to Leigh, as it helps bring clarity to the reconciliation process. The service allows firms to select a rate during the day and stick to it as business closes.

“If you speak to a lot of corporates today there’s a lot of processes – time and energy that’s being spent on reconciliation against the rate they thought they might get, the indicative rate against which their ERP system thought they were using, and then trying to match that back the next day against the trades they’d executed,” he said. “Obviously by giving clients a streaming rate that’s actually that’s lined to the trade in their ERP we can take that reconciliation layer out for them by guaranteeing that when they do send us that payment then at the end of the we’re going to provide that rate that they were given earlier on.”

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