At the end of last year we sat around the ‘virtual’ table, hypothesising as to how the world may have changed for banks  FX trading teams over 2020. Which was when one of Hedgebook’s more direct Directors asked why we were coming up with completely unproven hypothesis. We should just go and ask members of these Global Markets Divisions teams what they really thought. So, we did.

Over December 2020 and January 2021, we sought out a series of conversations with leading bankers in the UK, Europe and the US. If you were one of the many bankers we spoke to – we remain extremely grateful for the time you gave us and the interesting insights we gained.

The survey was not attempting to provide a statistical analysis but simply aims to provide insight into the collective responses and underlying themes. What was interesting is the general consensus on what has changed and what will continue to challenge Global Markets Divisions in the year ahead. Given the diversity of location and nature of the banks we spoke to, the commonality of answers really stood out.

Global Markets Divisions Survey Infographic

To make the outcomes easy to digest we’ve created a downloadable infographic which we’ve summarised below:

Trading volumes

While trading volumes undeniably varied widely across banks, respondents reported a general rise in short-dated small trades. Customers were generally making faster decisions but with a lower appetite for risk.

“Companies are holding a lot of cash at the moment (many drew down business loans and banked them straight away). Indicates low risk appetite. A lot less long-dated forwards.”

BAU disruption

The two common themes around client disruption related to the fracturing of supply chains and the difficulties in forecasting ahead. There was real empathy for the situations clients found themselves in – as one respondent put it:

“It’s difficult talking to business owners whose livelihoods are on the line.”

Client communication

One of the biggest changes noted was around client communication. Across the board, the global markets divisions we spoke with identified there was a lot more online engagement. This also sparked the need for more focus on creating a great online customer experience including self service options. Respondents noted an acceleration in digitisation and as one noted:

“The bank is going to have to work very hard to meet these new user experience expectations.”


Industry themes for 2021

Finally, we asked if there were any key themes emerging for the year ahead. Four stood out:

  1. Removing friction – increasing automated trades based on co-developed treasury policies.
  2. Relationship over price – a focus on building strong customer relationships will win out over pricing.
  3. Appetite to invest in tech – an increased appetite due to first two themes. While we admit to being pleased to see this trend, there was a rider in banks having a finite tech budget that is hotly contested.
  4. Industry acquisitions – increased likelihood of FinTech acquisitions by Banks and rationalisation of the market.

So, there you have it. Some very interesting insights that will continue to inform our understanding of the challenges facing FX sales and trading teams as well as their priorities for the year ahead. To save you scrolling back – here’s the link to the Infographic again.