CUSTOMER
This case study is based on one of Hedgebook’s UK-based FX broker clients that stand out as innovators, but has asked to remain anonymous.

CHALLENGE
To provide better hedging results and value-added functionality as part of its standard service.

SOLUTION
Hedgebook risk management

OUTCOME
50% reduction in time to analyse a client’s position; 90% reduction in human error in the first six months; at least a 75% saving on client compliance activity.

In the competitive world of international payments, one of Hedgebook’s UK-based FX broker clients stands out. While competitors jostle to differentiate on price and service – two important cornerstones of the industry – this broker transformed its product offering to deliver powerful treasury management tools.

It acted to provide better hedging results and value-added functionality, all as part of its standard service. A key component of this is a cutting-edge risk management platform powered by Hedgebook.

FX broker’s support for business growth

A UK success story in its own right, our client champions business growth by helping mitigate the risk of currency market fluctuations for companies selling offshore or participating in international supply chains. Experience in helping businesses manage detrimental market fluctuations has taught their management and trading team effective currency risk management is essential to supporting international growth ambitions.

They do this by employing an approach that starts by building a full picture of a company’s foreign currency and cashflow exposure. It then moves to examining the impact of changing rates on profitability; by designing and executing against a treasury policy agreed with the client.

FX broker up for the challenge

While the team at this leading broker spend all day focusing on currency risk management they acknowledge FX is just one of many items on a long ‘to do’ list for busy finance departments or owner-operators. This often leads to a reactive approach where the business transacts when they have time, or after a rate move.

Educating business on the pitfalls of such an approach – a two percent move in the wrong direction on a £500,000 contract is a £10,000 loss – is central to its mission of championing and supporting growth.

Aware of the need to provide customers with quick, relevant and actionable insight, our client was also keen to understand how they could make its customers lives easier by relieving some of the administrative and compliance burden of managing foreign exchange risk.

An analysis of client pain points found:

• An over-reliance on spreadsheets that often led to mistakes or missed opportunities
• Management and board reports were cumbersome and took time to create
• Accessing valuations for audit purposes was time consuming for the client and FX provider

With these challenges in mind and a genuine desire to develop a client-centric solution, the FX broker engaged with a range of financial technology providers, eventually settling on Hedgebook. It was seen as an intuitive, easy-to-use treasury management system to help manage financial risk, streamline compliance and contribute to stronger relationships between businesses and their FX providers. As the CEO explains:

“Profitability and expanding into new markets and regions is the primary goal for our clients. Helping them to achieve this while managing the uncertainty of FX volatility was the motivation behind engaging Hedgebook, as is delivering an enhanced user experience, more sophisticated hedging platform and tailored treasury solution to our clients.”  Chief Executive Officer

Hedgebook’s approach

The creation of the new platform was based on the simple premise that the customer should always be front of mind and their needs prioritised – an ethos shared by both Hedgebook and the FX broker. The solution therefore needed to be quick to set up, easy to use and provide tangible benefits.

Our client tested the software with a diverse range of customers, all with unique requirements. The feedback was unanimous: the software would deliver on their mission of supporting growth and add ongoing value to their business through the range of treasury tools and reports available.

“When facing market volatility, it’s important to have visibility into financial exposures and positions. Hedgebook is a true treasury risk management solution that allows our clients to make the best hedging decisions and protect profitability as they grow their business.”
Senior Trader

Delivered via SaaS, Hedgebook digitises the risk management process, helping companies quickly move away from spreadsheets and devise hedging strategies that mitigate risk and protect profitability.

The results

Time saved, compliance achieved

After using the platform, customers explain Hedgebook saves them time when preparing for audits. It allows them to answer crucial questions about their hedging strategy and improves efficiency and effectiveness when engaging their account manager at the FX broker. It also delivers a range of other benefits including:

• Visibility of the impact of moving exchange rates
• The ability to value all contracts on one platform, irrespective of FX provider
• Understanding how far a business is from receiving a margin call from their FX provider
• The ability to identify when to close out deals in a cost-effective manner
• Protecting underlying profit margin by understanding close out or cancellation implications

 

Safer and easier to manage

Having data on a secure, cloud-based platform, which can be accessed from anywhere, has made life easier. It’s given peace of mind that human error is eliminated. Our client estimates human error was reduced by as much as 90% in the first six months of deploying Hedgebook.

They no longer store data on multiple spreadsheets as Hedgebook collates everything, giving a quick view of the client’s position. The SaaS solution is also scaleable, meaning it grows with the business.

Greater focus

For their part, the team at our client has been more targeted in engaging clients, contacting them based on clear and material need that has added real value to their bottom line. Increases in both efficiency and profitability are emerging. They have halved the time it takes to analyse their client’s position and propose a new strategy meaning they can get twice as many proposals out in a single working day.