Foreign Exchange (FX) in a Post-COVID World, Digital transformations and new market dynamics

Businesses are changing their foreign exchange (FX) hedging strategies in response to the post-pandemic world. What does that mean for banks and their FX sales teams?

The enormously disruptive events of the past year and a half have forced businesses across all industries to rethink their ways of working. Banks are no different. “The COVID-19 pandemic has taught us that what we wake up knowing in the morning isn’t necessarily what we go to sleep knowing at night,” says Mpume Myeza, Head of Corporate FX Sales: Inland at Absa CIB.

She’s right: a business’s operating environment at 5pm on a Friday could be quite different from the new reality of 9am on Monday. All it takes is a presidential announcement and a change in national lockdown levels.

The same is true for global currency markets. A few hours can make a world of difference in the FX markets as currencies respond to various news flow from all over the globe.

“The market is so volatile,” Myeza says. “From the bank’s perspective, our clients have to be constantly informed of the changing market dynamics. Before, it might have been enough to only call your clients with an update once a day. Now, the situation is completely different by the time you close your day. That’s really when your sales team needs to kick in, updating clients about the changing environment and explaining how the bank will support them. It’s proactivity, taken to the next level. We always have to be plugged into the news cycle and remain agile and nimble.”

In these times ruled by extreme volatility, it is crucial for the FX sales teams to have an in-depth understanding of clients’ strategic hedging policies in order to service the clients in the most efficient way.

A consistent banking experience

With all that volatility and all those moving parts, banking clients need a consolidated view of their operating environment. Digital technologies allow for that, enabling Absa’s FX teams to keep clients constantly plugged into the movements in the market and able to capture the opportunities.

“In this virtual, digital world, we are looking to deliver end-to-end FX solutions for our clients,” says Myeza. “As teams in the FX value chain, we are good at what we do, but we need to combine that into a single package. Banks tend to segment FX into various departments – international banking, payments and so on – but our clients see it all as a single entity. Absa Access allows us to deliver this end-to-end solution to our clients – from securing an exchange rate to making the actual payment. We also offer our clients various ways of executing trades with us – through our single dealer platform in Absa Access and across multiple aggregator platforms. This allows us to always remain relevant to our client base.

Myeza says that in a post-Covid world, banks have had to change the way they view client relationships and how they build new ones. “In the past, relationships were built and maintained in face-to-face meetings and engagements. Building these relationships virtually has meant that we have had to move away from a siloed way of thinking to a more collaborative approach. Clients want to know that the level of superior service they have received and come to expect is going to be maintained. The challenge to the bank is how to use our resources to ensure this remains top of mind for them.”

That also speaks to the individual relationships that clients have with their contacts at the bank. “Traditionally, a client would have one salesperson at a bank, and maybe one other person to whom they would speak if that person was not there,” Myeza explains. “But the way things are moving, you need to be more dynamic. The client must get the same high level of service, no matter which salesperson they speak to. The old, siloed way of thinking has to go.”

It must go because it no longer works in a world that requires instant, constant, always-on engagement. As Myeza points out, “Things are changing at a rapid pace. We must anticipate the needs of our clients and offer tailored solutions for their businesses. The combination of our superior digital offering and the dynamism of our sales teams ensures that we remain top of mind.”

That’s not to say that the digital age will spell the end of traditional banker-client relationships. If anything, it emphasises the need to establish new relationships and keep existing ones going. “You could never replace people and personalities,” says Myeza, “but in terms of the business, and the outputs we as a bank give to the client, it must be a consistent experience and it must be immediate.”

Article published by: Mpume Myeza, Head of Corporate FX Sales: Inland ABSA | 6 August 2021
Source: https://cib.absa.africa/home/insights-and-events/fx-in-a-post-covid-world-digital-transformations-and-new-market-dynamics/