International Payments with an FX Flavour
An Interview with Wim Grosemans, Head of Product Management International Payments - Cash Management, and Adrian Brown, Head of Commercialisation - FX+, BNP Paribas
As globalisation continues to drive the need for international payments, corporates are focusing on the underlying FX as well as the payment itself. Increasingly, they require their banks to offer fully integrated payment and FX platforms. BNP Paribas’ new cross-currency solution is designed to meet this requirement.
Why an integrated cross-currency payment offering now?
AB: This is a client-driven change. We’ve responded to what our clients have told us. Corporates are becoming increasingly sophisticated and knowledgeable about the FX underlying cross-currency payments (CCP) and they now look at CCPs as both payments and FX transactions. They want the best of both worlds – a platform and a service that offers both a high quality payment and FX experience.
WG: In the Eurozone, SEPA is up-and-running, so corporates are ready to address new aspects of treasury optimisation. Cross-currency payments are non-SEPA, international payments that integrate an exchange of currency. And they are undeniably a focal point for corporates.
What is your promise to the market?
WG: Many corporates find that strictly separating the handling of their international payments and the embedded foreign exchange is not a winning strategy. Our commitment is to help them streamline their whole cross-currency payment process once and at fair prices, even if their FX exposure is not actively managed as part of a dedicated foreign exchange policy.
“Our approach to cross-currency payments is to offer a convenient, flexible and transparent service.”
AB: There are 3 key words to describe our CCP offering - convenient, flexible, and transparent. Our clients are under pressure to streamline and reduce their costs while remaining fully accountable, and we want to help them meet this challenge. The ability to reach the entire world through one single point that combines both payments and FX is fundamental.
What strikes you most when implementing a CCP solution?
WG: Flexibility is essential to designing a successful cross currency approach. Not all corporates benchmark in the same way – provided they do at all. Some focus on automation and efficiency to ease the workload, so it is on us to integrate how we work to how they want to work. Others want more control over their cross currency transactions, so they expect more added-value services on the front end. As a leading bank, our powerful technological infrastructure means that we can meet these requirements, including the real-time monitoring of transactions and flows.
AB: Also, whatever their profile, corporates are seeking more transparency on how we create and apply FX rates. It’s not enough to simply disclose or negotiate a margin. It’s equally important to be willing to discuss what rate that margin is applied to and how that can be benchmarked or verified. By discussing and demonstrating these openly, we ensure that our CCP offering meets these requirements. Technology is a powerful tool to make this possible.
“It is all about understanding how treasurers think, where they come from and how they want to manage their FX exposure.”
So it looks like convenience, flexibility and transparency are the words…
AB: Absolutely, and both our own clients and the market research we have conducted confirm the importance of all three. Our approach to CCP is to offer a convenient, flexible and transparent service. This includes how corporates wish to submit payments, how we create and apply an FX rate, whether they wish to combine the payment and FX into one simple transaction or deal with them separately, and what level of transparency and auditability they require.
WG: In the end, it is all about understanding how treasurers think, where they come from and how they want to manage their FX exposure. Based on that understanding and on our expertise, we provide fair and effective cross currency solutions to cater for a whole spectrum of corporate realities and strategies. And because continuous improvement is one of our drivers, we are already looking at further broadening our offer with more innovative, value-added services.