BLOG
Insight to All Things Currency and Treasury Management

In March, FiREapps announced a very exciting new partnership with the #1 FX bank in the world, Deutsche Bank.¹ The multiyear agreement follows a two-year pilot that market-validated the concept of embedding the FiREapps solution with a top global financial institution. Based on the success of that pilot, FiREapps and Deutsche Bank are broadening the partnership and expanding it globally.

The partnership between FiREapps and Deutsche Bank is certainly significant for us and for our customers. But far beyond that, it represents a milestone – a game-changer – for banks in how they offer technology solutions to their clients and for corporate finance in how they consume financial services. That is why other banks are already following Deutsche Bank’s lead; they recognize that this is the way of the future.

To put some context around the partnership – and why it represents a milestone – two trends are particularly important to understand:

  1. Banks are moving from liquidity provider to solution provider. As traditional banking services are becoming increasingly commoditized, banks must look for alternative ways to provide value to customers. Offering technology-based analytics solutions is one way to do that. As the editor of Bank Systems & Technology wrote, “The next big thing in the treasury services/corporate banking space will be bringing intelligence into high-value transactions.”²
  2. FX transactions are increasingly done electronically. The partnership is also another step in the evolution of electronic trading. As the Bank for International Settlements (BIS) reported in its 2013 Triennial Survey, “In today’s market structure, electronic trading dominates…with a share above 50% for all customer segments, and is available for all instruments and investors across the globe.”³ The move to electronic transactions will intensify, and we will begin to see increased automation as well.

Big Data Analytics to Aggregate, Validate, and Analyze Exposure Data

In an environment in which foreign exchange transactions are increasingly done electronically and even automated, it is critical that corporates be able to quickly and with confidence aggregate exposure data, validate it, analyze it, and make a decision about whether to engage in an FX transaction. Yet data integrity – validating that the exposure data is accurate, timely, and complete – is not easy. It requires complex algorithms that enable analysis and decision making on big data sets.

That is not a challenge that banks are used to resolving. Banks do provide technology, but that technology serves as a facilitator of transactions – an interface between the corporate’s operational data and the bank’s financial processes. Essentially, the corporate sends data through the interface to the bank which then facilitates transactions accordingly. But – again – it is very difficult for a corporate to ensure the integrity of its exposure data extracts.

FiREapps is different. FiREapps dives into the corporate’s operational data – big data – working within the enterprise data systems and processes to aggregate, validate (ensure accuracy, completeness, and timeliness), and analyze underlying exposure data. It is no secret that this inner sanctum of the corporate operating environment is a place banks have not traditionally been invited. In fact, banks have failed trying to implement exposure analytic solutions because corporates don’t want banks deep diving into their operations data.

So the partnership between FiREapps and Deutsche Bank is a win-win-win. It brings together the corporate; the agile IT firm with the technology, expertise, and access to corporate requirements necessary to aggregate, validate, and analyze exposure data; and the bank that facilitates the financial transaction. It keeps the arm’s length relationship between the corporate and the bank. It gives the bank an innovative way to offer its customers far more in-depth analytics than it could do alone.

It represents a significant milestone for corporates and banks alike.

Closing the Gap between Operational Data and Financial Decision Making

The partnership between Deutsche Bank – execution – and FiREapps – analytics – closes the gap between a corporate’s operational data and its financial decision making. Key to closing the gap is aggregating operational data from disparate sources – entities around the world and often different ERP systems – and then bringing that data into an analytical environment in which it can be validated for accuracy, completeness, and timeliness. Only then is a corporate able to optimize decision making according to the parameters of its foreign exchange policy.

Closing the gap between operational data and decision making through partnerships between legacy financial services firms and innovative big data analytics companies is a trend we expect to continue, and to extend well beyond the area of FX. In fact, it is the vision we have had since the inception of the company in 2000. It is a vision that came to fruition with our initial discussion and subsequent trials with Deutsche Bank in 2011. So the partnership represents a critical milestone along this evolutionary journey.

For multinational corporations, the FiREapps/Deutsche Bank partnership is an opportunity to benefit from the full range of financial services associated with one of the world’s leading banks and – at the same time – from the agile, responsive analytics capabilities delivered by the leader in FX data analytics. Through FiREapps’ FX exposure analytics, corporates will be able to aggregate exposure data, validate it, and analyze it. And through Deutsche Bank’s FX trade execution services, corporates will have the ability to act, quickly and cost-effectively.

 

[1] In 2013 and 2014, Deutsche Bank was ranked by Greenwich Associates as the top global foreign exchange bank.

[2] Bank Systems & Technologies, “The Future of Corporate Banking: Intelligent Transactions to Improve the Customer Experience,” 19 Apr 2012.

[3] Bank for International Settlements, “The anatomy of the global FX market through the lens of the 2013 Triennial Survey,” 8 Dec 2013.