62% of corporates experience a lack of transparency in the FX market
Approaching two-thirds (62%) of UK corporates believe there is a lack of transparency in the FX market, with many relying on just one or two counterparties for their FX trading, according to a report from FX-as-a-Service firm MillTechFX.
The report found that one of the critical reasons for this lack of transparency is the difficulty that corporates face in comparing prices when executing trades. Corporates are often beholden to limited sources of liquidity as it can be challenging to set up relationships with multiple banks. On average, UK corporates only have three FX counterparties, while just 1% of the surveyed UK corporates have five or more FX counterparties.
Although FX volatility has decreased since peaking towards the end of 2022, currency movements are still significantly impacting corporates, with 69% of those surveyed stating that their bottom lines were affected by GBP volatility. A slim majority (52%) of corporates experienced decreased FX risk in the past six months, while 33% experienced increased risk.
Corporates are adapting their hedging strategies to the relatively calmer environment, and the proportion hedging their currency risk fell from 89% in 2022 to 70% in 2023. Of those that do not hedge, 67% are now considering doing so, compared to 89% last year. The average hedge ratio dropped from 50-59% in 2022 to 40-49% in 2023 based on last year’s survey results.
Even though there is widespread acceptance that volatility has dropped recently, many CFOs and treasurers are still prioritising risk management, with 41% planning to increase their hedge ratio and 40% preparing to increase their hedge windows in the year ahead.
Most corporates (75%) are looking into new technology and platforms to automate their FX operations and move away from manual legacy systems. The key driver behind automation is cost savings (31%), followed by eliminating silos (29%), operational risk reduction (28%) and simplicity (25%).
BIS sets out harmonised ISO 20022 data requirements for cross-border payments
The Bank for International Settlements' Committee on Payments and Market Infrastructures (CPMI) has published harmonised ISO 20022 data requirements that establish a consistent minimum set of messaging standards for more efficient processing of cross-border payments.
The CPMI developed the data requirements for ISO 20022 – a global and open messaging standard for exchanging financial information – in collaboration with the private sector Payments Market Practice Group (PMPG) for cross-border payment transactions.
The data requirements published in the Harmonised ISO 20022 data requirements for enhancing cross-border payments final report to the G20 will facilitate the straight-through processing of end-to-end payments, making them faster and more reliable. The increased adoption of ISO 20022 by payment systems worldwide is a significant opportunity to improve their interoperability. But BIS says this opportunity will not be realised if jurisdictions implement the international messaging standard for payments in inconsistent ways. The CPMI's harmonised ISO 20022 data requirements are designed to address that risk and provide a common basis for the use of the new messaging standard in cross-border payments.
The report reflects intensive discussions by payment practitioners over the past two years and extensive consultation with the industry, including feedback from more than 50 stakeholders who responded to the CPMI's public consultation in early 2023. As such, the CPMI believes these data requirements reflect a broad market consensus. How far the benefits of adopting these requirements are realised will depend on their uptake. Market participants are therefore encouraged to begin preparations to align with the harmonised ISO 20022 data requirements in earnest and by end-2027 at the latest.
The CPMI says it will continue its engagement with payment system operators and financial institutions to foster the implementation of the harmonised data requirements by the end of 2027. It will also consider how consistent implementation can be assured as the payments landscape evolves.
Instant payments platform launched for digital transactions in the UAE
Al Etihad Payments (AEP), a subsidiary of the Central Bank of the UAE (CBUAE), has announced the launch of Aani, an instant payments platform that aims to transform the landscape of digital payments in the UAE. Aani, a key initiative under the CBUAE's Financial Infrastructure Transformation (FIT) programme, signals a new era of seamless, secure, and instant digital payments.
In keeping with the UAE's vision of becoming a global digital payment hub, Aani enables licensed financial institutions (LFIs) and payment service providers to offer customers an exceptional user experience. Aani offers consumers, businesses, corporates, and government entities an unparalleled digital payment experience, enabling transactions to be processed instantly and securely 24 hours a day, seven days a week.
Aani includes a suite of convenient features allowing users to transfer money instantly using only the recipient’s phone number. Other functions of Aani include “Request Money” and “Split Bills”, effectively streamlining various payments experiences. Aani also supports QR codes, facilitating hassle-free, cashless payments at merchants. Additional functionalities, such as real-time direct debit and e-cheques, will be introduced shortly.
The launch involves participation from eight licensed financial institutions: Abu Dhabi Commercial Bank, Al Fardan Exchange, Emirates NBD, Finance House, First Abu Dhabi Bank, Habib Bank AG Zurich, Mashreq Bank and National Bank of Fujairah. AEP is working to onboard the remaining LFIs by year-end 2024.
Aani is accessible through the existing channels of the participating LFIs or AEP’s Aani mobile app. AEP has also been working with Magnati, Mashreq/Neo Pay and Network International to enable Aani QR-based payments with merchants, intending to onboard tens of thousands of merchants in the coming months through these and other licensed merchant acquirers.
Call for improved data collaboration to tackle fraud epidemic
Payments 20 (P20) has published a report entitled ‘Public-Private Data Exchange for Fraud Prevention: Best Practice Recommendations’, which calls for enhanced public and private sector data exchange using new methods and technologies to fight against increasingly sophisticated fraud.
It features contributions from J.P. Morgan, The Clearing House, McKinsey & Co., Featurespace, the Federal Reserve, FIS, Fiserv, UK Payment Systems Regulator, and Pay.UK on how the public and private sectors can work closer together to tackle the fraud epidemic.
In 2022, the Federal Trade Commission (FTC) highlighted consumers in the US lost nearly US$8.8bn to fraud, an increase of more than 30% over the previous year. In the UK, over £1.2bn was stolen by criminals last year, equivalent to over £2,300 every minute.
While progress has been made to increase collaboration between the public and private sectors, how fraud is currently tackled globally requires closer cooperation. Data is often held in multiple locations and data stores, meaning a siloed, layered, complex system has evolved, requiring callouts to third parties. Efforts to collaborate on real-time data of transactions are also hampered by privacy laws such as GDPR, which uphold an individual’s fundamental right to privacy. This slows down attempts to combat fraud as soon as it is committed.
Advancements and the adoption of new privacy-enhancing technologies (PETs) and artificial intelligence (AI) can not only help to resolve regulatory concerns of meeting privacy laws through protecting the consumer’s data. Still, they can also provide a further defensive armoury against modern cybercriminals. Beyond new technologies, increased engagement between public and private sectors on controlled data sharing could also help detect sophisticated fraud that any one organization can't see alone.
Recommendations in the report, the third in a series from P20 on combating fraud and criminal transactions, include:
- Develop and agree on a protocol and platform for the secure real-time data exchange between FIs, government agencies, law enforcement, tech companies and telcos to help identify suspected fraud.
- The government should issue regulatory guidance on responsible data sharing between entities and standard data formats.
- The industry should have For Your Eyes-Only access to law enforcement Suspicious Activity Reports (SARs).
- The government should incentivise industries to expand and deepen AI machine learning technologies, which can help detect fraud. This will allow the private sector to invest in more AI capabilities, and the entire ecosystem’s payments will be better protected.
- Allow private sector access for the authentication of government data. The public sector holds a significant amount of data, which could be a resource to help prevent fraud.
- The creation of a regulator-led forum to facilitate regular dialogue with the private sector on combating fraud to foster mutual understanding and build trust.
- Government and industry should also work together to develop a fraud prevention protocol setting out circumstances when it is acceptable to override privacy law provisions.
Trovata and J.P. Morgan announce treasury solutions suite
Trovata has launched two solutions with J.P. Morgan Payments: J.P. Morgan Treasury Workstation and J.P. Morgan Multibank Reporting. Through its expanded partnership, Trovata says it is enabling J.P. Morgan to become the first bank to provide its clients with real-time data, connectivity, and onboarding across multiple banks via a single API.
Enterprise companies have many banks and bank accounts that are always in flux, making it challenging to gain visibility, insights and control over managing cash and liquidity. For decades, banks have used legacy systems to exchange financial information and communicate with each other. However, this type of information sharing is slow, adding unnecessary time and stress to lean finance teams. Furthermore, many corporate treasury teams use legacy software, often decades old, to manage their treasury operations. As more banks develop APIs as part of their digital transformation, Trovata brings them into a single platform that enables actionable information to become accessible to finance teams at the actual pace of business.
J.P. Morgan Treasury Workstation will enable corporate clients to access Trovata’s multibank treasury management software through their J.P. Morgan relationship. J.P. Morgan Multibank Reporting will enhance the bank’s current SWIFT-based multibank reporting solution by opening up API-based multibank connections, enabling more real-time reporting.
GTreasury launches instant data connectivity into Wells Fargo
GTreasury has announced that its global bank API connectivity suite, ClearConnect Gateway, has launched instant financial data integrations with Wells Fargo. Treasury teams and CFOs can now use ClearConnect Gateway to access current-day balance and transaction reporting and prior-day balance and reporting from their organisations’ Wells Fargo accounts.
Wells Fargo joins a list of ClearConnect Gateway data connectivity integrations for balance and transaction reporting, including Bank of America, Goldman Sachs, and JPMorgan Chase. Goldman Sachs partners can also perform payment creation, including FX.
“ClearConnect Gateway ensures that treasury teams and the office of the CFO have a modern, maintenance-free API-connectivity architecture always at their disposal,” said Victoria Blake, Chief Product Officer, GTreasury. “As organisations understand, real-time visibility into balance and transaction data is critical for driving accurate business decisions.”
Finastra and ELCY partner to roll out corporate trade finance portal
Finastra is partnering with ELCY to provide a trade finance solution for corporates. The Corporate Trade Finance Portal from Finastra and ELCY is designed to enable corporates to communicate securely and authentically with all their banks through one centralised platform. As a result, corporates could benefit from greater visibility and real-time control of all trade finance exposures across their organisations. The transition away from the complexity of connecting to multiple bank proprietary systems and removing inefficient paper-based processes may also deliver cost and efficiency savings.
Customers using the joint Corporate Trade Finance Portal will be equipped to communicate, both on the import and export side, with any SWIFT-enabled bank worldwide to manage their day-to-day trade finance processing. All instructions or messages sent through the portal can be tailored to conform with the message type preferred by the bank in question.
Additionally, the portal includes modular functionality for corporates to monitor counterparty and bank exposure, manage global bank limits and provide reports for credit and treasury departments, all in real-time.
Emirates NBD and DIFC look to build next generation of UAE global founders
Emirates NBD has launched the ‘National Digital Talent Incubator’ program as a part of its strategic partnership with Dubai International Financial Centre (DIFC). Facilitated by DIFC’s venture-building platform, DIFC Launchpad, the bespoke incubator program aims to boost UAE talent and the growth of entrepreneurship within the fintech and digital innovation space. Industry partners, including Visa, Microsoft and Dell Technologies will also support the program.
The National Digital Talent Incubator program will run two cohorts annually, each consisting of three to six fintech startups with UAE national founders and members. Over the eight-week-long program, participants will gain insights from venture-building and innovation experts from DIFC Launchpad, hands-on experience from entrepreneurs in the UAE, mentorship and one-to-one coaching sessions with founders of UAE fintech scaleups and access to innovator networks, incumbent corporations, governments and capital in the UAE.
“The National Digital Talent Incubator programme in partnership with Emirates NBD, is designed to drive innovation and growth by nurturing local talent and the next generation of industry leaders,” commented Arif Amiri, Chief Executive Officer, DIFC Authority. “DIFC’s growing stature as global hub for talent and thriving eco-system for fintech and innovation, will further empower UAE Nationals in their pursuit of transforming ideas into thriving startups, as they join our community of over 39,000 highly skilled individuals, representing over 160 nationalities.”
Galileo launches corporate credit tool for B2B expense management
Galileo Financial Technologies, a financial technology company owned and operated independently by SoFi Technologies, has launched the Galileo Corporate Credit solution to help businesses modernise expense management. Traditionally, managing thousands of employee charge cards and their individual credit limits has been a complex and time-consuming task for companies. The Galileo solution aims to simplify this process by introducing a central account with a single credit limit for fintechs and non-financial brands to facilitate a streamlined billing cycle and enable corporate-level repayments.
In the past, companies issuing charge cards to employees for business-related expenses faced the challenge of keeping track of multiple account balances, each with its own credit limit. The process of totalling balances from dozens, hundreds, or even thousands of accounts often provided only a static snapshot of credit utilisation, quickly becoming outdated and requiring repeated calculations.
The Galileo solution can help businesses transform B2B expense management through simplified tracking and management of multiple employee charge cards, real-time visibility into available credit across all connected cards, one single repayment at the funding account level, due at the end of the billing cycle, and enhanced security and control over expenses.
This streamlined approach is designed that companies only need to check the credit limit of the central account to ascertain available credit but can still have access to transaction records for each card.
Same day ACH growth boosts ACH Network results
Ongoing adoption of Same Day ACH and the continued increase in business-to-business (B2B) payments led the ACH Network to robust results in the third quarter of 2023. There were 212 million Same Day ACH payments with a total value of US$608bn, increases of 20% and 27.1%, respectively, over the third quarter of 2022.
So far, in 2023, the ACH Network has handled 597.6 million Same Day ACH payments valued at US$1.78 trillion, respective increases of 16% and 42.4% compared to the first three quarters of last year. B2B also continues to be a growth area for the ACH Network. B2B volume in the third quarter was 1.7 billion payments, up 9.6% from a year earlier.
Total third-quarter volume on the ACH Network was 7.8 billion payments, up 3% from the same time last year and 4.6% per processing day. The value of those payments was $19.7 trillion. Other major transaction types experiencing growth include claim payments to healthcare providers, up 5.8%, and Direct Deposit, up 2%.
“The ease and convenience of Same Day ACH has been embraced by the businesses and other organisations that use ACH,” said Jane Larimer, Nacha President and CEO.“The one million dollar limit and the three settlement times each business day make Same Day ACH a great choice for faster payments.”
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