US corporates ramp up FX hedging ahead of election despite rising costs

Over eight in ten (86%) of North American corporates intend to increase their hedging activities ahead of the upcoming US election on 5 November 2024, despite 73% reporting an increase in hedging costs, according to a report from MillTechFX.

Two-thirds (66%) plan to extend the length of their hedges, while 29% aim to increase their hedge ratios, providing them with more protection from any impact on currency markets. The most hedged currency pair is USD/CAD, with 30% of respondents prioritizing it, followed closely by USD/CNY (28%), EUR/USD (25%), and GBP/USD (25%).

Corporates’ biggest FX-related concerns surrounding the coming election are the impact of policy changes on currency values (44%), unpredictable market movements (38%), increased volatility (37%) and counterparty risk (35%).

The report also found that the stronger dollar has impacted 93% of North American corporates’ bottom lines, while 93% said the stronger dollar has weakened their company’s competitive position in international markets. Other stronger dollar-related concerns include profit margin erosion (43%), forecasting financial performance (41%) and reduced international sales (38%). Looking ahead, more than nine in ten (92%) respondents believe that the dollar will continue to strengthen over the next year.

Over four in every five corporates (82%) now hedge their forecastable currency risk, a slight increase from last year’s 81%. The mean hedge ratio was 49% which is likely to increase as we approach the election. Meanwhile, the mean hedge length was 5.05 months. The primary reasons for not hedging were that capital could be better deployed elsewhere (47%), expense (33%) and insufficient credit lines (33%). 

Securing credit lines was the biggest challenge corporates faced when handling their FX operations (31%), suggesting banks’ risk appetite is falling and costs are rising. Settlement (34%), risk identification (33%) and trade execution (32%) were the key FX processes corporates are considering outsourcing in 2024. 

Every corporate respondent (100%) is now exploring the use of AI in FX processes. Risk management (46%), process automation (39%) and FX operations (36%) were the key areas of focus. And just over one-third (36%) of corporates said automating manual processes was a key priority, up from 32% the previous year. 

 

Finance closes the AI adoption gap with other corporate functions

The adoption of finance AI by finance functions has increased significantly in the past year with 58% using the technology in 2024 - a rise of 21 percentage points from 2023 - according to a survey by Gartner, Inc. While 42% of finance functions are not currently using AI, half of these are planning implementation.

“In this survey last year, other administrative functions (such as HR, legal, and procurement) were twice as likely to be using or scaling out AI solutions compared to the finance function. This year the gap is almost nonexistent,” said Marco Steecker, senior director, research in the Gartner finance practice.

Four prominent use cases stood out amongst those adopting AI in finance:

• Intelligent process automation (used by 44% of finance functions) - Automation that leverages the AI capabilities of existing automation tools (such as RPA) to enhance information processing.
• Anomaly and error detection (used by 39% of finance functions) - AI-enabled identification and reporting of errors and outliers in large datasets (e.g., internal claims, expenses, and invoices).
• Analytics (used by 28% of finance functions) - The creation of better financial forecasts and results analysis that can lead to improved decision-making.
• Operational assistance and augmentation (used by 27% of finance functions) - Emulation of human-judgment-based decisions in operations through AI (often generative AI).

Finance leaders’ top two challenges related to AI adoption were inadequate data quality/availability and low levels of data literacy/technical skills.

“Because interest in AI is rising across the board both inside and outside their organisations, CFOs are finding it tough to source the talent they need to meet their AI ambitions, and this problem is likely to get worse,” added Steecker. “It’s therefore essential they have an overarching functional strategy to identify, acquire and develop AI skills.”

To do this CFOs will need to address three primary challenges that hinder finance AI talent plans: a limited understanding of the necessary roles and skills involved in AI implementation; a difficulty attracting and retaining AI talent; and slow progress developing AI skills within existing employees.

In terms of data quality, Gartner experts recommend considering leaving behind a “single version of the truth” data management philosophy because it is almost impossible to attain this kind of perfection given the volume and volatility of data in modern companies. The alternative is a “sufficient versions of the truth” approach that balances data quality with ensuring it is useful in decision-making.

 

Swift looks to streamline movement of digital assets and currencies

Interest in digital assets and currencies continues to grow, with the last two years bringing greater clarity on the potential value of these developments to the industry.  As Swift moves into the next phase of its strategy, it says it will continue to expand on its ability to interoperate with new systems, technologies, assets, and currencies. 

In its innovation labs, Swift been proactively exploring potential solutions to the challenge of extending global interoperability to CBDCs and tokenised assets for a number of years now. Recently, the cooperative brought the industry together in a series of breakthrough research projects to explore how existing Swift capabilities and infrastructure can seamlessly support interoperability across different asset classes and network types.  

Successful blockchain interoperability experiments have shown how Swift’s infrastructure can facilitate the transfer of tokenised value across public and private blockchains. And its Phase 1 and Phase 2 CBDC sandbox projects – carried out with leading central and commercial banks from across Europe, Asia and North America – demonstrated how Swift can interlink CBDCs on different networks and interlink multiple asset and cash networks.  

The cooperative’s vision is for its members to be able to use their Swift connection to transact interchangeably using both existing and emerging asset and currency types. 

A Swift statement said that it is further evolving its infrastructure to be able to offer its members the same level of access to emerging digital asset classes and currencies across a range of use cases in payments, securities, FX, trade and beyond. 

Building on what it has learned, Swift says it is paving the way towards real-world solutions capable of interlinking various forms of digital assets and currencies – including plans to test how to enable multi-ledger Delivery-versus-Payment (DvP) and Payment-versus-Payment (PvP) transactions on Swift’s global platform. In the future, this could enable securities buyers to simultaneously pay for, and exchange tokenised assets in real time on the network.  

Without a globally accepted digital form of money, the cash leg in the execution of DvP settlement is particularly challenging. As a result, Swift is looking at ways to connect tokenised asset settlement with the corresponding payment transfer taking place on its network. The payment leg will initially be made using existing fiat currencies, but will later be able to use tokenised forms of money, such as CBDCs, tokenised commercial bank money, or regulated stablecoins. 

Finally, Swift is also testing how its interlinking capabilities could be used as the technical solution to interlink emerging bank-led networks such as the US Regulated Settlement Network with other financial infrastructure.  

 

Salmon Software selects Necto to power cash management APIs

Salmon Software and Necto API have partnered to connect corporate treasuries to full-service bank API offerings. Customers of Salmon’s TMS will have the opportunity to access Necto’s multi-bank API aggregation, providing a single endpoint for real-time bank connectivity, bank account balances and intraday payments, regardless of data formats.

This streamlined approach aims to enable corporates to enhance their banking connectivity and slash complexity in their integration projects through Necto’s plug-and-play capabilities.

The collaboration with Necto will support Salmon’s expansion in the UK, Europe and the Middle East. A statement from Salmon says that the partnership will further enhance its offering to corporate clients seeking to enter new markets, or streamline cross-border treasury operations, by offering real-time, aggregated banking data from across the globe.

“Salmon Software is focused on bringing corporate treasuries the tool kit they need to drive real-time treasury management decision-making,” said Tom Leitch, CEO of Salmon Software. “Necto’s ability to aggregate banking data from multiple sources complements our treasury management solutions perfectly. It brings an integrated solution to our clients that enables them to operate across jurisdictions, seamlessly.”

 

A2A and instant payments set to spark new innovation wave

Account-to-account (A2A) instant payment solutions present a faster and cost-effective way to pay, bypassing expensive card networks. According to the Capgemini Research Institute’s World Payments Report 2025, the rise in their popularity threatens to challenge the dominance of traditional payment cards, with estimates suggesting they could offset 15-25% of future card transaction volume growth. With interchange fees and interest charges being a key profit source, financial institutions could view this as a significant risk with the potential to cost incumbents in the industry billions in lost revenue.

The European Payments Initiative’s Wero wallet is likely to accelerate adoption of A2A payments with a 37% reduction in card transactions predicted by 2027 across Europe.

“The continued surge in non-cash transactions is a watershed moment for banks and payment service providers,” said Jeroen Hölscher, Global Head of Payment Services at Capgemini. “The data indicates an inevitable shift to a future of payments that is instant and open. The progress seen with Pix in Brazil and UPI in India has laid out a clear marker that success hinges on private-public sector collaboration. While some financial institutions may upgrade their existing payment hub or tap into shared bank infrastructure, the fact remains that consumers are demanding instantaneity, and corporates are hungry and willing to pay a premium for innovative solutions that solve real business problems. The time is now to put those foundations in place.”

Two-in-three payment executives view the expansion of instant payments as vital to drive non-cash transactions. Consequently, banks need to jump on the instant payment adoption wave; however, concerns about fraud – echoed by the majority of payment executives in the report – deter much progress. With banks lacking robust defences, and the potential for liquidity concerns, many opt to receive but not send instant payments. Today, based on the survey, only 25% of banks can receive instant payments and 53% are fully capable of sending and receiving them.

For this report, Capgemini evaluated survey results across diverse business and technology parameters to understand banks’ preparedness for the adoption of instant payments. The report finds only 5% of banks showcase high business and technology readiness to solidify their position as instant payment adoption leaders. Notably, only 13% of European banks can claim a strong technology foundation for instant payments. This is particularly pertinent for EU banks and payment service providers (PSPs) with the October 2025 Instant Payment Regulation (IPR) deadline on the horizon, mandating all to offer full instant payment send and receive functionality.

For corporate treasury executives across insurance, retail and automotive sectors, inefficiencies across accounts payable and receivable processes create a significant cash flow headache. Over 80% still use manual, paper-based processes for accounts reconciliation resulting in nearly 7% of corporate revenue being tied up within the value chain. This potentially translates to billions of dollars being stuck that could be used to fund business activities. Instant payments and open finance can present a new path forward for these enterprises by offering real-time cash visibility.

Laurent Descout, Co-Founder and CEO of Neo, commented: “Research reveals that many corporates still depend on manual processes for reconciliation. Technology is no longer optional but essential for treasurers, as accurate data is crucial. Treasurers who haven’t yet upgraded should act swiftly to explore solutions that offer real-time cash flow reconciliation and forecasting, ensuring they stay competitive and efficient.”

 

Standard Chartered launches digital asset custody service in the UAE

Standard Chartered has announced a digital asset custody service in the UAE. The offering has been granted a licence by the Dubai Financial Services Authority (DFSA) within the Dubai International Financial Centre (DIFC), following the memorandum of understanding (MoU) signed in May 20231.

The service, which is designed to enable clients to safekeep their digital assets, has launched in the UAE due to its well-balanced approach to digital asset adoption and financial regulation, and marks a milestone in the bank’s digital asset strategy, initially supporting the two largest cryptocurrencies by market capitalisation, Bitcoin and Ethereum. Brevan Howard Digital, the dedicated crypto and digital asset division of Brevan Howard, is confirmed as the inaugural client for the product.

“The launch of our digital asset custody offering represents a pivotal moment not just for Standard Chartered, but for the financial services industry,” said Bill Winters, Group Chief Executive of Standard Chartered Bank. “We firmly believe that digital assets are not merely a passing trend, but a fundamental shift in the fabric of finance. With this new service, we are strategically positioning ourselves at the forefront of this next evolution in the custody business.”