Rules-Based Approach To Currency Trading

Nils Waldmann, of Nordea eFX Solutions Connectivity Sales and AutoFX, tells how a customer request led the bank to break through internal silos.

Nils Waldmann, Nordea

Global Finance:  How is your FX hedging solution unique?
Nils Waldmann:  AutoFX automates the entire process chains of foreign exchange risk and liquidity management that normally require high-level attention and manual work in treasury departments. With Auto FX, three to four manual steps, perhaps across different banking systems, have been reduced to straight-through processing via a rules-based automated setup. AutoFX has disrupted the traditional treasury setup through automated efficiency and reduction of the need for trading platforms and functionalities that may have been provided by treasury management system providers.

GF:  How did the idea for AutoFX evolve?
Waldmann:  The inspiration for AutoFX came from a customer asking us to take over their FX handling on a daily basis. As this was neither legally compliant nor possible for us as a bank to execute manually on behalf of the customer, we were inspired to build a rules-based solution that would take care of it. As the customer said, “You have all the information about our accounts in your systems, so surely you can build a solution around it to do the actual trades that it takes.” They were right, so we did!

GF: What were the key challenges to creating this solution?
Waldmann:  As with all projects, it was difficult to secure funding. Often, new services also challenge your own organization and existing business, so the combination of those elements was tough to overcome.

Developing new products in the banking industry is often a long, bureaucratic process with lots of internal stakeholders. It is also a process that can choke creativity and innovation. At the very least, it often prolongs the crucial time to market. With AutoFX, we developed a prototype with a group of pilot customers on a small scale, which allowed ample customer feedback and quick adjustments along the way. Only once we knew we were on the right track was the prototype “bankified,” and put through the normal product-development process. Following the customer inspiration detailed above, we called an internal brainstorming meeting. Soon after, we produced a sketch and called in the customer to get feedback. Already, we were confident enough to build our first prototype and begin testing with dummy trades. We could see immediately that this was a solution that could really deliver value to our customers in general, so that also drove us on to develop the optimal solution.

GF: How has this inspired future projects?
Waldmann:  AutoFX showed the power of working across internal units, as Nordea Cash Management and Nordea Markets combined to deliver the best solution. This joining of strengths internally requires a new, agile culture for large organizations—but thankfully this is supported at unit and group level at Nordea. We have introduced initiatives and ways of working that mean we can work directly with customers and new entrants. It is a new era, where banks like Nordea have to compete or work with fintechs that are smaller, more agile and idea-rich, with short times to market. Nordea is adopting some of this culture and more agile ways of working so we can be an ideal partner for third parties and customers. [Our] Transaction Banking [team] is a leader in developing Nordea’s strategy and products with the aim of staying competitive and crucial in the future payment ecosystem. This object has been borne out through initiatives, such as the specially formed Innovation Lab, with responsibility for fintech collaboration and initiatives around PSD2 and other areas