Maria, your role allows you take a very specific view of the changes taking place in the FX markets. What do you believe are the most significant trends to take note of?
What really defines e-FX sales is being able to take a combination of the data, the technology and client feedback to continue to improve the overall trading experience for our customers. We are seeing three key developments which are helping re-shape the way we do business. Firstly, the data-driven approach taken by an e-FX salesperson today is very different to the role of a salesperson just five or ten years ago. The technological advancements that have taken place in such a short period of time are considerable. Another area that we’re very focused on at Deutsche Bank is the development of workflow solutions. We believe it is vital to talk to our clients about their currency requirements managed outside of their traditional FX dealing desks to find alternative ways to support their business and work with them to further improve these workflows and bring down costs. Then a third area I’d call out is how we continue to innovate our core services such as with electronic pricing for emerging market (EM) products.
Can you outline for us how the e-FX offering at Deutsche Bank has evolved over the past year?
Last year proved to be a highly volatile year in terms of macro events, inflation and so on, especially in emerging markets. As a result, FX was very much a priority for many clients. This focused attention on what we are able to provide, not just in terms of research and voice execution but also in making sure that we are better connected on the e-FX side. We ensure we are offering solutions beyond the day-to-day trading support, such as the analytics that clients need to help them in making those trading decisions. This includes our Market Colour application where we are continuing investment with more studies such as into trading predictors and cumulative volumes, more currencies and more products. Market Colour is where we direct clients to get more of a view of what the market liquidity looks like and the costs involved before they make those trading decisions.
What have you been working on in terms of developing electronic pricing?
A continuing trend in FX has been the shift from aggressive to passive execution, which we have addressed with our Deutsche Bank Principal Resting Order (PRO) order type. Since its launch it’s been proving very popular with our institutional clients due to certain features which allows clients to customize and interact with the order and the ability to access our overall eFX franchise liquidity.
On the algo execution front we also have Stark, our new dynamic, intelligence-seeking algo that has received excellent feedback from clients who use TCA benchmarking across algos. Stark is not a scheduled algo but one that can look at various parameters and offers the client access to our franchise liquidity, while also promoting internalisation, reducing market impact and information leakage. Asia and Latin America are also important growth areas, not just for e-FX but for the bank as a whole. We’ve always been very strong in Asia and are continuing to grow that side of the business and offer services across the onshore markets, as well as expanding our LatAm footprint. We are now also investing in our EM and NDF pricing capabilities to incorporate a more quantitative approach, leveraging resources from our electronic businesses. It’s an exciting time with more coming over the next few months.
You mentioned a focus on workflow solutions. What developments have you looking at there?
Our aim with institutional and corporate clients is to provide them with FX liquidity, better connectivity and to constantly improve their overall experience with Deutsche Bank. This means we have broader discussions about various parts of their business including areas such as payments, restricted markets, and third party FX, to consider alternatives to what they do today. This includes looking at how we can automate some of their more routine tasks and processes, hedging solutions or access to onshore markets. For example, our automated rolls offering continues to be a very popular product with customers for their forwards and swaps. In addition, we’ve been working with clients about third party FX for those that require access to restricted currencies and to provide them with an alternative to meet their FX needs.
Can you share more detail about how the role of e-FX sales has evolved and how that has improved the overall client experience?
If you were to look at what an e-salesperson was doing five to ten years ago, it was a much more reactive role. Today, it is a much more data-driven proactive perspective. The entire e-sales approach has changed considerably. The key investment has not only been in accumulating and gathering the data, but also a significant increase in the sophistication of what we can do with that data.
As soon as the data hits our environment, we’re able to capture it – so we’re now able to look in real-time at the client activity, requests we haven’t priced, understanding our hit rates and so on. Using these data points, we are able to understand more about the client experience while it is happening, and we no longer need to wait until we see a report at the end of the day, week or month to understand the client activity and take action. So now, in addition to focusing on how to improve trades and valuations, we are also able to respond to client questions or requests for information as they come in. It could be as simple as making sure that they want to trade in a certain currency and we can react to that very quickly to get an understanding of their requirements.
We can also use the valuation data to indicate where there may be a level of market impact and then discuss with clients our suggestions on how they might be able to further hone and improve their execution. This enables us to have an ongoing client conversation, rather than just checking in with clients every so often. This role is all about knowing your clients and understanding what they want. Clients are also going through their own changes, so it is important that we stay connected and up-to-date. The relationship aspect of the role has not really changed, but the tools available to us and our clients’ strategies have become far more sophisticated.