e-Forex Magazine recently interviewed Steve Godfrey on e-FX technology and what is on the horizon for Wells Fargo. The following is an excerpt from that article.
How does Wells Fargo differentiate itself from other large banks operating in the currency markets?
Our focus is on our customers and fulfilling their needs, and this takes a variety of different forms such as addressing their liquidity needs or providing extensive risk management services. One main area where we differentiate ourselves from our competitors is by delivering FX alongside payment and cash management services through a deep integration with treasury products and services provided by other Wells Fargo units. In the FX group, we help provide customers with global cash management services, including payments, trading, and providing extensive risk-management support by working with clients on analyzing their FX risk exposure using quantitative techniques and providing hedging services which can involve forwards or other derivatives. The overall goal of all activities is to help our clients achieve their objectives.
What sort of clients does Wells Fargo provide online FX services for?
Our customer base ranges from consumers to financial institutions. Within that spectrum, we have retail consumers, high-net-worth individuals, small businesses, medium-sized or middle market businesses, large corporates, and then financial institutions (FIs). And for us, FIs include many downstream banks who are using some of our FX products to service their customers or international FIs who might be using us for their primary U.S. dollar account.
What are the core FX e-commerce solutions and integration toolsets that Wells Fargo currently provides?
Our products are delivered either through a user interface or via application programming interfaces (APIs). Our flagship e-commerce offering is called Foreign Exchange Online (FX Online) and is available through Wells Fargo’s Commercial Electronic Office® portal (CEO®) which is the primary delivery mechanism for any electronic solution for wholesale customers. A key product-development driver for Wells Fargo’s FX group is to remain integrated with the rest of the products the bank offers and CEO is a powerful way to make this happen.
We also have a series of APIs or system interfaces which enable our customers’ to embed our foreign exchange services into their own digital environment. While we provide our customers with liquidity and trading capability using APIs, we also use them to collaboratively design workflows helping our customers to be more efficient.
What drives the on-going development of your digital strategy and the evolution of your electronic FX services?
The suite of Wells Fargo APIs are available through our developer portal Wells Fargo Gateway. This model, like CEO, offers a wide range of services, of which FX is one, through a single client-entry point. It uses cutting edge web service technologies which are often used by fintech and new technology companies. The Gateway is designed to give our clients ease of access and the developer tools needed to get up and running very quickly. The Gateway is innovative in the ease and flexibility at which client solutions can now be deployed and allows us to combine FX services with other banking services to create highly customized and broad solutions for customers.
In what ways do Wells Fargo’s e-offerings compliment the bank’s voice trading services and do you think further electronification in FX will eventually spell the end of hybrid dealing?
Voice is still an important way that we deliver service to customers, and we believe it’s going to continue to be an important part of the equation. Routine transactions lend themselves to being done electronically, such as cash management transactions or the initiation or rolling of standard hedge contracts. But if a customer is facing a unique, new, or complex scenario such as a large M&A deal, liquidity challenges, or the use of a new hedge instrument, they may need to talk to a specialist about strategies for risk or liquidity management. I don’t see that conversation about strategy going away but it’s possible that the discussion eventually leads to the use of an electronic or algorithmic tool for execution.
What factors usually determine whether you develop your e-FX products in-house or outsource their construction to specialized vendors?
We operate using all models and describe our platform as a hybrid. We build plenty of technology in-house but we also buy or license and, in some cases, partner with technology providers when appropriate. We determine which path to follow by thinking about which technological pieces will best differentiate us from our competitors. We also consider what parts of the business process are commoditized and for those components, the best technology solution.
Looking ahead, what plans does Wells Fargo have in the relatively near future for launching new e-FX products and toolsets?
We will continue to enhance and expand the capabilities of our FX API offering, alongside our colleagues in other product areas. We’re continuing to build out our FX algo capabilities to help with our liquidity management and to make it available to customers. We are working on a new version of the corporate flavor of FX Online called FX Online 3 which includes mobile capabilities and are also developing, in partnership with Wells Fargo’s wealth management division, enhanced FX services for high-net-worth customers. Our focus, as always, is on serving our customers.
Steve Godfrey is executive vice president and head of Foreign Exchange E-Commerce, Wells Fargo Securities, based in San Francisco. View Full Article (PDF)