BANKING
“ New technology also has the knock-on effect of making FX more inclusive in two ways . First , reduced costs create benefits for everyone in the value chain and makes FX more accessible . Second , the need for cutting-edge FX solutions is powering digital innovation hubs in emerging markets , which are establishing themselves as new centres for financial technology .
“ FX innovation has the potential to be the engine of intra-regional trading in previously underserved markets . In regions such as Africa and Latin America , where regional economic integration is incomplete at a legislative and infrastructure level , technology can be transformative . This makes business and investment easier and more affordable .”
How has fintech transformed forex ? The advent of new platforms for making crossborder payments , and trading commodities ,
has resulted in a ‘ democratisation ’ of forex . By 2019 , this had catapulted trading in forex markets to $ 6.6trn a day , according to research by the Bank for International Settlements ( BIS ). This was up from $ 5.1trn a day just three years earlier .
All of this is set in the context of a recordbreaking period for fintech generally . 2021 was a “ remarkable year ” for the sector , according to KPMG ’ s Pulse of Fintech report ,
“ WE MUST FOCUS OUR EFFORTS ON USING FINTECH TO HELP DEVELOP THE REAL ECONOMY ”
ERIC HUTTMAN CEO , MILLTECHFX
with strong investment and a record number of deals in every major region . In forex specifically , this is highlighted in Visa ’ s $ 929 million deal for foreign exchange payments platform CurrencyCloud , which was announced last summer .
Yet despite the progress made in the retail market , there is still a sense that commercial forex lags behind .
“ Few areas of financial services have remained so stubbornly analogue , for so long , as commercial foreign exchange ,” says Seth Phillips , founder and CEO of forex hedging platform Bound .
“ True , the sector ’ s liberalisation in the early 2000s spawned a number of non-bank forex providers and boosted competition . But this new wave of FX brokers consisted mostly of ex-bankers whose model was to undercut bank pricing while still making a fortune – by charging a variable and opaque mark-up on the customer ’ s exchange rate , rather than a transparent and easily comparable fee .
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