Control of FX payments revenue is within reach

Harnessing FX Payments: A New Revenue Opportunity

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Financial institutions have an opportunity to use new technology to take control of their own FX payments revenue for the first time.

International payments that involve foreign exchange (FX) transactions for clients have sometimes been an afterthought for many financial institutions. FX deal flow for financial institutions has been inconsistent and the technological challenges of implementing automation have meant that many firms have been happy to work with trusted dealer partners to handle international payments for their clients.

This meant, in practice, that large dealers were able to retain much of the revenue from FX transactions linked to international payments by financial institutions – even though the dealers did not manage the end-customer relationships.

Today, financial institutions have an opportunity to reverse this dynamic and take control of their own FX payments revenue. This breakthrough is possible because of advances in technology that allow financial institutions to access state-of-the-art software-as-a-service tools for processing and risk-managing international payments on a cost-effective basis.

And the breakthrough is not just possible – it is also scalable, meaning that a regional bank can take a modular approach to managing payment flow, and then expand the use of a new solution as needed.

Going digital for Superior Customer Experience (CX)

Banks of all types now interact with their clients on a digital basis. One of the benefits of a software-as-a-service solution for FX payments revenue control is that it can be customized so that clients interact seamlessly with their regional bank. A simple, self-service interface provides live currency rates and allows the customer to track the progress of payments in real-time.

Financial institutions have automated access to a robust FX liquidity pool and visibility into payments for internal team members that is linked to the service provided to the end customer. This can reduce the need for customer support calls and emails.

Managing risk

Crucially, the adoption of new FX SaaS solutions can be a tool to improve the risk management of international payments. Many of the settlement complications of a deal in a foreign currency can be outsourced to the FX solution. Customer beneficiaries can be set in advance and payment limits can be pre-configured.

This does not just reduce the risk of a mistake in processing a payment in a foreign currency that might require an expensive amendment. It also allows financial institutions to demonstrate to their own regulators that they are in full control of payment risk exposure.

Boosting revenue

And this control extends to revenue generation. An integrated payments technology solution allows financial institutions to set pre-agreed FX spreads for transactions, along with a target for the mark-up to be charged to end customers.

In the fiercely competitive foreign exchange marketplace, liquidity providers will always be necessary. Now, new SaaS technology allows financial institutions to manage exposure in advance, rather than simply reacting to changes in market conditions.

Cost-effective implementation

A new FX payments solution can be additive to existing technology rather than involving an expensive onboarding process that replaces legacy functions. One of the benefits of a bespoke software-as-a-service solution is that implementation can be handled on a cost-effective basis that does not impose burdens on in-house development teams.

The benefits of tailored FX payments SaaS solutions quickly result in the form of higher fee-based revenues which are scalable in nature and can build exponentially.

Future-proofing non-interest income

This scalable opportunity from taking majority control of FX payments revenue effectively gives financial institutions the chance to build and future-proof a contributor to non-interest income.

2023 has been a challenging year for financial institutions and the competitive landscape is not going to get any easier. A ‘higher-for-longer’ interest rate policy from the Federal Reserve might offer the prospect of a revenue boost, but the pressure on lending margins is not going to abate.

That makes a viable path to an increase in non-interest income for financial institutions absolutely essential to future growth and stakeholder confidence. A move to take majority control of FX payments revenues via cost-effective use of new technology offers financial institutions an opportunity to deliver vital non-interest income.

Don’t miss out on this opportunity.

For more on Derivative Path’s innovative FX and International Payments solution, click here!


The Term “Derivative Path” refers to affiliates, Derivative Path, Inc. and Derivative Path Hedging Solutions, Inc. Derivative Path, Inc. is headquartered in the State of California. Hedging advisory and execution services are provided through Derivative Path Hedging Solutions, Inc. (DPHS). DPHS is a Commodities Futures Trading Commission (CFTC) registered Introducing Broker (IB) and Commodity Trading Advisor (CTA) and member of the National Futures Association (NFA). This communication is for informational purposes only, is not an offer, solicitation, recommendation, or commitment for any transaction or to buy or sell any security or other financial product, and is not intended as investment advice or as a confirmation of any transaction. This communication is intended as an information resource only; Derivative Path has taken reasonable measures to ensure the accuracy of this communication. Any information contained herein is not warranted as to completeness or accuracy, and Derivative Path accepts no liability for its use or to update or keep any such information current. The content of this communication is subject to change at any time without notice. For additional information, you can read more here.

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