Case Study October 11, 2024 How Derivative Path’s FX Payments Solution Transformed a Regional Bank’s Approach to International Business Recently, I was chatting with a friend of mine who happens to be a Regional Commercial Banking executive. He was expressing frustration over how his bank could approach the largest manufacturer in his region with a compelling value proposition. Stephen Johnson Head of Sales This manufacturer operates globally and manages complex international supply chains and payrolls. Historically, they have relied on large money center banks for their foreign exchange (FX) needs. My friend wanted to offer something that could not only compete but also build a stronger, more personal relationship with this key perspective client. I was able to paint a picture for my friend on how Derivative Path’s FX Payments solution could solve his conundrum. Here’s the story I shared with him, which eventually led to a scheduled demo of our FX payments product. Understanding the Client’s Challenge Imagine a large regional manufacturer with operations spanning multiple countries. They deal with suppliers and employees across various time zones, requiring them to handle a significant volume of cross-border transactions. Historically, this manufacturer relied on major financial institutions for their FX needs, but they faced high fees, slow processing times, and a lack of personalized service. My friend, the Regional Commercial Banking executive, wanted his bank to offer a solution that could match the sophistication of these large institutions while providing the local, personalized service that sets regional banks apart. The Solution: Derivative Path’s FX Payments Real-Time FX Pricing One of the primary challenges this manufacturer faced was the unpredictability of currency exchange rates. With Derivative Path’s FX Payments solution, they could access real-time FX rates, ensuring competitive pricing and cost transparency for all their international transactions. This not only helped manage their cash flow more efficiently but also reduced currency risk. Automated Cross-Border Payments The manufacturer’s finance team was bogged down by manual processes, leading to errors and delays. Our automated, cloud-based solution seamlessly integrated with their existing systems, reducing the administrative burden and speeding up transaction times. This efficiency translated into faster, more reliable payments to global suppliers and employees. Tailored Hedging Strategies Recurring payments such as payroll in multiple countries and supplier payments exposed the manufacturer to significant currency risk. Our tailored hedging strategies allowed them to protect against currency fluctuations, ensuring financial stability and predictability. By managing FX risk effectively, they could forecast their finances with greater confidence. The Conversation During our conversation, I explained how the bank’s relationship managers, equipped with these advanced tools, could approach the manufacturer with a compelling pitch: Understanding Their Needs: Demonstrating a deep understanding of the manufacturer’s operational challenges and financial goals. Personalized Service: Offering dedicated support and local expertise that large banks often lack. Competitive Edge: Highlighting how the bank’s advanced FX solutions can match or exceed the offerings of major financial institutions. The Impact Cost Savings: The manufacturer enjoyed lower transaction costs and more favorable FX rates, contributing to significant savings annually. Operational Efficiency: Automated payments and real-time pricing enhanced operational efficiency, allowing the manufacturer to focus on core business activities. Risk Management: Customized hedging solutions provided financial stability, reducing the impact of currency volatility on their bottom line, particularly for recurring payments like payroll and supplier payments. Strengthened Relationship: The combination of advanced services and local, personalized support strengthened their trust and loyalty towards the bank, leading to long-term partnership potential. Continuing the Conversation My friend was intrigued and saw the potential immediately. We set up a demo to showcase how our FX Payments solution could transform their approach to serving this key client. The excitement in his voice was palpable as he envisioned the possibilities. He could now offer a sophisticated FX solution that provided the competitive edge of large institutions while maintaining the personalized service that only a regional bank could deliver. Conclusion By leveraging Derivative Path’s FX Payments solution, regional banks can transform their value proposition. They can offer a unique blend of local relationship banking with cutting-edge financial technology, enabling them to win and retain business from major local companies. This powerful combination allows relationship managers to compete effectively with the biggest names in the industry, all while maintaining the personal touch that their clients value. For commercial banking relationship managers, the ability to present such a compelling value proposition can be a game-changer. It’s not just about competing with larger banks; it’s about offering a superior service that combines the best of both worlds. If you’re interested in learning more about how Derivative Path can help your bank achieve this, we’d love to continue the conversation.
