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Australian fintech aims to minimise small business FX risks

Australian fintech aims to minimise small business FX risks

(13 July 2016 – Australia) Earlier this week, Australian based fintech CurrencyVue launched their foreign exchange risk management platform.

The firm, which among startup hub, BlueChilli’s portfolio, is led by former foreign exchange and hedging solutions specialist, Matt Tyrrell. The fintech is backed by a private investor group including ex-SAP CEO Les Hayman and Head of Group Treasury at Tatts Group Limited Cale Bennett.

According to the firm, the platform is targeting small and medium sized businesses (SMEs), allowing them to “quickly and easily identify foreign exchange risk through a visual representation of their exposure”.

The impact of the EU referendum on the Pound is an example of how businesses can utilise the platform, Tryrell said.

“In the post-Brexit market shock, the Pound fell by about 10 percent against the US dollar. To put this in to perspective, this is the biggest one day drop in history. For an unhedged importer in the UK paying for goods in USD, this meant overnight they would be adding an extra 10 percent to their cost of goods,” Tyrrell said.

East & Partners Europe’s latest Business FX Program found that two thirds of SMEs and Micro businesses in the UK were exposed to currency risks, with 75 percent still relying on basic Spot FX products, with no currency risk management in place.

Conversely, that report found that the adoption of sophisticated FX hedging products was universal among big businesses, with all reporting the use of Option FX and Forward FX products in the last six months.

That’s a disparity CurrencyVue is seeking to minimise, according to Tyrrell.

"SME’s are at a huge information disadvantage when dealing in foreign exchange markets and we are hoping to change that by providing some of the sophistication available to institutional businesses to the lower end of town, for a fraction of the price. We are looking to level the playing field," he said.

CurrencyVue said that traditionally, businesses used manual processes to gain information and overview of the exposure, while it platform aims to streamline it.

"We are really trying to automate the process of quantifying FX exposures so businesses can be armed with all the information they need to make hedging decisions quickly," Tyrrell said. 

“The options available for an SME's are expensive and complicated treasury management systems that cost more than $50,000 a year. Otherwise they use spreadsheets which can be prone to human error when dealing with the complexities of FX hedging,” he said.

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