FOREIGN EXCHANGE | Roxanne Uy, Singapore

SMEs still prefer conventional FX risk management

But bankers say that those with higher FX volumes could conduct such activity online.

ABF: With more and more large corporations starting to manage their exposure electronically, How can banks help SMEs transition from a more of “manual” risk management to “electronic” FX risk management?

DBS: Teo Kang Heng, Managing Director, Corporate Advisory, Treasury & Markets
SMEs generally do not need sophisticated risk management policies or systems. SMEs with conservative risk management policy commonly use vanilla FX instrument to hedge their FX risk. Most prefer to consult an FX specialist over the telephone. Those with higher FX volumes would conduct such activity through online FX or cash management platform. Today, most banks offer an in-house cash management platform that offers an integrated view across multiple products such as fixed deposits, loans, deposits and FX. Such platforms can help SME customers effectively manage their FX activities, and are gaining popularity.

CITIC Bank International: Woody Chan, Treasurer
Even SMEs now could rely on electronic platform in managing FX risk, e.g. CITIC Bank International Transaction Banking is going to offer full electronic / internet banking with cash & payment capability.

But there are times when we can not rely too much on electronic platforms because at times we need to sit down with the customer, talk, and analyze in order to come up with a solution. But for things as simple as buying a product or a local currency, what the client needs is efficiency as well as the pricing. Normally the banks will provide those simple products on the electronic platform so that the clients could be just sitting at the office or logged on the internet so that they can see the price that they want and they can hit and execute the order.

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