UK regulations push SVB further towards automation
Silicon Valley Bank (SVB) has partnered with foreign exchange fintech, Kantox, after admitting UK regulation “is always getting tighter”.
Head of transactional FX solutions at SVB, Adam Dowsett, told FinTech Futures: “Regulation is always getting tighter so we need to utilise partner technology to adhere to those regulations and automate as much as possible.”
The partnership will see SVB serve Kantox’s hedging technology in just a couple of weeks to its business customers to mitigate transactional FX risk.
The technology can monitor thousands of business transactions each day in real-time, minimising the complicated risk when businesses manage receipts from more volatile countries.
Currently, only UK SVB customers will benefit from this product, but Dowsett says SVB and Kantox “have positive ambitions to see it go further afield”.
Despite tighter UK regulations, Dowsett is still optimistic: “It is strong but it’s clearly defined. If you’re happy to take time to understand that regulation you can work within those parameters and achieve a lot. Brexit aside, the environment here is very supportive.”
The SVB executive is fully aware of instances where UK banks have adopted technology poorly leading them to receive a fine from the financial conduct authority (FCA) – the Bank of Scotland were fined £45m this year.
This is why SVB chose Kantox, calling the solution provider “rather unique in the market at the moment” because it offers a micro-transactional solution rather than a more holistic, multi-national solution.
When the high-tech commercial bank chose Kantox, Dowsett says his criteria came down to this: “Do they really solve a problem that our clients have? If they don’t, then it’s probably a bad fit.”
Come September, Dowsett anticipates a boom in the use of dynamic hedging, noting “a few people are enjoying the stay-cation or European holiday at the minute”.
Dowsett joined SVB a year ago but has been in FX for nearly 17 years. Now an advocate for what the UK entrepreneurial spirit has to offer the FX industry, New Zealand-born Dowsett jokes: “I came to the UK for two years and here I am 15 years later.”