Best Practices and Benchmarks for FX Solutions - Aharon Navon, Co-founder & CBO of Grain Finance

Grain is an end-to-end embedded cross-currency solution that empowers software platforms and marketplaces to effectively eliminate cross-currency risk for their end customers. Through their user-friendly and automated solution, Grain's partners and customers can easily secure currency rates into the future and conduct seamless cross-border fund transfers. Grain’s team consists of industry professionals, including former employees of Barclays and Deutsche Bank, as well as successful fintech startup entrepreneurs.

We’ve put together some questions focused on currency solutions and best practices for startups.

Before we discuss best practices related to currency solutions, we would love to hear from you! What inspired you to start Grain?

The idea for Grain emerged from a blend of firsthand experiences with currency market complexities and a vision to harness technology for better financial tools. While large firms managed currency risks well, smaller businesses often struggled. This gap inspired Grain's creation, aiming to democratize sophisticated currency solutions for all business sizes.

Our innovation combines financial acumen with advanced technology, offering intuitive and powerful currency risk management. Grain isn't just about mitigating risks; it's about equipping businesses for global market success, making currency a catalyst for growth rather than a barrier.

Which industries do you think benefit most from currency solutions?

Industries heavily engaged in international trade, such as automotive, technology, and manufacturing, along with those in countries with unstable currencies, are particularly susceptible to currency volatility. This risk is even more critical for sectors like travel, supply chain, and retail, where FX rate fluctuations greatly impact low-profit margins.

Importers and exporters in these industries face significant financial risks due to exchange rate variations, influencing their revenues and expenses. While these sectors are most affected, all businesses dealing in multiple currencies experience the effects of FX volatility, underscoring the universal need for effective FX hedging solutions.

When dealing with cross border payment practices, what steps do you put in place to make sure that payment processes can be easily managed?

Grain streamlines cross-border payments with a robust system. We provide seamless integration for transaction reporting and offer quotes in local currencies for customer clarity. Grain assumes full FX risk, ensuring the promised rate is always delivered. The settlement process is automated, with currency exchanged at the guaranteed rate on the due date, either to businesses or directly to customers.

Additionally, Grain enhances currency management with efficient spot transactions for smooth currency conversions, simplified payment processes through local currency collections, and multi-currency wallets for easy management and handling of various currencies. This comprehensive approach makes managing cross-border payments more efficient and user-friendly.

Which platforms do you think would benefit more from currency solutions?

Currency solutions are particularly beneficial for three types of platforms:

• Software Platforms: By embedding Grain’s API, software platforms can enable their users to automatically hedge receivables and payables directly within their applications. This integration offers a significant value-add by simplifying and securing financial transactions.

• Payment Service Providers: For these providers, offering customers the ability to seamlessly hedge their cross-border flows is crucial. It allows for more predictable and stable financial management, especially when they need to send or receive funds in the future.

• B2B Marketplaces: These marketplaces can greatly benefit from enabling buyers and sellers to lock in exchange rates in advance. This feature guarantees the exchange rates for transactions within the platform, providing financial certainty and stability for all parties involved.

Each of these platforms faces unique challenges in managing cross-currency transactions, and Grain’s currency solutions are designed to address these needs effectively, enhancing their overall financial operations.

Can you provide best practices for managing your currency exposure?

Managing currency exposure effectively involves several key practices, integrated into a cohesive strategy. It's crucial to thoroughly understand your currency exposure by analyzing the currencies involved, transaction volumes, and frequencies. Implementing hedging strategies, such as forward contracts and options, is essential to mitigate risks associated with currency fluctuations.

Diversification of currency holdings can also play a significant role in balancing potential losses and gains across different currencies. Given the volatile nature of currency markets, regularly reviewing and adjusting these strategies is vital. This involves staying informed about market trends and leveraging technology for real-time monitoring.

One of the most effective approaches is to embed a hedging solution directly into your platform. Such a solution can automatically protect your exposure from currency risk, offering a streamlined and efficient way to manage financial transactions in different currencies. It's also important to maintain a balance between addressing short-term risks and aligning with long-term business goals.

Education and training for your team on currency risk and its management are equally important.

With the volatile nature of currency markets, how do you stay informed about global economic trends and geopolitical events to proactively adjust currency risk strategies?

To stay informed about global economic trends and geopolitical events in volatile currency markets, it's essential to adopt a streamlined approach. Regularly monitoring financial news and utilizing analytics tools are key. At Grain, we provide an intuitive dashboard that offers complete visibility and control over cross-currency activities. This tool not only keeps you updated with real-time market data but also helps in making informed decisions quickly.

Additionally, consulting with financial experts and leveraging risk management software can aid in developing a proactive strategy, allowing you to adjust your currency risk strategies effectively in response to global economic shifts. This comprehensive, yet efficient approach ensures that you are well-equipped to navigate the complexities of the currency markets.

Tell us a little bit about your team. What's their background?

Our team consists of skilled professionals spread across Tel Aviv, North America, and Europe. Our founders are seasoned entrepreneurs with diverse backgrounds, having previously worked at leading institutions like Barclays and Deutsche Bank, and prominent fintech startups including Melio. This rich mix of experiences fuels our passion for making financial solutions accessible to businesses of all sizes.

We have a substantial R&D team, which also includes talented data scientists dedicated to innovating and improving our financial solutions. Together, this blend of expertise and backgrounds positions us uniquely in the industry, ready to tackle the varied challenges faced by businesses in managing their global commerce.