BNP’s Petra Wikstrom: The human-robot hybrid is the way of the future

For Petra Wikstrom, a quant at BNP Paribas, soft skills are as important as technical know-how. As the current global head of the bank’s execution and alpha solutions team, Wikstrom does transaction cost analysis for institutional investors and corporates.

Wikstrom has a doctorate in turbulence in fluid dynamics from the department of mechanics at the Royal Institute of Technology in Stockholm. For quants, an organization’s financial engineers who typically specialize in applying mathematical and statistical methods to financial and risk management problems, it is now even more imperative to keep an element of human engineering present in a business that relies heavily on technology, she said.

It’s a nod to a lot of familiar industry talk about robo-advice and the need to maintain a human touch through human interaction. Recently, BNP Paribas’ wealth management arm launched a mobile advisory service for its high net-worth clients whose biggest sell was a human advisor – at a time when most companies are touting robos. But in currency trading markets that run mostly on technology, Wikstrom says internal qualitative development can help deliver analytic content the right way. Tearsheet spoke with with Wikstrom about taking a human approach to an increasingly technology-driven world, both in the services BNP Paribas provides and in her leadership role.


How is technology driving the business?
A core part of what we see of development in the market is having access to systems and tools to get information about market liquidity and managing your own execution as it is live. Our automated FX execution strategies employ an adaptive execution technology, and also puts control at the fingertips of the investor to allow them to pilot their execution. We also focus on education around market liquidity and its structure, and access to people and experts. The two go hand in hand.

How has your background prepared you for this role?
My background has naturally helped me speak the language of a lot of our quant developers who have similar backgrounds. What I also really enjoy is human interaction, working with people and our clients. Bridging those two passions – the technology expertise while understanding what people need and how to ask the right questions – is a core aspect of my day-to-day work.

Speaking of that contrast, who will win the future – robots or humans?
The hybrid model is the way of the future. The pendulum might swing one way or another as we go along but it will be very clear for the industry that many problems will require some form of tailored needs and help investors to understand what any technology is and isn’t solving for them. The hybrid model is very similar in nature to an engineering approach where you essentially identify the need for improvement of process, what product or technology is best suited, and finally highlight what areas are not covered. There will always be the need for a human engineer or the expert that will know what solution fits and in what context.

What’s one of the hardest parts about your job?
Learning something new everyday is the challenge that I truly enjoy. Automation is accelerating the financial services industry in many aspects – and it’s not just in finance, it’s across industries affecting our day to day lives. There is a lot of information and we have to constantly keep on top of new technologies, keep abreast of what’s going on, and how this fits into the broader market. The focus is about getting access to the right information and what to do with it. We only have 24 hours a day.

‘More transparent forex is a race to the bottom’: How Kantox’s technology automates FX exposure for SMBs

Multinational companies transacting in multiple currencies have more to manage than the average SMB. Owners of ecommerce, travel, and digital advertising companies not only have to run a profitable business, but also develop strategies to limit forex risk to secure profits.

But figuring out when to sell Pounds or when to exchange Euros for Dollars is only half the battle. Relying on a bank or employee to execute complex strategies leaves a margin of error that can lead to hard earned profits disappearing.

One fintech upstart looking to limit the risk involved with managing FX positions is the London-based Kantox.

Most FX startups preach transparency and lower fees than when solving the FX problem, giving a side-by-side comparison with banks and showing the price difference. Kantox went in a different direction by building a technologically-advanced platform to proactively help solve a SMB’s needs

“In fintech, and specifically FX, companies’ strategies were marketing driven: educating the market that FX isn’t transparent and then presenting a more competitive solution,” said co-founder and CEO Philippe Gelis. “But at some point we need something more, mainly advancing technology.”

Kantox’s technology solutions range in complexity from simple processing of FX orders to complex APIs and payment hubs. An SMB can connect its Treasury Management System to the Kantox platform, allowing for simultaneous payments in multiple currencies to destinations all over the world.payments_hub_-_kantox

One of Kantox’s newest products is its Dynamic Hedging solution. The software allows companies dealing in multiple currencies to automate their FX exposure. Clients input currency exposure strategies, and the software automatically executes the game plan.

Trying to tackle forex exposure tactics à la Transferwise or WorldRemit would only offset price. But for SMBs, lower costs are a good thing, but not everything. Moving $500 to your wife’s account in Estonia is a lot different than paying 11 vendors in four different currencies by midnight or you’re out of business.

“Our view was that in the long run, trying to be more competitive with transparent forex companies is just a race to the bottom,” explained Gelis. “We focused on how to bring more than savings to a business. This is why we’re gaining traction; clients appreciate value over price.”

Even though Kantox isn’t using the same model as low fee forex companies doesn’t mean transparency isn’t important. Kantox displays the mid market rate to clients, and is open about what it charges: five basis points on the FX rate and a per trade fee that depends on the size of the client. At the end of the month, SMBs using the software get an invoice with a monthly summary of fees.

Kantox is still small when it comes to FX. $4 billion has moved through the platform since its inception in June of 2011, and Dynamic Hedging has seen over $100 million in transfers since its launch. That’s a great start, but not close to becoming “mainstream”.

The tools that Kantox’s software provides allow managers to focus on running their businesses, not executing FX payments. SMBs still have to come up with hedging strategies to protect their profits, but can spend significantly less time on payments.