Fintech

Managing foreign exchange (FX) risk is a significant challenge for global businesses due to volatile currency markets, which can lead to unpredictable costs and risks. Traditional FX hedging methods often involve over-hedging or paying high risk premiums because of inaccurate forecasts of cash flows and FX exposure. On 7 May 2025, UK bank Barclays was announced to have adopted AI to enhance the efficiency and resilience of its global treasury management operations. This is expected to help customers to reduce foreign exchange-related costs and risks against global volatilities. The project entails the integration of an advanced AI-powered forecasting model into its FX hedging platform. This model uses a transformer architecture with billions of parameters and sophisticated time-series forecasting algorithms to predict cash flow and FX exposure with over 90% accuracy on hourly, daily, and weekly bases. The AI model continuously improves its predictions through pre-training and supervised fine-tuning techniques. Also, by embedding it into the bank’s FX hedging workflows, Barclays is enhancing the precision of forecasting FX exposures, enabling more accurate prediction of trading volumes, reducing unnecessary hedging and lowering risk premiums. The AI platform also supports digitalization of treasury workflows and optimization of FX hedging strategies, particularly benefiting sectors such as e-commerce and payments. Said the bank’s Head of Global Fintech & FX Automation Sales, Ben Parkinson: “(The) state-of-the-art AI model has improved the accuracy of forecasting cash flows and helped us optimize the FX hedging process… We’ve been able to reduce uncertainty and cost, setting a new benchmark for FX risk management.” Looking ahead, Barclays plans to continue evolving its FX automation capabilities and expand the AI-enhanced solutions to cover more currencies and business needs, aiming to reduce frictions and boost cost-efficiencies in cross-border transactions. Kelvin Li, General Manager, Platform Tech, Ant International, the incumbent technology vendor for the bank, said: “The results that we have achieved… demonstrate how technology can enhance the way businesses manage their global liquidity, by enabling more efficient FX transactions. It also shows how enhancing our treasury management can benefit our customers, when businesses translate the cost efficiencies into competitive FX rates.”

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