Commerzbank is investing in another Fintech company. Via its early-stage investor Main Incubator, the bank is investing in the FX-Fintech 21 Strategies. This was announced by the research and development unit of Commerzbank on Monday, April 20th. Together with the venture capital company Forest Capital from the United Arab Emirates, Commerzbank is investing a seven-digit amount in the Munich-based FX-Fintech, which, according to Main Incubator, was only officially founded on April 9th this year.
That means the shares of 21 Strategies will be divided between the Main Incubator, Forest Capital and the Fintech founders Yvonne Hofstetter, Christian Brandlhuber and Scott Jon Muller. Together, the three founders hold the majority in the start-up. The parties involved did not comment on the exact distribution of the shareholdings.
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FX-Fintech wants to completely automate hedging
The Start-up 21 Strategies is promoting its Hedge 21 tool to provide treasurers and CFOs with a data-based and automated solution that supports the hedging decision-making process. According to 21 Strategies, the company wants to close a gap in the already largely software-supported hedging process of companies.
The background: many treasury departments have already automated large parts of their hedging process in commodity and currency management. Only the decision when and to what extent hedging transactions are concluded is often made by a human being. The basis for this decision is sometimes many years of industry experience or even an immediate or basic feeling or reaction without a logical rationale, according to the communication.
FX-Fintech creates probability forecasts
This is where FX-Fintech 21 Strategies comes in: The tool is “cognitive, but not a black box,” said founder Yvonne Hofstetter, who is also the CEO of the company. It is based on machine learning and, according to Hofstetter, combines quantitative and qualitative information such as interest rates, inflation rates, GDP growth and geopolitical developments provided by the markets with internal constraints imposed by a company’s individual hedging process.
“Based on this situation and taking into account the hedge policy of the respective company, the model makes hedging decisions,” explained 21-Strategies co-founder Christian Brandlhuber at an event organised by EY in Munich at the beginning of February. It not only specifies a hedging quota, but also whether the time for hedging is good or bad.
At that time, three companies had agreed to test the tool in currency management. “One of the previous customers of 21 Strategies is an internationally active company from the MDax,” the Main Inkubator announced at the request of DerTreasurer.
Banks use Fintech expertise in digitalization
Not only Commerzbank, which is investing in a technology-driven start-up for the 19th time with its stake in 21 Strategies, wants to support its corporate customers in automating their currency management.
Last autumn, BNP Paribas also entered into a strategic partnership with the British company Fintech Kantox, thereby adding a tool for automating FX hedging to its treasury services.
Through the partnership, the major French bank is offering its corporate customers in Europe, Africa and the Middle East a solution from the Fintech Kantox. Other banks could follow with similar investments.
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First published in Der Treasurer, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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