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Assure Hedge launches OpenHedge, its platform for Embedded Hedging

By Joy Dumasia

April 26, 2022

  • Assure Hedge
  • B2B
  • Banking-as-a-Service

Assure Hedge announced the launch of OpenHedge, its platform for embedded hedging, at the FTT Embedded Finance & Super Apps Conference. Assure Hedge has as its mission to bring hedging to everyone, working with a broad range of distribution partners to close the massive currency protection gap that exists today. Research shows that while 80% of large companies with currency risks hedge their currency exposure, 80% of SMEs do not, and still fewer individuals. As a result, millions of people face unmitigated risks to their businesses and livelihoods, estimated to be over $100 billion annually.

This currency protection gap arises because of complexity, access, and cost. Firstly, not many institutions offer hedging products, owing to cost and regulation. Secondly, hedging services are typically presented in highly technical language. And thirdly, costs can make it prohibitively expensive for SMEs and individuals to cover their exposure.

To address the currency protection gap, Assure Hedge has launched OpenHedge, its platform for embedded hedging. Embedded hedging solves the problem of access because hedging is proactively offered through a channel partner the customer is already using, such as when they are making a purchase. Embedded hedging also solves the problem of complexity because a simple solution is offered to a simple challenge, like guaranteeing how much a company will pay for a service in three months’ time. And lastly, Embedded hedging solves the cost problem. Since the service is fully digitized, all the analogue administrative and distribution costs are removed, reducing the cost to the end customer.

OpenHedge is an API-first platform that allows hedging services to be embedded into any partner’s app or user experience. OpenHedge is built on 3 pillars:

Hedging-as-a-service: Simplified, contextually relevant and self-service hedging over the right channel at the right time

Embedded Credit: credit at the point of need, meaning end customers do not need to advance any funds

Banking-as-a-service: wallets, payments and cards that allow partner brands to broaden their embedded finance offering to address more complicated use cases

Barry McCarthy, Founder & Head of Embedded Hedging at Assure Hedge, said: “Embedding hedging into everyday activities is the key to addressing the currency protection gap. The reason is that we need to reach the people who are not hedging today, and we need to present a simplified solution to their currency exposure at the time that exposure arises. Without that, hedging will remain the privilege of only very large companies with treasury teams and corporate bankers.”

OpenHedge is already being piloted for several use cases. The company has entered into innovation partnerships with cloud accounting companies and B2B marketplaces and believes the solution is also highly applicable to international payroll companies, universities and freelancer platforms, whose users are subject to future-dated currency exposures.

Tony Connelly, CEO & Founder of Accounts IQ, a cloud accounting software firm which has entered into an innovation partnership with Assure Hedge, commented: “At AccountsIQ, we are committed to using embedded FinTech to help our customers save time and money. AccountsIQ users have operations across over 80 countries, so they deal in multiple currency transactions constantly and have exposure to FX rate fluctuations. By integrating with OpenHedge, we can allow our customers to dynamically hedge their currency exposures based on actual transactions in AccountsIQ – at the best rates possible. By using OpenHedge hedged rates over the course of the financial year, CFOs get certainty by locking in their budgeted rates for the year so they can focus on the trading results of their businesses rather than the gains/losses generated by currency fluctuations in the markets where they trade.”

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