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Understanding Currency Movements – a conversation with Tony Redondo
23 Plays15 days ago
Tony Redondo has worked in international currency markets for over 35 years. He has seen how the introduction of technology, FinTech, into the banking industry has radically changed the way in which banks and their customers interact with each other.
These changes have says Tony had a detrimental impact on the banking industry. Putting his money where his mouth is Tony has established Cosmos Currency Exchange.
Investments can go down as well as up
This episode of The Independent Minds includes a conversation about investing. Before you make any financial investment, it is important to obtain independent financial advice.
In this episode of the Abeceder podcast The Independent Minds, host Michael Millward laments on the challenges of trading internationally and having to use different currencies.
Tony describes how algorithms make a huge number of exchange rate changes possible every day. Companies need to plan their use of international currencies more proactively, says Tony, which is why he set-up Cosmos Currency Exchange.
More information about Tony Redondo and Michael Millward is available at abeceder.
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Transcript
00:00:05
Speaker
Made on Zencastr.
Introduction to 'Independent Minds'
00:00:07
Speaker
Hello and welcome to the Independent Minds, a series of conversations between Abysseedah and people who think outside the box about how work works with the aim of creating better workplace experiences for everyone.
00:00:23
Speaker
I am your host, Michael Millward, the Managing Director of Abysida.
Guest Introduction: Tony Redondo
00:00:28
Speaker
to Today, my guest, Independent Mind, is Tony Redondo, the founder of Cosmos, a currency trading business.
Podcast Creation on Zencastr
00:00:38
Speaker
As the jingle at the start of this podcast says, The Independent Minds is made on Zencastr. Zencastr is the all-in-one podcasting platform on which you can make your podcast in one place and in the same place distribute it to the major platforms like Spotify, Apple, Amazon and Google YouTube Music.
00:01:01
Speaker
Zencastr really does make making podcasts and other content so easy. If you would like to try podcasting using zencastr visit Zencaster, visit zencaster.com forward slash pricing and use my offer code, Abysida.
00:01:19
Speaker
All the details are in the description. Now that I have told you how wonderful Zencaster is for making podcasts, we should make one. One that will be well worth listening to, liking, downloading and subscribing to.
00:01:34
Speaker
As with every episode of The Independent Minds, we will not be telling you what to think, but we are hoping to make you think.
Tony's Background and Cosmos
00:01:43
Speaker
to Today, my guest, Independent Mind, who I met at matchmaker.fm, is Tony Redondo, the founder of Cosmos, a currency trading business.
Financial Market Discussion and Advice
00:01:55
Speaker
Although Tony is a Londoner, he is now based in Cornwall, which is in the deep west of the West Country of England. When I go to Cornwall, I make all of my travel arrangements at the Ultimate Travel Club because that is where I can access trade prices on flights, hotels, holidays and all sorts of other travel-related purchases.
00:02:17
Speaker
There is a link and a membership discount code in the description. Now, before we start, I must point out that Tony and I will be discussing finances, money.
00:02:30
Speaker
Our conversation is not intended to be advice to any one individual or any one individual organisation. We are talking very generally about a particular financial market.
00:02:43
Speaker
If you are considering any investment, you must be aware that investments can go up in value and can go down in value. It is important that before any financial investment, you seek independent financial advice.
00:02:59
Speaker
Now that we've got the warning over, Tony, I can introduce you. Hello, Tony. How you doing today?
Tony's Career Beginnings in Banking
00:03:04
Speaker
I'm very well. Thank you, Michael. Thank you for inviting me. It's great to have you here.
00:03:10
Speaker
I am fascinated by the way in which currency is traded and what happens and how, as a small business owner, I can sell more internationally one quarter than I did the previous quarter but actually make less money because of the exchange rates and because they can work for me and they can work against me.
00:03:35
Speaker
And I want to know more. I want to understand why. Before you start explaining it to me, could you please just give me a little bit of a potted history of how you built your expertise in the currency markets?
35-Year Banking Journey
00:03:50
Speaker
Yes, of course. um I ended up having a 35 year corporate career in the banking world. before I set up Cosmos in 2020. During that time, i joined banking in 1985 as a result of the second Fetcher government's liberalisation of financial services that allowed the world in to the city of London.
00:04:14
Speaker
They needed it staff. I was at a time a 19-year-old kid without any real idea of what I wanted to do in life, um but I had to a certain talent for maths.
00:04:26
Speaker
And I thought joining finance would be you know very glamorous and globetrotting as I'd seen in the films. It was far from that, but it was it was my in to the city of London.
Banking Culture in the 80s and 90s
00:04:39
Speaker
And then I progressed through the ranks. So, Tony, you mean it's not like it is in the films? You didn't have red braces. No.
00:04:52
Speaker
People did wear braces at a time and drinking was allowed and three hour lunch breaks. It was wonderful back in the 80s and 90s.
00:05:01
Speaker
You have three hour lunch breaks, but lunch in the films is for wimps. That's right. According to Gordon.
00:05:10
Speaker
Yeah, we're going to find out an awful lot about the the city of London, I can tell. But Kate, you're 19. You find yourself, because you're good at maths, working in international finance.
Mentorship and Learning in Banking
00:05:20
Speaker
What happens next? I was, look with the benefit of hindsight Michael, I feel very privileged because I'm probably the last generation to be taught by bank managers when bank managers were still bank managers.
00:05:38
Speaker
People with vast years of experience um and I started at the very bottom ah of the of of the corporate ladder and learnt a lot from the bottom up.
Opportunities During Recession
00:05:54
Speaker
But by 1992, I'd had by then seven years experience, um newly qualified from Guildhall University.
00:06:05
Speaker
And then, of course, with the recession in 92, the banks made the fateful, took the fateful step of getting rid of a lot of middle management and opening up the call centres overseas to save money.
00:06:19
Speaker
And for young people with a little bit of experience like me, obviously that was beneficial because he catapulted their subways.
Transition to Property Finance and Forex
00:06:28
Speaker
Every down's turn has an upside for someone.
00:06:32
Speaker
Yeah, absolutely. Absolutely. So you get moved up the corporate ladder and you're doing international finance, corporate currency transactions, all these sorts of things.
00:06:45
Speaker
You must have gained an awful lot of knowledge. Absolutely. So i started off in general banking, um sort of high street banking if you like, then joined a a trust company that specialised in property finance, specialist property finance.
00:07:05
Speaker
Did that for a few years and and and it was through that that I got into foreign exchange you in the late 90s when when Again, like a lot of things in my life, and you know it wasn't planned as such. All that happened was that as as my clients got wealthier, one of the things they would end up generally doing at a time was quite you know fashionable to have an overseas property a buy and buy an overseas property.
Pre-Euro Currency Complexity
00:07:35
Speaker
And I'm Portuguese by birth, I'm bilingual.
00:07:38
Speaker
Portugal is currently popular with the British. um and um if asked i would help out with introductions and translations and helping out with the purchase and then got involved with at the time was the conversion of the pound sterling to the portuguese scooter because it's pre-euro time yeah i remember the pre-euro times and uh traveling around numerous countries in europe with a wallet that had so many different currencies that's right yeah exactly
00:08:11
Speaker
So many different currencies, marks and francs and guilders and pesos and, you know, lira. Oh, it was like, because I was in a different country every day of the week.
Exchange Rate Changes and Impact
00:08:22
Speaker
You know this is one of the reasons why I'm fascinated in this, by this currency transfer and how much more even a credit card transaction in one country can end up being cheaper when you pay in your own currency.
00:08:35
Speaker
or actually much more expensive because of something that is absolutely nothing to do with you. It's just the movement of the money. Yeah, that's right. So you're working in in the currency exchange markets.
00:08:50
Speaker
You mentioned about this ah this learning from the traditional bank managers who, as a customer of a bank, meeting the bank manager was meeting somebody very important.
00:09:02
Speaker
And it has to be said that some of them some of them knew that they were important. But that was all part of the the seriousness ah of managing money, I think, in many ways.
00:09:14
Speaker
Now, you can manage money on a on a mobile phone app. You can manage money over the telephone. Managing money is a serious business, and and that's one of the challenges.
00:09:28
Speaker
of being someone who's grown up in that era, then transferring to an era where it's a press of two or three buttons and
Technology in Currency Markets
00:09:35
Speaker
you've moved money around. And it's it is a big, big, not obstacle, but it's a big cultural shift and to go through that.
00:09:44
Speaker
But that is one of the issues though, isn't it? That when you set up Cosmos, that's one of the issues you were trying to address. Absolutely. So what I saw from the turn of the millennium onwards,
00:09:56
Speaker
is the takeover of technology in the finance industry and especially in currency exchange. And so towards the end of my 35 year career, you had a situation where the majority of currency brokers were technology only platforms where sometimes they even have a telephone number on the website.
00:10:19
Speaker
So the client had to self-service on a one size fits all generic platform. And The technology is very clever, but at the end of the day, I believe my life experience is that us humans are social creatures and it's good to talk and it's good to get you know an opinion and advice from somebody who is knowledgeable, who can guide you through it rather than learn from your own mistakes.
00:10:46
Speaker
And that's gone completely out out of a lot of the finance industry, based especially currency exchange.
Founding of Cosmos
00:10:54
Speaker
And so that's where I started to think about there's a gap in the market and that's what led me to set up Cosmos in 2020.
Strategic Currency Management
00:11:05
Speaker
yeah Because when you say that a lot of currency transactions are done through technology online, one of the, I suppose, advantages of it, it may be a disadvantage, but I was astounded when you told me how quickly the exchange rate changes.
00:11:29
Speaker
That's right. to Every three seconds, night and day. Yeah, 24 hours a day, seven days a week, every three seconds, the exchange rate changes. 28,800 changes every hours.
00:11:45
Speaker
Every time then that we buy something from abroad, every time we travel abroad and start spending local currencies, which we will then repay in our own currency, whether, you know, I'm in the UK at the moment, so I would pay it in sterling.
00:12:02
Speaker
Do you notice there how I said, I'm in the UK at the moment, trying to make out I'm a really big international traveler. Jet setter. Well, yeah, this sort of thing. But I would pay it in Sterling. But because the the rates change so quickly, i have absolutely no idea, really, how much it is that I am going to finally spend on whatever it is that I am buying.
00:12:30
Speaker
And that is a consequence of the automated currency transfer, ah currency um conversion market.
00:12:40
Speaker
It is. And one one of the issues for clients, Michael, is that if you're a small, medium-sized business and it's never been easier to have overseas suppliers and overseas clients because everybody's online these days.
00:12:54
Speaker
But the issue then is that a lot of people, because of the technology or because the majority of the offer on currency brokerages is a one size fits all technology only platform where the client has to self-service.
00:13:10
Speaker
people will then look at an invoice, right, I need to pay this on such and such a date, and that's when they all buy the currency to settle the invoice.
Guidance for Optimal Currency Transactions
00:13:21
Speaker
But that might not be the right time to buy the currency, but there's very little guidance in the market to say to a client, hold on a second, if you have the cash flow, by maybe there is, and you can work with, like you used to, you used to be able to work with your bank manager and say to the bank manager, I've got this bill to pay in you in euros, for example, I need to pay a supplier in Germany by the end of the month.
00:13:50
Speaker
Can you let me know when the right time is to purchase the the currency so that that invoice in euros costs me the smallest amount of sterling possible?
00:14:01
Speaker
That's the kind of thing that I saw time and time again in my early days, obviously not in euros because was long before the euro, but that that That was every day. So i' would like to say to you, Michael, that you know I'm a great blue sky thinker, but I'm not.
00:14:16
Speaker
All I've done with Cosmos Currency Exchange is really taking it back to my early days and and felt and had a feeling that there was still a demand for that kind of personalized relationship-based service um and launched...
00:14:35
Speaker
in a very interesting year in everybody's life, of course, 2020, the year of the lockdown. But it's proven to be the right thing to have done. Great.
00:14:45
Speaker
So it's been very successful. But for me to understand this, what I'm thinking is that in a big corporation, they will employ someone who's going to manage the various different currencies that the organization has to trade in.
00:15:01
Speaker
Mm-hmm. And that means that that person is doing that, for want of a better expression, the old time, old fashioned process of analyzing the actual currency markets and deciding on the basis of lots of information and lots of experience and lots of analysis, what is going to happen in the various different currency markets over the next 24 hours, the next week, the next month, all those sorts of things.
00:15:33
Speaker
When you are trading on a digital platform, you take what you are given, but you take the rate that you are given at that point in time. But what you're saying is that smaller organization who couldn't justify having that type of person on board, assessing when the right time is to send money abroad or when the right time to ask for payment of an invoice is.
00:15:59
Speaker
you can provide that, I suppose, strategic service. You've described it as a personal service, and I don't ah don't doubt for a a moment that it is, because you've got to get involved in the organisation and work out what it needs.
00:16:14
Speaker
But it's also ah very strategic service, isn't it? It's not, you know, I need some money, I'll phone up p Tony and he'll find it for me. You are talking about... you are talking about actually planning with a client when they will need US dollars, when they will need euros, when they will need a South African rand, whatever currency it is and planning so that that currency is bought at the right time to get the best deal and then held in such a way that it also works for its it's living and then is used at the right time.
Global Opportunities for SMEs
00:16:56
Speaker
Correct. Absolutely. So yeah, it is strategic because it makes a material difference to particularly SME businesses um where everybody's under pressure. or We all know the statistics from the the FSB as to how many businesses don't make it to year five, don't make it to year 10.
00:17:19
Speaker
And this is a way where people can capitalise on the fact that we live in a world that's never been more interconnected, therefore everybody's online, therefore it's never been easier to get overseas clients and overseas suppliers.
00:17:34
Speaker
But as you said earlier, it's one thing getting the business, but you've got to make it pay.
Convenience of Cosmos Currency Accounts
00:17:39
Speaker
Now, I can't get involved with the ins and outs of the negotiation between the parties, but what i can do is be the client's eyes and ears in the market so that within whatever timeframe they have to settle a bill or they're receiving funds from Nevisys clients to try and make the most of that transaction for my clients.
00:18:02
Speaker
And that can, I suppose, sometimes mean balancing the needs of your client and the needs of their supplier. So everyone's a winner. Absolutely. Absolutely. One of the things that has worked really well for us because it's, it's a real, um,
00:18:21
Speaker
it just simplifies life, is that the SME client, first of all the SME client who approaches Cosmos, don't have to have the expense and the hassle and the management of a load of currency bank accounts in their own name, which are available in for the major banks in the UK, but at a price and need managing like any bank account does.
00:18:49
Speaker
We take that all out of the market. All the client has to do is register with us on our usual no-cost, no-obligation basis. That gives them access to over 35 currency accounts in London, plus two local collection accounts, a US dollar account based in New York and a euro account based in Dublin.
00:19:11
Speaker
The advantage to that is that if you're an SME with a dollar client based in the United States, Typically you would go to your bank, open up a dollar account with your bank and there are the bank details that you provide on your invoice.
00:19:28
Speaker
That's costing you money.
Simplified Cross-Border Payments
00:19:30
Speaker
Worse still, when he arrives the other end of the pond in the United States, that client has to send dollars abroad.
00:19:40
Speaker
Because bank managers are no longer bank managers, with due respect, um and There's not a lot of explanation like that like I saw in the early part of my career.
00:19:51
Speaker
Nobody's told the clients that overseas payments cannot be done online in the United States. Somebody has to physically go into a bank branch, fill out a form, ask the bank to do it and incur a fee.
00:20:07
Speaker
Contrast now with the Cosmos approach where the client saves money and leave the time and the hassle of opening up their own currency accounts because they don't have to they simply register with us and then we give them access to all those currency accounts the client then tells us that they've got new client based in the united states the their invoice goes out with our dollar account details in new york rather than our dollar account details in london and that when he arrives in the united states because you're asking
00:20:41
Speaker
the client has sent funds to New York, it will be done online 24 seven free of charge. So in a way, it helps cement the relationship between both parties this because it's making life easier.
00:20:54
Speaker
It's taking obstacles out of the way. There's nothing people like more than an easy life though, is there?
Security and Client Fund Protection
00:21:00
Speaker
Absolutely. i mean, people are busy. People have got so much to do that any little thing, well not so little, but even a little thing that helps save time save hassle, save money, with no downside because all those accounts are fully authorised by the Financial Conduct Authority, the UK regulator, so they're all protected clients' accounts.
00:21:27
Speaker
If something untoward would happen to Cosmos Currency Exchange, nothing would happen to those client funds because they've never hit our office accounts. They're always held in protected client accounts, so there is no downside to this arrangement.
00:21:42
Speaker
Unless you feel talking to me is a downside, but know that's another matter. Well, people have to make up their own mind about the pros and cons of it of any type of any type of proposition that is made for them. But any dealing, any financial exercise attracts a risk of some form or another.
00:22:00
Speaker
And we just have to always be mindful of those sorts of things.
Post-Brexit Euro Transaction Costs
00:22:04
Speaker
But yeah Are there examples of clients that you've had who have seen their profitability improve because of the way in which they, because they've changed the way in which they manage their international finances and international contracts?
00:22:23
Speaker
Absolutely. So a typical and example that is still happening to this day is with British clients dealing with with the European Union.
00:22:36
Speaker
So typically you invoice in euros and in certain countries before Brexit, so before the 31st of January 2021, you invoiced a client in Spain, for example, um the Spanish bank would charge their client usually a flat fee of about 20 euros to get the euros wired to an account in London.
00:23:04
Speaker
in settlement of the invoice so that it can be converted back to sterling. Post Brexit, a lot of banks in certain countries in the European Union are now charging up to a 1.5% fee.
00:23:20
Speaker
So on a thousand euros, that's 150 euros that somebody's paying when they used to pay 20 euros. And if if it's a relationship where perhaps you're invoicing weekly or monthly,
00:23:35
Speaker
all of a sudden that adds up.
Overcoming Financial Service Disadvantages
00:23:37
Speaker
The solution that Cosmos offers is we can channel that euro payment back through a client protected account, client collection account in Dublin, in Ireland which is still part of the single market and therefore under EU banking law the EU banks are not allowed to charge percentage fees for domestic transfers and it's seen as a domestic transfer because it's within the single market.
00:24:04
Speaker
So again, it's a way of making life easy for everyone. You're saving your purchaser. for For our client, we'll typically be the UK exporter.
00:24:17
Speaker
yeah you're You're making life as easy as possible and you're saving money. because uh your purchaser and therefore making life easier that should cement the relationship or at least yes it does seem being cynical for a while totally out of character for me that um so many different aspects of the financial services market are full of uh built-in disadvantages should we say that the system hurdles hurdles ah built is designed to incorporate yeah the financial services are full of hurdles which have to be overcome and if you don't know what you don't know you're not going to you're going to fall at the hurdles you're fall at the first fence and it's going to cost you an awful lot of money
00:25:13
Speaker
you know, where is it, you know Tony, where is it that people can find out more information about Cosmos?
Further Information on Cosmos
00:25:19
Speaker
On our website, www.cosmoscurrencyexchange.com will be the ideal place. There's a contact us page there with all our contact details.
00:25:30
Speaker
Right. It's a long website address. So just tell it to me again, please. www.cosmoscurrencyexchange.com Brilliant.
00:25:42
Speaker
It has been really interesting to find out more about some of the advantages and disadvantages, how the foreign currency market works, and also the solution which you have devised to make it easier for small to medium-sized businesses and big businesses, I suppose, to actually work the the markets to their advantage, to think about it much more strategically rather than transactionally.
00:26:07
Speaker
It's been a real insight. And as someone who runs a business that trades internationally, it's been a great insight. Thank you very much. Thank you very much for the invites, Michael. It's been a pleasure.
00:26:19
Speaker
It's been great. Thank you. I am Michael Millward, the Managing Director of Abbasida, and I have been having a conversation with the independent mind, Tony Redondo of Cosmos Currency Exchange.
00:26:34
Speaker
You can find out more about both of us at abbasida.co.uk. There is a link in the description. I must remember to thank the team at matchmaker.fm for introducing me to Tony.
00:26:46
Speaker
If you are a podcaster looking for interesting guests, or if like Tony, you have something very interesting to say, matchmaker.fm is where matches of great hosts and great guests are made.
00:27:01
Speaker
There is a link to matchmaker.fm and an offer code in the description.
00:27:07
Speaker
If you're listening to the independent minds on your smartphone in the United Kingdom, you may like to know that 3.0 has the UK's fastest 5G network with unlimited data. So listening on 3.0 means you can wave goodbye to buffering.
00:27:21
Speaker
There is a link in the description that will take you to more information about business and personal telecom solutions from 3.0 and the special offers available when you use my referral code.
00:27:33
Speaker
The description also includes a link to Tony's website. Something tells me that description is going to be well worth reading. But, know, if you've liked this episode of The Independent Minds, please give it a like and download it so that you can listen anytime, anywhere.
00:27:51
Speaker
To make sure you don't miss out on future episodes, please subscribe. Remember, the aim of all the podcasts produced by Abbasida is not to tell you what to think, but we do hope to make you think.
00:28:05
Speaker
If you are thinking about any form of financial transaction, it is important that you receive qualified independent advice. All that remains for me to say is until the next episode of The Independent Minds, thank you for listening and goodbye.