The Forex Edge: What it takes to succeed in the Forex Market

Welcome to the latest episode of The Zista Podcast, where we explore the vibrant world of forex markets and related career opportunities. Our esteemed guest today is Himanshu Singhal, a seasoned finance professional with a rich 19-year tenure at Kotak Mahindra Bank. 

Starting as a trainee and moving in to become an Executive Vice President, Himanshu has worked with every part of the treasury domain —operations, technology, systems, and sales. He played a key role in both setting up the derivatives back office and promoting forex products. In 2020, he started a new chapter as an entrepreneur, working to make real estate investing accessible for everyone.

In this enlightening episode, we tap into Himanshu’s diverse experiences, extracting essential insights for our listeners. We discuss the inner workings of forex trading, explore the strategic structuring of bank sales forces, and understand what fuels a successful career in Forex Trading. 

Welcome to the latest episode of The Zista Podcast, where we delve into the intricate world of forex markets and the diverse career paths within this field. We’re thrilled to present our esteemed guest for this episode, Himanshu Singhal, a dynamic professional with a prolific 19-year journey at Kotak Mahindra Bank, where he climbed from trainee to Executive Vice President.

Himanshu’s journey doesn’t stop at the corporate world. In 2020, he took a bold step towards entrepreneurship, endeavoring to democratize access to global real estate investing. Combining his corporate acumen with entrepreneurial vigor, Himanshu offers a unique perspective on the landscape of finance and investment.

Whether you’re an aspiring forex trader, a finance student, or an entrepreneur looking to understand the dynamics of the investment world, this episode is laden with pearls of wisdom. Join us as we explore these intriguing topics with Himanshu, equipping you with practical insights to navigate your path in the forex and investment landscape.

KEY TAKEAWAYS

• Understanding Forex Trading: Forex trading involves various roles such as balance sheet management, forex trade finance, and forex sales. These roles require a comprehensive understanding of international markets, business, economics, and people skills.
• Digital Advancements in Forex: The rise of digital platforms and robot-assisted trade executions has transformed the forex trading landscape. However, human interaction remains crucial, emphasizing the need for a balance between technological proficiency and people skills.
• Bank Sales Force Structure: Banks structure their sales teams based on the size and type of their client companies. Recently, new-age companies and startups have emerged as a separate category, suggesting the rapid evolution and importance of these enterprises in the market.
• Industry-Specific Knowledge: Though not always formally categorized, having specific industry knowledge can significantly aid a salesperson’s effectiveness. Understanding the nuances of different companies and industries allows for a more tailored and efficient service.
• In-Depth Knowledge and Perseverance: Succeeding in fields like Forex and Investment Banking demands a deep understanding and perseverance. Early roles that provide insight into the inner workings of the industry, like back-office roles, can be invaluable for later career progression.
• The Role of Passion: Finding a career path that keeps you engaged and interested is crucial. Passion drives dedication, and it is this commitment that sets successful professionals apart.

Q1. How does Forex trading work?

A: Himanshu offers a comprehensive explanation of how Forex trading works by breaking it down into its individual functions and roles.

To illustrate, he draws an example of starting a bank with an investment of 100,000 rupees. He states that as per regulatory requirements, the bank can lend up to 80,000 rupees. If a customer, let’s say a corporation needs a part of this loan in dollar bills, that’s where the bank’s Forex Treasury team comes into play. This team handles balance sheet management, involving the bank’s borrowing in foreign currency.

He explains the importance of understanding how balance sheets work and how international markets influence borrowing situations, as well as the concept of ‘Trade Finance’. He illustrates this with an example of a corporation which might need to import a bulk order of computers from Dell in the U.S. but lacks funds. Here, the bank provides a ‘letter of credit’ – essentially guaranteeing payment to the supplier (in this case, Dell), while the bank assumes the risk of the transaction and the currency movement.

For a more interactive role, Himanshu highlights the function of the Forex Sales team. The ‘Corporate Banker’ bridges the gap between the internal function of the balance sheet management and the Forex Trading team. They engage with external stakeholders (i.e., clients) and internal ones. He emphasizes the need for a treasury salesperson to understand businesses, global markets, and their interplay.

The third team, the Forex Trading (or Interbank) team, works strictly with internal customers. 

The modern landscape, Himanshu adds, has seen changes like the rise of digital Forex platforms and robot-assisted trade executions. Nonetheless, he underscores the human-centric aspect of Forex Sales roles, where understanding economics, businesses, and people remain crucial.

So, in this context, he suggests that a successful career in Forex management would require an understanding of businesses, markets, and the inherent skills required for these distinct functions. He advises those interested in the field to stay updated with digital advancements but not to underestimate the power of human interaction and relationships in closing deals.

Q2. How do banks structure their sales force?

A: Himanshu provides an insightful perspective into how banks structure their sales teams. The organization is primarily based on the size and type of the client company. For instance, in Kotak, there are specific teams catering to different scales of corporations.

The highest echelon includes conglomerates, where teams focus solely on mega-corporations like TATA, Birla, and Reliance. The second category is large corporates, encompassing businesses such as Kapa Industries.

Then there are smaller and medium enterprises, which are companies with a top line of one hundred crores or below. This is followed by two more categories. One of these caters to multinational corporations (MNCs), which requires a distinct skill set due to their unique operations and requirements.

Lastly, in the recent 7-8 years, a new category has surfaced, focused on new-age companies and startups. Himanshu observes that this category might soon merge with one of the top three tiers as these companies are rapidly achieving parity with their larger counterparts.

While discussing specialized knowledge or industry expertise, Himanshu states that it does help significantly. As a salesperson, he had been assigned companies from various sectors, including the IT and petroleum sectors. This assignment was based on his personal research and understanding of these industries. The ability to comprehend the nuances of each company and industry helped him to interact effectively with each of them. Thus, offering a well-rounded service that took into account the unique requirements and characteristics of each client.

Q3: Does each bank follow a similar or different approach in structuring their sales forces?

A: Himanshu observes that many prominent banks, including ICICI Bank, HDFC Bank, Axis Bank, and YES Bank, follow a similar approach in structuring their sales force. Within the broader category of corporate segmentation based on turnovers, some members of these teams might have a stronger understanding of certain industries. However, Himanshu hasn’t seen any formal categorizations based on the type of industry or a domain-specific approach in these banks.

In contrast, investment banks often assign banking or telecom experts to relevant companies, creating a form of industry-specific segmentation. This level of segmentation hasn’t been observed in the aforementioned commercial banks, possibly due to their flatter structures.

For instance, in a competent sales team that Himanshu was part of, there were about 40 people handling accounts across India. This team was managed by three regional heads and a sales head, making it quite a flat structure. Given this structure, industry-specific knowledge might not be as relevant,  when compared to the understanding of the companies’ size and turnover.

Q4: What motivates an individual to stay within the domain of Forex Trading and continue to gain expertise in this field?

A: Himanshu points out that his journey in Forex trading began with operations, where he gained invaluable experience working on systems and implementations. After these foundational years, he transitioned to sales. The adrenaline rush of executing large transactions, securing clients, and devising innovative solutions were key aspects that fueled his interest.

Himanshu emphasizes that each client, transaction, and product in Forex trading is unique, making every interaction a learning experience. 

Q5: What can students do to succeed and build a career in the Forex space?

A: Himanshu suggests that roles in Forex and Investment Banking might seem glamorous, but they demand a certain level of understanding and perseverance. He admits finding Investment Banking challenging himself, illustrating the need for introspection before diving into these roles.

Early in his career, Himanshu realized the value of in-depth knowledge in his chosen field. He enrolled in a Forex course in the UK, given that such detailed studies were rare at the time. This proactive approach led him to a job offer from Kotak Mahindra Bank, where he surprised many by choosing to work in the back office. For him, this role presented a crucial learning opportunity about the intricacies of Forex, providing perspectives that later fueled his career progression.

Himanshu’s advice revolves around passion. He defines passion as an obsession that keeps you awake, and he encourages students to find that in their careers. 

Himanshu also highlights the importance of anticipating client needs and striving to exceed their expectations. To illustrate this, he compares a hypothetical scenario where you’ve eaten eggs for breakfast, and during a noon meeting, you’re offered more eggs. But if instead, they offer you your favorite Chinese dish, your delight would be apparent. This is akin to understanding a client’s need and meeting it with passion and dedication, leading to what he terms “customer delight.”