Today on the IC-DISC Show, we’re talking with Bob Blades, the president of Blades International, a foreign exchange consultancy based in Houston.
They have a great niche business in which they act as an advocate for their client to ensure the foreign exchange rates they pay are fair and reasonable.
I discovered during the call that it’s just the nature of foreign exchange to have a lot of complexity, so they assist their clients in making sense of that complexity.
Bob has some great success stories from clients in a variety of different businesses. Although they have historically worked primarily with multi-national Fortune 500 clients, their service is now a viable option even for companies with under a million dollars a year of foreign exchange.
Their free analysis is a great way to see the indicative savings you could achieve, and they are a very knowledgeable and enthusiastic group of people to work with.
So, I learned a lot about foreign exchange myself. It was a really fun interview, and I hope you enjoy it as much as I did.
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Contact Blades International
To find out more about the services Blades International provide, your can call (713) 977-7400, or visit www.bladesintl.com
IC-DISC Show 014 Transcript
Dave: Hi, Bob.
Bob: David, good afternoon. How are you doing?
Dave: I’m doing great. Thank you.
Bob: Are we on the podcast?
Dave: You’re live.
Bob: Are we live now?
Dave: We are live. Yep. We are live.
Bob: Well, I appreciate the opportunity, and delighted to speak to you the other day and set this up.
Dave: Yeah, the pleasure is all mine. So let’s get started. My guest today is Bob Blades, the founder of Blades International, Inc. Bob began his career in 1979 as a foreign exchange intern with Texas Commerce Bank, where he remained throughout a 30 year career dedicated to international banking. He served as vice president and manager of the bank’s European division in Houston. And then as the bank merged to become JP Morgan Chase as senior vice president and manager of the trade and to international banking divisions. After 30 years with the bank, Bob established Blades International in 2009. As a broker and advisor for international trade finance, your firm advisors and brokers transactions for corporations, banks, and foreign multinationals specializing in structured trade finance, letters of credit, foreign exchange, and XM bank solutions, such as guarantees and insurance support US exporters.
Your company’s known for its innovative FX rate service called FX rate integrity. And you earned a BBA with honors and an MBA from, my alma mater, the University of Texas. And he is a native Houstonian. And along with his wife, Cindy, is blessed to have four children and six grandchildren. So, wow. Welcome to the show.
Bob: Well, thank you. Thank you, David. No, it’s a pleasure. And I recall you and I must have met some years ago as we both have a passion for international business, international trade, and we both have, I guess, niches in helping exporters. And so I have an appreciation for what you do because I can remember studying at the University of Texas about the DISC, which became a FISC, and I guess it’s now an IC-DISC. So I have an appreciation for how you help your clients save money related to their export trade. There’s some similarities as we also help exporters in the multinational companies with international trade.
Dave: Yeah. That is exactly right. And we appreciate what a great resource your firm has been not only to us, but to our clients through the years. So thank you for that.
Bob: Do we go to some questions? You’ll ask me some questions?
Dave: Yeah, that’s exactly what we’ll do. So what was it that prompted you to leave the bank after 30 years? Did you just see an opportunity in the marketplace?
Bob: Well, I did. About 10 years ago, I was fortunate to have an opportunity to pick up a couple of clients that had been good clients of mine while I was at JP Morgan Chase. One was a steel trading group and another was a major multinational engineering group. So with that, I started on international trade. And at first it was mainly structured trade, some Mexican bank business. And then we got into some letter of credit business, and it was just me at first. But then over time Jack Borland joined me who had been a long time colleague at JP Morgan Chase managing the foreign exchange business. And then a woman named Sherry Mama also joined us and she had been in Halliburton on the letter of credit side, and she’d been my longtime colleague at Chase in the letter of credit side. And then one thing led to another and we have a handful of other people that joined the business now. And we’ve evolved to where we are, as you mentioned, brokers and advisors and advisors for international trade.
So international trade has been my passion. We started out doing more loan advisory work, but with the downturn in the market in Houston a few years ago, that slowed down. Some of the challenges that XM bank has had, that slowed down. But fortunately, we had expanded our business to do more letter of credit and foreign exchange work. And today the fastest growing part of our business is the foreign exchange side. And as you mentioned in the introduction, we’re known and we’re promoting our service called Foreign Exchange Rate Integrity, a service we’ve trademarked and something that we’re investing in and growing and developing because we’ve had success in helping smaller companies, middle market companies, and in one case, one of the larger oil companies, and some multinational companies.
Dave: So let’s dive into that one. Tell me a bit more about FX Rate Integrity. So what is it and what’s it do?
Bob: Well, we have a contract with Bloomberg. And Jack Borland, he spent his career in front of a Bloomberg and knows how to use it well, because he used to manage foreign exchange at JP Morgan Chase. And he and I were longtime partners. While he was managing a team of traders, I managed the international side and I had clients like a Pemex, and Pepper Bras, The Wood Group, and the multinational companies that were here in Houston that were owned by European Asian companies. And those companies naturally did a lot of foreign exchange, so Jack and I did a lot of work. Well, then Jack joined the business about five or six years ago. And I had been dabbling on the foreign exchange side in terms of our advisory work. We put our heads together and we saw the opportunity to help clients be more efficient with foreign exchange.
So FX Rate Integrity is basically a rate service where we help our clients understand what they pay by way of markups for foreign exchange, and then help them get good foreign exchange arrangements or competitive arrangements. Jack and I are former bankers and we believe banks need to make money, they need to have a fair return, but what is often the case is there’s an opaque market and there’s an inefficiency, and companies can pay way up for foreign exchange if they are not paying attention or if they’re indifferent. So it took us a while. We started about five years ago, but today we’re doing more and we’ve had some good success, and we’re working on automating what we do to hopefully take it to an even higher level.
Dave: Okay. Could you give us some real world or give us a real world example of maybe a firm you’ve worked with on FX Rate Integrity?
Bob: Yeah. Let me tell you about a few stories if I can, because I love sharing about deals stories, and because we have nondisclosure agreements, I won’t go into names. But we got started and we helped a couple of modest sized companies, but our first big deal was for a major energy service company, used to be public. Now it’s part of the larger group, an energy service and a turbine company. And this is a company that Jack and I had helped from our days at JP Morgan Chase. And we looked at their data, we finally got their foreign exchange trades, including their timestamps, so we could look at our Bloomberg and go back to the very specific minute that they did these trades and see how much the bank made on these transactions.
And lo and behold, it was well over a hundred basis points. It was high for the volume of business that this company was doing. So we explained it to them and we shared what we wanted to do. And again, this was the early days and we were trying to establish this service. We were trying to sort out how we would market it, how we would provide it, what we would call it. So we were making our way. Well, the client said, “Thank you.” They went to the bank and immediately the rates were lowered and they shared some data with us, and they probably lowered the rates on the markups by like 80%, real significant savings. But then they came to us and they said, “Thanks.” But they didn’t hire us. And so we scratched our head and we thought, “Well, gee that was tough.” Because we basically gave a real good service.
So we stayed in touch. It was notable that we had a good relationship and we were still trying to think how we would do this, but we went back to the client some months later and they shared about six months of data. And then we put that on a chart and crafted as we analyze trades. And lo and behold, there was a real story. The chart showed a story. The chart showed that they’d been way up over a hundred basis points, how he’d come down significantly to less than 20 basis points. But then over that six month period, each trade was going up or kind of ratcheting up, maybe not each trade, but the trend was up. And it was real clear and it was obvious that by not monitoring or seeing, that they were going back up.
So that chart that we took to them and showed them was a real teaching moment. And at that point we were hired. And we went forward and lowered their markups. And I believe in that case, the average markups that they ended up paying was around seven basis points. And speaking of the energy service company, in their mind, they were doing a modest amount of foreign exchange. But it was over 20 million a year and it was significant. And when you looked at the inefficiency, it was nice savings. So we were delighted to have them be one of our first larger clients. And we stay in touch with that company today. And in fact, a while back, we helped them with what we call FX Rate Integrity Audit. They actually became part of a larger company and we helped their parent in them with what we called it. So that’s one story. Can I tell you another one?
Bob: So we learned a lot from that. And then one of my other favorite stories was a transportation company, a freight forwarder here in town. And again, this was a company that I had known from my banking days, and I visited with their CPA. I happened to know their CPA. CPAs have been very good referral sources for us. In developing this business, it’s important to us to collaborate, similar to how we’re collaborating here with you and spreading the message with what we’re doing is still innovative and it’s a new service and some people have a hard time understanding at first. So visited with my CPA friend and we talked about his client, which had been one of my clients. I said, “Well, it may be a modest volume, but let’s look at it.” So we had lunch with the controller and he brought some foreign exchange data. It showed that their annual volume was only about 2 million a year.
Well, we had done the larger company, which was over 20 million and we were trying to see how low we could go. So we said, “Well, let’s give this a look. Let’s see if we can help this company that’s only doing 2 million a year.” And modest trades, but 2 million a year in our eyes is significant. And I think in your business as well. I mean, if you can save somebody’s taxes on a couple of million, I mean, that adds up. So we at first saw a month’s worth of data and we said, “Yes, we’d like to help you.” We put an agreement in front of them. It’s a simple five page agreement. I believe we were paid a couple of thousand dollars upfront to be mandated and to go forward. And then our agreement was to earn a share of what we proved we saved them going forward over the next year.
And it took us a while to get to that arrangement, kind of learned that that was a good way to do it, but that was the deal. So then we studied nine months or a year of data, and this is what we call our backtesting process where we look and see what they have been paying in terms of markups. We definitively state what that is. And in this case, it was about 3.2% that the company was paying in markups. Now, this is notable, because over the sample period, they had done about 65 trades and they paid $15 for each one of those foreign exchange wire transfers. So disclose to them 65 times 15 is roughly around $1,000. And so disclosed was about $1,000 in fees. But on 2 million times the markup that the bank was taking, or the bank was earning, or that the company was paying 3.2 times 2 million is 64,000. So their real cost was 65,000, a thousand in fees, plus 64,000 markup.
And as we saw this, we explained, “This is high.” And for that volume, it is meaningful for a bank, but 3% or over 3% was simply too high. So the next step is along with Jack Borland, we put our heads together, he did a report, and we went and saw the company. We gave them a recommendation on how to approach the bank with the data and with the report, and basically asked for a better arrangement. In some cases there will be break points, like we’ll have a markup for up to 100,000 trades between 100 and half million or a trade over $1 million will be even lower. And so we gave them several options, like an A, B, C, D, actually like four different options of how they might do their break points and how they might do it, but they averaged around 50 basis points.
So we gave them the information, we coached them, we counseled them and we were going to stay in the back background. And interestingly they went to their bank and the bank immediately or fairly readily said, “Yeah, we can do better.” And they agreed to go to 50 basis points about what we had suggested. So we explained, “Gosh, that’s a good deal. Take that deal.” And that’s what we imagine. And so the savings was over two and a half a percent on 2 million, that’s a cool $50,000 a year savings. And this was for a middle market company only doing 2 million. And in this case, the CPA was really pleased because they generated Goodwill. In some cases, we pay revenue sharing to people that help generate business, but CPAs are our friends. And they say that their acting as fiduciary.
So they didn’t look for any kind of sharing of what we earned on this deal, but they generated a lot of Goodwill. And my guess is for this CPA firm, they may be earned 100,000 a year on auditing and tax work for this company, but here they helped the company save 50,000 in this one year on their foreign exchange markups. And so a real good deal. But there’s even more to this story, which is really kind of telling … can I keep going on this story?
Dave: Yeah, absolutely.
Bob: I got some others as well.
Dave: This is what this is all about.
Bob: But if you’re following this …
Dave: This is all about you telling stories and me listening.
Bob: And hopefully this is … I think you’re tracking with this and you understand, and you’ve listened to me before, but what’s really interesting here is this was the early days, so there was an understanding that the bank would charge 50 basis points. So what we did was on a monthly basis, the company would send in their data, and we would check it, and we would see that it was a 50 basis points. So we did that for the first month, second month, third month. And it was right there at 50. And what’s interesting is Jack Borland and I, and our team now understands that these trades are being done through a computer and through a formula or what we call algorithms. And it was notable that the rates were like right at 50, the markups were right at like 50 basis points. It’d be like 50.2 49.7, 50.5, but the average would come out and right at 50. So it was real notable. And we could tell from our days on the banking side, we’d know that the bank would set an algorithm to put them at markups of like 50 basis points.
But after the first three months we decided, “Okay, let’s just go to looking at this quarterly because this is going okay.” So we later got the data for the fourth, fifth, and sixth month. And I’ll never forget, Jack would do the data from backtesting and looking at the interbank market rates on Bloomberg. And he came to my office and he said, “Bob, look at this.” And it was notable that the bank had gone off the grid. Instead of 50, within the last few trades of that period, they went up to over 270 basis points. And so, wow, this was a teaching moment. So we called the client, we said, we needed to go see them. So we went to see the client.
I’ll never forget this, Jack Borland who’s one of the foremost authorities on foreign exchange in the Southwest basically said, “See the data. You had an understanding of 50 basis points, but it was verbal. And we need to get it in writing because that was always our intention, but we’re reviewing the data for the year so we thought we would see how things go. And then towards the end of the year, get it in writing. But we need to do it now, and you’ll need to talk to the bank, and you’ll need to confront them and explain your agreement was 50. But in these recent trades, they went to 270.” Then Jack advised the client. And this is what I’ll never forget. He said, “The bank may share with you that they made a mistake because they had your algorithm attached to perhaps another client and they changed the other client’s formula or algorithm. So they accidentally changed yours, but not to worry, they’ll change you back.”
And so this is what we shared that they might hear. The following week, the client called me said, “Gosh, Bob, you wouldn’t believe, but the bank shared with us basically what Jack said, that they made a mistake. They accidentally changed it, but they’ll change it back and they’ll put it there.” And we had been on the banking side, so we’d kind of seen that and likely what happened was they had a good deal. Maybe a manager came through and said, “Let’s change all these. Let’s up these.” Whatever. And just innocently raised the markups. But the Foreign Exchange Rate Integrity service caught that. Then we helped them get an agreement in writing such that the bank agreed to stay at 50 and let them know if they go off that. And that’s the way it stayed at 50 basis points for the rest of the year.
Notably that client, after they finished the one year period, what we call our advisory service where we basically earn a fee based on proven results or what we might call like a success fee. But after the 12 months they’re done. And so some months went by and we went back to him and explained for a real small fee, a real nominal fee we can actually audit their account. And they became our first audit client. So on a quarterly basis, we get their rates and we audit it, and they have an assurance that they have ongoing rate integrity. So one of our early stories and a real success story.
Dave: Those are great stories. And I’m guessing that audit fee is probably average out to be less than 200 basis points. Huh? The difference between-
Bob: Oh, well, in this case, no. And we don’t even put it into basis points. It’s interesting. But in this case, the company may do … maybe they do 80. I think it’s less than $150 a quarter. It may be only $600 a year or so for this company.
Dave: Oh, wow. That’s cheap
Bob: So it’s real low. And it’s interesting. And I’m glad you kind of bring this up, David, because at first we wondered about audit, but we want to stay in touch with these companies. We really don’t make money on our audit product if you take into account what we do and staying in touch with the client, but it’s important for us. And in fact, we’ve now developed audit and later I want to tell you a little bit more about the automation side, but can I tell you another story that I think would want to-
Bob: Another company, an out of state public company, manufacturer, mainly domestic, but they do Canadian business. And so I actually got to know the company and that’s another CFO in bringing up our business and Foreign Exchange Rate Integrity was kind of an aside, but they do about 10 million a year in foreign exchange. So we looked at their markups and we saw that they were at 200 basis points. And for a $10 million flow, that was way high. In this case, I’d actually not met the company. This was all over the phone, but we told them it was high. And similar to the story I told earlier, they basically came back and said they talked to their bank and their bank agreed to lower the markups. And at first, I believe they went to 50 basis points, but then they talked to their second bank and the second bank said they would do a lower. They actually went down to 25 basis points, from 200 to 25, but this was a company-
Dave: I would say almost a couple hundred thousand dollars a year.
Bob: Oh, yeah. Yeah. And you’re right. And that’s a big savings. But this was over the phone, brief discussions, getting to know somebody. Well, again, we were not hired because they felt they did it. Well, we stayed in touch. And so later I visited with the company and I decided I wanted to go see them face-to-face. And visiting with them, we talked about some other business. Then we talked about their foreign exchange. And I asked them if they were sure that they were 25 basis points and I asked them if they’re dealing writing. And they said, no, they didn’t really get it in writing. And they really weren’t sure. They’d been busy and rocking along, but they wanted to check.
And so this was on a complimentary basis or a free basis. They shared some more rates with us, but because I told them when the bank had told them they were 25, that might’ve been the case, but over a year had gone by. And I explained well, gee, that 25, it may be up 30, 40, 50 basis points, no telling where it is. And so they agreed. So they shared the data and we do our report, and we go back to them. And it didn’t move from 25 to 30, 40 or 50. It moved from 25 to 105. And so that much, it had quadrupled from what they had been told. But again, it had been verbal. They’d been told, “Don’t worry, we’ll go down.” But over time, over more than a year, during that period, the markups went up. And they just did, they weren’t watched.
That’s when we were hired. So it’s notable that it takes a while sometimes for companies to understand, but we were hired and then we gave the advice, explained. And at first the bank wanted to just go to 50 basis points, but we said, “No, the company needed to stress for that type of volume, for that type of flow and because of the other aspects of the banking relationship that we knew, that they deserved to be at 25 points.” And indeed they got to 25 and they too became one of our FX Rate Integrity audit clients.
Dave: Okay. Wow.
Bob: That’s another good story, another good story.
Dave: Yeah. Yeah. And it’s interesting how your service offering has just kind of followed your client’s challenges and needs. Right?
Bob: Say that again, David.
Dave: Yeah. That your service offerings have expanded as you’ve had client dynamics occurring. That you could see that there was a need for that work.
Bob: Oh, indeed. And along those lines, if I can digress for a second, we also do some LC work and I’d like to go back to the foreign exchange in a second, but I don’t want to be remiss if I didn’t talk about a couple of people on our team. I mentioned Sherry Mama before. Sherry Mama is a letter of credit expert that was with me at Texas Commerce and Chase for years. Then she was at Halliburton for about 10 years. And she helps companies, and we have a special bank relationship where we help them with their LCs, with templates, with writing LCs, advising clients.
Dave: And LCs being letters of credit, right?
Bob: Yeah, letters of credit. Letters of credits, and we’ve also done some letters of credit brokerage work. And then a couple of years ago, a man named Mike Ryan joined us who had been a client of ours from his days at Stewart and Stevenson. So he too is a letter of credit expert. He helps with one of our bank clients and then he helps on the energy service side as well. And is there as a resource to help companies with import and export letters of credits or commercial letters of credits. So there’s that side of the business. And that also compliments what we’re doing to an extent, because one of our top letter or credit clients is one of our good Foreign Exchange Rate Integrity prospects. And as we get to know the company better, we’re better positioned to help. But to go back to foreign exchange, that is the fastest growing part of our business where a lot of time is going. Can I tell you another deal?
Dave: Sure. Sure.
Bob: One of my favorite Foreign Exchange Rate Integrity deals was helping a petrochemical company. And in this case selling about 25 million a year to Europe and getting paid in euros. And they would have their euros directed to their money center bank here in Houston. So this was captive business for the bank. Well, we knew one of the executives involved and he had known of our banking career. So we looked at a month of data and we said, “Yeah, we can help you.” And we gave them an indication that they were paying over 50 basis points and that was high for a $25 million flow. And we knew that we could help. Well, some time went by, a couple of months went by and that prospect was kind of quiet. And we thought, “Well, shucks.” We weren’t sure.
But it took them some time, I think, to realize, to understand. And they eventually came back to us and they said, “Yes, let’s do this.” And of course we were working off of just a one month sample, but then they shared a year’s worth of data. And what we saw was on the roughly 2 million a month that the company was selling to Europe, they would do window forwards to protect against the rates going down. And when they had more money coming in than the window forwards would cover, they would do some spot trades. So the window forwards were a little bit larger and the spot trades that were kind of the surplus over the hedging would be a little bit more expensive. But overall, the whole flow had an average markup of 67 basis points. So that’s around 180,000 or pushing $200,000 a year in markup on this flow of foreign exchange, which was regular, a fairly routine, and for a bank, it was on a risk free basis.
So 67 was the markup. So we helped them. And in this case, the company was a good size where they had a syndicated loan agreement and they had various banks. So we help them do what was as simple as a one page request for a proposal to see what other banks might want to bid for this. So interestingly, the money center bank that was the agent in handling this deal, they came in at something less than 20 basis points, maybe it was 10 or 15 basis points, a huge reduction. And Jack and I were very pleased. But lo and behold, one of their regional banks that was a participant that needed ancillary business, and that wanted ancillary business, and Jack, and I understand how the banks operate, but this other bank was on the outside and they saw that this was risk-free regular business. Banks like this kind of foreign exchange business. So they did not know what the company was paying in markup, but they came in at only three basis points.
This was less than 10,000 a year. So instead of paying 180,000 in markup, it was a 95% reduction. One of the best deals I’ve ever done anywhere. And we were tickled and we have good relationships with that regional bank that does it at three basis points. Jack and I, we were blown away. We were really surprised because we thought it might be 10 or 15, but the market took it all the way down to three, and just very compelling. And our client was kind of a tough guy to satisfy, but clearly we exceeded his expectations and he explained that he still had a relationship with that money center bank that was his agent, but he explained to them that they were high and another bank that was in their syndicate won the business. So that’s the way it can work in this market.
Dave: Wow. Those are great stories.
Bob: Well, should we keep going with questions or can I tell you about the technology aspects, one of the technology things we’re working on or what…
Dave: Yeah. I’ll tell you what, why don’t you why don’t you tell me about the technology. Well, actually, before you do that, let me just ask you another two questions real quick. One is, are you focused just on the Houston market or do you have clients outside of Houston and outside of Texas?
Bob: We do have clients outside of Texas. So we have a global business. And in fact, one of my colleagues, a woman named Paola Gasca is on the line. She’s listening in as we do this. She joined us last year. She did some real good work. She and another woman on our team named Marissa Lara are helping us. They’re both helping us with a prospect in Monterrey, and we’ve done other business for companies in Mexico, but we’re in discussions, and we hope that we can help this company in Monterrey. And then one of the examples that I talked about earlier was in Georgia, a public company that’s out of Texas. And then some of the companies we’ve helped are here in Texas, but have foreign ownership. So indeed our focus is here. A lot of prospects here, a lot of companies here and that’s where our roots are, but we hope to do more out of state and more global. And we’re working with a software company that’s out of state to try to do some more with our product on the technology side.
Dave: Okay. It does. Yeah. Let’s talk a bit more about that and then let’s talk about how people can best reach you.
Bob: Well, on the technology side, it’s interesting. Six years ago, this was just an idea and Jack and I spent a lot of time, and we’re getting better at how we do this, but it is still a chore for people to understand because it’s new and it’s innovative. But we keep making inroads. But for clients, they need to pull that data and give us that foreign exchange data. And we need to know the date and the timestamp. We need to know the dollar amount that they paid the bank and then the foreign currency amount that they got or that was paid. And in some cases it can be pulled fairly readily. But in some cases we get it in an Excel worksheet, or most cases, and that’s the best, but sometimes we get a one page PDF where it is a confirmation of a trade. And from that we can pick up the details and importantly, that timestamp.
But one of our largest clients has a person that’ll spend about a half day a month to share data. And this is this was one of our clients where the FX annual volume may be over a hundred million and it’s a real good deal. But to enhance the service and to make it easier for them to go into the audit phase, we’ve established what we call Foreign Exchange Rate Integrity auto audit. And earlier I talked to you about how we have audit clients, but now we’re working on what we call auto audit. And we have a software company and we were just visiting the other day.
And so we’re in the process of writing the software, developing the process so that we can buy automation or a robotic process automation, or an RPA, pull data using an AP, or an applicable programmable interface, directly to our website, to our database. And we believe if we do this for one of our large clients, that instead of it taking somebody a half day, it’ll come through robotics and we’ll get the data analytics so much easier that it’ll make sense for them to do this and the cost comes way down on the audit for a long, long time. And we hope that’ll be an example and they’ll be able to show other people. So for us you, I think often you talk about misconceptions that people might have about products.
And in here people that we work with have a hard time understanding exactly what we’re doing at first. And then maybe they don’t quite understand how important the data is. We’ve got to get the right data and specifically the timestamp. And now we were hopeful in the coming weeks or months, we will do our first auto audit with software and take this to a higher level from a technology standpoint. And that’s important because we’re in this age of data analytics and algorithms, and people in college today are taking classes in data analytics. And we talked to our CPA friends. And they tell me how it used to be. When you and I were coming out of University of Texas, it would be that if you had a hundred transactions maybe to do the audit, you would test 10 transactions. But my CPA friends tell me with technology, you can audit all 100 of those transactions and that’s similar to what we’re doing with FX Rate Integrity, and backtesting, we can look and see exactly what those markups are.
And so last year we read an article in The Association of Financial Professionals website, and it talked about how artificial intelligence is coming. In fact, Paola and I, and Jeff Borland visited one of our clients the other day. And we learned how they were using artificial intelligence, very, very sophisticated, major global company. And we explained that what we wanted to do was simply use a robotic process automation or APIs to simply pull data. And for a company like that, that’s not too hard. And so we believe that in treasury that more and more will be done by robotics. In fact, it makes me think of your IC-DISC business. I know that you need certain documentation. And I wonder if maybe this is something that you’ve thought about in terms of automating, but it had been on our mind for some time.
And at first we were thinking, “Well, gee, we’re going to have to get the information directly from the banks.” And there is a movement called open banking to where third party vendors like Blades International, Inc can maybe get information. But banks obviously have to be very secure. And so that’s going to be maybe a while in coming, but there’s big efforts. But when we looked into robotic process automation and APIs and what is being done, we realized, shucks, the best thing to do is just work with our client. Let our client pull their data perhaps to an Oracle database or an SAP database, which they may already be doing. And then with our new software, we hope to be able to pull it from that Oracle or SAP database and efficiently, robotically get it to us, which will enable us to significantly lower our cost of audit and make our business a lot more efficient.
And along the technology side, if I can, if I’m not going on too long, I mean, we see-
Dave: No, that’s fine.
Bob: We see that there’s going to be a grind for years and it’s happened, but we see that these foreign exchange markups will come down and the market will get a lot more efficient because so much of the trading is done electronically. It used to be a lot was done over the phone, and used to see trading rooms being kind of loud, and traders with a phone in each ear. But the reality of it is now so much of it has moved electronically and we’ve evolved into being brokers for foreign exchange arrangements when clients are doing their foreign exchange over their internet banking systems.
It’s also interesting, a current event is how Schwab and TD Ameritrade, Fidelity and these other companies in the equity world have said zero commissions. I mean, it’s really interesting, but if you read some of the articles about that, those companies are sometimes selling those trades or they’re making money off the deposit accounts or they’re making money off of margin loans. But these equity brokers are doing trades for almost zero commission because they make money elsewhere. And it’s been a huge compression in the commissions for equity trades. But that market as we see it is way ahead of the global foreign exchange market where there still is a lack of transparency and the market is still opaque to an extent. But with the technology, like some of the things that we’ve just talked about, we believe, and we’re doing it now, that companies are going to get a lot more visibility, more transparency, and they will be able to better negotiate their foreign exchange arrangements. And it will be more efficient for the clients.
Dave: That is really interesting. And I appreciate that parallel, that with the equity trades those spreads going all the way to zero now and that the foreign exchange business may kind of mirror that, but with a lag. Well, this has really been been exciting. What if somebody is listening to this podcast and they say, “Boy, this foreign exchange is really interesting. I didn’t really understand all this. I’d like to learn more about this.” Are you receptive to somebody just giving you a call or shoot you an email and talking about their situation?
Bob: Indeed, indeed. And a lot of times some people might say, “Well, gee, he’s talking about some big companies, some big public companies.” But if a company has a million dollars a year in foreign exchange flow, or maybe if it’s even down to around six or $700,000 a year, we’re interested in talking to him and seeing a sample of their foreign exchange trades. And we like to think our proposition is pretty compelling. For free, no charge, complimentary we’ll talk to somebody and we’ll look at their foreign exchange data.
And it happens that we will see data and we’ll say, “Well, it looks like you are getting okay markups, maybe a little bit high, but they’re okay. And we’d like to stay in touch, but you’re doing okay.” We see that sometimes. But if we see that they’re high and we believe we can help, then we’ll go to a full proposal and share our agreement, and see if it is appropriate for us to be mandated to help somebody realize that foreign exchange savings, but for free. It’s easy for somebody to contact us and share the data. They can see and read about the process. They can see some of our samples from our website and we’re Blades International Inc, so there’s a Blade’s International website out there. There’s a way you can actually send us information through the website, but most people will send us an email.
Dave: What is the website? What is the website exactly?
Bob: It is www.bladesintl.com. So it’s blades I-N-T-L, of course, INTL is the abbreviation for international. But we are fortunate.
Dave: Go ahead.
Bob: Go ahead.
Dave: No, I was just going to say, and if they want to just call you up, what number should they call?
Bob: (713) 977-7400. And they could ask for me, they could ask for Jack Borland, they could ask for Paola Gasca or Marissa Lara. And on the LC side, they could ask for Sherry Mama or Mike Ryan.
Dave: Okay. Well, that’s great. Well, I can’t believe how fast the time has flown by. Well, I tell you, I certainly know a lot more about foreign exchange than I did an hour ago. Well, is there … go ahead.
Bob: I really appreciate that. I just looked at the clock and I appreciate this. And I think I told you, David, that maybe I could talk for 20 minutes or so, but I think we’ve gone 40 plus minutes. I have thoroughly enjoyed this. I can’t tell you how much I appreciate you listening and letting us be part of one of your podcast. I remember some time ago when you told me about this idea. So I think it’s a great idea. And because I’ve known you for a while now I’m hopeful that we can further collaborate because I hope that we can further help each other because we both have that passion for international business and exporters.
Dave: That’s absolutely right. Well, again, thank you so much for taking the time on a late afternoon on a Friday to talk to me and I look forward to further conversations in the future.
Bob: And we’re going to see you next week. I look forward introducing you to Paola and others on the team because we look forward to seeing you next week. Right?
Dave: That sounds great. You sure will. All right. Thanks a lot, Bob.
Bob: Thanks so much, David, take care. Bye-bye.
Dave: All right, bye.
There we have it. Another great episode. Thanks for listening in. If you want to continue the conversation, go to ic-discshow.com. That’s ic-discshow.com. And we have additional information on the podcast, archived episodes, as well as a button to be a guest. So if you’d like to be a guest, go select that and fill out the information and we’d love to have you on the show. So that’s it. We’ll be back next time with another episode of the IC-DISC Show.