All good? Everyone can hear me? Thanks, Jim. Well, it's a very, very warm welcome to the OFX Investor Day for 2023. I'm delighted to have the global executive team either here in person or participating online. Except for Sarah Webb, who's our Regional President for EMEA, and it's not a great time zone for her. We can certainly take any questions around our European business if you have them. I'm also joined by Patricia Cross, our Chair, and we're supported as always by our friends at today , Matt and Maddy. I'd also, apart from the welcome to the folks here in person, a big welcome to those participating online. We've got over 50 different investors and potential investors participating online.
I think this is a terrific time to talk about strategy. We think about strategy as being a set of choices given constraints. We know that investors value companies that are thoughtful about the way they deploy capital. We know that boards, pay considerable time and attention to strategy. Times like these are when it really pays, to be very thoughtful about the choices you have and the choices you actually make. We are gonna have a really good conversation about our strategy, the choices we have made and the choices we're making going forward. Let's move to the agenda, please.
In terms of this morning, I'll kick it off with a performance update, give you a sense of how we're trading through the Q4 and where we expect to land the year. I'm gonna walk you through the strategy pieces, how we're thinking about it, where we're heading. Selena gonna share with you where that implies from a financial perspective, how we create a more valuable company. Fundamentally for investors, we know that's what we're trying to do here, but also for employees and for clients. When you've got a more valuable company, you create more certainty, more engagement, and with that, you get a much stronger company through the cycle. We'll share a little bit about that.
Elaine Herlihy, our Chief Marketing and Product Officer, is going to share with you a little around how we go to market, why we believe we have got a winning value proposition, and give you a little bit of an insight into our corporate clients, corporate value, and so forth. We will do Q&A. I know there is going to be a bunch of questions for me and Selena and possibly for Elaine as well. We will do that at the end of the first section. For those that are online, you will see you have got a Q&A panel in your section. Feel free to type in your questions there. We will see them here, and we will get to you. For those who are here, please just raise your hand.
In fact, you know, thanks to our friends at KPMG, and thank you, Sean, again for the use of the facility. We've actually got an excellent facility that people can hear very well, but please speak up. All right, let's jump in. First of all, as no doubt you already see and feel, the global economy is going through some substantial gyrations, and you would have your own views on what's happening. I'm just gonna touch on a few that we see. The first is that obviously we're cycling through a period of substantially rising interest rates and inflation. Again, one of the questions I got asked by the board is, do you think this is unprecedented or cyclical? Some things are cyclical.
I'm old enough to have lived through 1990, dot com boom, 2008, and operated through those cycles. What I would say is somewhat unprecedented is the combination of factors all happening at once, all globally. Also the fact that unemployment has remained relatively low. What that's meant is that we've certainly seen, and you've all seen consumer confidence dip. That's pretty much in every market. What we also saw was corporate confidence tends to follow. There was definitely a softening of confidence in corporate generally. What we've seen though in the last sort of 90 days are, I would say, positive signs. First of all, what you're seeing, corporates were running down inventories.
In the kind of through COVID and the second half of last year, they were buying up inventories. There were supply chain constraints. As you started to cycle out, they started to run down inventories, but they're feeling generally a lot more confident. Our ATVs have remained steady in our corporate business, which is a healthy indicator. The second thing that we've actually seen is a softening of the rate of increase of interest rate rises. That's starting to give people a bit more confidence. I don't think anyone's saying, you know, we're at the end yet, but we're certainly past halfway. Indeed, even the morning's comments from the Fed Chair would suggest that they're starting to feel like we're getting toward the end of that.
We've seen our corporate clients start to feel better about prospects. It hasn't yet flowed through to our consumer clients, but certainly we've seen that. I'd add to that, the China reset is a real tailwind for SMEs because what that has done as well is remove a little bit of uncertainty in global supply chain. Most of our SMEs, one way or the other, are pretty exposed to that. All in all, we're starting to see a little bit of improvement in conditions and confidence, particularly with our corporate clients. Of course, travel has started to reopen as well. Okay, let's move to the trading update.
Against this backdrop, it's pleasing to be able to share with you that we expect to land NOI just slightly below the revised guidance, but above the original guidance, and EBITDA in line with the original guidance at AUD 62 million. NOI at about AUD 214 million. That's really... The softness there was really around consumer, which again, I think was pretty clearly telegraphed, if you like, around the high-value use cases softening relative to prior periods. I'd also say, the intangible investments coming in at around AUD 18 million, is pretty clear evidence that the investment through the cycle is a very, very clear trend for OFX.
In fact, what it's actually saying is we're finding the availability of technology resources and the ambition to go get our technology work done in service of the client, and you're gonna hear more about that later. Is happening. It's real. We're very happy with it. It has taken intangible investments up to around AUD 18 million. We're obviously delighted with the Firma acquisition. You can see there that we've said on this chart that the EPS accretion in year one is gonna be over 30%. I've been doing M&A for 25 years. There's not too many I've ever seen deliver more than 20% EPS accretion in year one, much less over 30. To add color to that, voluntary attrition in the Firma organization is actually down.
We're seeing a very, very good cultural fit from a risk perspective as well. That's before we've really given them access to a lot of the synergy benefits that are coming in fiscal year 2024. Access to systems, access to U.S. licenses. We're very, very happy with the Firma acquisition. As you can see on the right-hand side, the NOI number will be slightly ahead second half versus first, which again, through the cycle, notwithstanding the headwinds on consumer is a pretty solid result for us. Let's move over to strategy and then we'll get into Q&A after the next two sections. This slide is pretty familiar to you. You've seen it before, and I think familiar is good when things are moving around a lot.
It just sets out what we call strategy on a page. In simple terms, we have a huge opportunity, and Elaine will talk about that in a little bit. That opportunity is very macro-driven. Corporates particularly are increasingly cross-border. Supply chains, clients, staff, all of those things these days, they're accessing from different jurisdictions, and we just play into that. Second of all, of course, it's pretty much a kind of bank-held set of markets, if you like. I mean, it depends on your jurisdiction, but it's still definitely north of 70% of everywhere. In some markets, it'd be north of 80%. We think the opportunity is very real. As I've said before, our challenge is to not jump at all the butterflies.
We've got to be focused about which segments we think we can go access and unlock. We've chosen four. Corporate, which are SMEs. We are focused on online sellers who are SMEs, but they're linked up to marketplaces and or PSPs. Third of all, enterprises who have an embedded cross-border service. Think Link, which is a share registry business, or WiseTech, which is a global freight forwarding logistics company, and there are more to come on that. Of course, high-value consumers. Folks who really want to have that reassurance of a very strong entity to move these large transactions that they typically like to do with a company like OFX. The competitive positioning, I'm not gonna go into a lot of detail on this 'cause Elaine's gonna kinda walk you through that.
I would emphasize more than ever the value of digital plus human. Most of our clients use us digitally. Over 90% of transactions are digitally completed. I think the events of the last two weeks, four weeks, would remind clients of the value of having a human when things don't go according to script. Yesterday in our board meeting, we were actually sharing with the board examples of how we do payment processing and how we're automating some things, but we've also got people standing by for, in the event that the client, for whatever reason, gets it slightly wrong. That is, in our opinion, a very, very fundamental assumption that it's not always straightforward. Digital plus human. The global operating model.
Again, it all looks easy on a page, to build a technology platform that can operate around the world, to go get the licenses that can operate all around the world, to be able to add companies onto that platform easily. Also teams. What we have spent particularly the last five years doing is putting in place what we call intact teams in our regions. We've got very strong regional presidents. They each have marketing, risk, finance, product, technology resources in region to be able to move at the speed of the client. That's absolutely essential. It's hard to do, but it's why we can unlock global growth. All of that should lead to a more valuable company, which we know matters a lot to investors.
Matters a lot to us too, obviously, because what we're seeing, particularly, you know, I was in the US, not last week, the week before, and spending a lot of time. These tech companies are laying people off all over the place. We're seeing that as well with some of the neobanks. Employees like companies that are gonna be around tomorrow and the next day. They're gonna make payroll. In cycles like this, we're getting really good access to talent as well, from some of the companies that are falling over. That's really, really important for employees. Obviously for investors, high recurring revenue, strong cash flow generation, strong balance sheets, kind of managed by adults, a very strong governance, through our board of public company infrastructure.
That's who we're trying to be. The eagle-eyed of you will see this little tick on the, on the bottom right, that's the newer bit. What we're finding, we've been building towards this, is this idea that a specialist versus a generalist. A specialist has access to a client in ways that a generalist doesn't. This is frankly how cross-border payments can take share for banks. Thanks to so many jobs for a client, they're not very good at that cross-border bit. We're very, very good at that. What we wanna start to do is attract revenue from the products and services around that cross-border payment. You've seen our investment in TreasurUp, which is basically software that helps automate hedging strategies for clients. They're also doing cash flow forecasting for clients now.
We've been growing our emphasis in receivables product all around cross-border payments. Let me be clear on that. We think over time, we can generate more than just what I would call spot FX margin to create a more valuable company. That's the strategy on a page. Let's jump to the next slide. I think the thing about this is, it's working. We're seeing the pivot to B2B, particularly, generating much better outcomes for us as employees and for investors particularly. You can see the growth in B2B has been, you know, very substantial over the last five years. We've moved it from under 50% to basically 2/3 of our revenue now is B2B. The reason that's valuable is that it generates a lot of recurring revenue.
You can see there 71%-84%. That is incredibly helpful for us, Selena going to go into this in a minute because gives us certainty around investment, optionality around growth. We're very, very good and very, very strong at retaining clients and growing with clients. You'll see our transactions per active client go up. Again, that B2B relationship is really at the heart of OFX. In this global piece as well, Yung's here, and you heard from Yung last year. He's the President of our APAC region. It's not that we don't love Yung, it's just that the markets are much bigger in Europe and North America. If you want to grow the company the way we want to grow the company, we've got to just play in the bigger pools.
I'm delighted to see the progress, particularly in North America and Europe in the last few years. It's not at the expense of APAC, by the way. APAC's growing, too. Let's make that very, very plain. We still have APAC. As you can see on the right-hand side as well, a couple of data points there around the CAGR, around B2B revenue growth versus consumer. Consumer, you'll see in the result, you know, has its usual ups and downs. Very, very strong halves or quarters. Sometimes that pulls back. Through the cycle, it's a great business. It generates superior EBITDA margins. It's a great business. We love it. It's just not as reliable as corporate, and therefore, we wanna access more corporate revenue and B2B revenue. Next slide, please.
What you're also seeing, is the industry is starting to change. I talked a little bit about the economic cycle and what effect that's had on our business and clients generally and economies generally. It's clearly having a substantial impact on the payments industry and indeed more broadly in the banking space. The first one is, guess what? As if this is a new lesson, you ought to be focused on risk. One of the things that the board and the executive team hold as a very strong belief is there's no great or enduring financial services company that is not built on risk management. Every single one that survived multiple cycles starts with great risk management. OFX has been saying this for years. More than just saying it's been investing.
There's over AUD 3 million invested. We've got 90-plus risk professionals. We don't always onboard clients as fast as some of our digital competitors, and we're gonna get better at that. We're very, very thoughtful about who we take on, how we manage fraud, how we think about cybersecurity, how we think about tail risks to the group. Risk management becomes the thing that not only, as I've talked about in the past, is your shield, it's your sword. Customers want great risk management. They don't want you to disappear when they need you the most. That's been a big trend. As you know, we've talked in the past about working with tier one banks.
I know that's always been a line on our presentations, and people are like, "So what?" Now you're figuring out why that matters, as the smaller banks hit the skids. Profitability is also starting to be a bigger focus. Again, it's not that new to me. I've seen this cycle many times before. As interest rates rise and the cost of capital becomes real, a lot of this private financing that came in, that started in 2013 at about $7.5 billion, then it went to $15 billion, then it's $25 billion+. That money was all free, and it's kinda like a free option. Now what's happening is it ain't free anymore.
Companies, and investors, more importantly, starting to figure out, "Well, we need to turn a profit here at some point." That's actually helpful for OFX because they're starting to do things like raise their prices. I've talked in the past about competitors adding 50% of price overnight. I saw Revolut went from being free to a minimum of 50 basis points and $4 on a transaction plus your monthly $7. We're a long way from free. All the folks who said, "This thing is going to free," it ain't going to free. In fact, what customers are valuing is: How do you work with me? You're gonna hear from customers later on, how do you work with me as things get more expensive, and I have my own challenges?
The second thing is, or the third thing I should say is that there's more and more companies that are looking to pivot to earn more from cross-sell. That's not the same as earning more from the core job that you're doing, which is moving money. Again, I worked in London from 1990 to 2000. I saw all those neobanks come up and say, "We're gonna cross-sell. That's the way we're gonna do it." None of them are around today. I saw the same thing in the 2000s. I've seen the same thing in the last decade. Cross-sell is a very, very hard proposition to pull off.
If you're a specialist, and you can generate a really strong relationship where you've got a right to make an offer and a better product and a better feature, then you can generate earnings from that core job that you do for clients. As I've said, we've been adding receivables product. We do more forwards for our clients. We're gonna do more and more of this over the next several years in order to improve our returns. Finally, industry consolidation. Again, you wouldn't be surprised, given where we're at in the cycle. All of those companies, that were piling into this industry off the basis of great IPO markets, great tech multiples, it's all very different now.
The Firma acquisition has really given the board, hopefully you as investors, certainly us as management, considerable confidence that we're gonna be an acquirer in this space. To drive that level of accretion in the first year is a really strong testament. It's also equally important to be thoughtful about what you go after. We are very deeply in the flow and again, I've shared with some of you that we've recently appointed Axel to the global executive team. He was running corporate development, now runs strategy and corporate development. We as a board, as a management team are very thoughtful about our corporate development, and there's lots of opportunities, but we're gonna be careful about the ones that we take.
It's certainly nice to have a good, strong balance sheet, supportive investors, and a track record, that's for sure. Those are things that we're seeing at an industry level. Of course, just to sort of bear that out, profitability does help. Thanks, Maddy. We know that generating an EBITDA margin, like we do, is not only healthy, creates sustainability, but if you can grow on top of that, the old McKinsey's Rule of 40, that's a pretty good balance. In fact, that's probably your top decile, maybe top 20% of companies over time through the cycle generate EBITDA margins and growth that generate at least 40%. I think you're gonna find that the growth piece, at any unit economics is gonna be harder and harder for folks to justify.
Like I said, when you see those price rises from the competition, you're starting to see that become real. Our job is to continue to do that carefully, but also take advantage of this dislocation. It is real at the moment. We're certainly having lots of interesting conversations about what's happening in the banking space, what's happening in the regulatory space. This will continue to be an opportunity for OFX over the next several years. Okay. Finally, I'll just kinda close by saying this is the roadmap to building a more valuable company, and it's a reiteration of everything I've said, so I won't take too long. We've got to be focused on B2B. This is where there is so much opportunity, and it continues to grow, whether it's OFX driving it or macro factors that are driving it.
We think we can continue to grow our proportion of B2B revenues, particularly as we push our enterprise programs, we build better risk products for our clients, we will be a better B2B company. Again, let me be really clear about this. This is not because we can't be a great consumer company for our target segment. It's just that we think we can, with discretion and capital, focus on B2B. Global is where the opportunities are the largest, so that's really where we're gonna pay disproportionate time and attention. Scalability so that investors get returns is really, really important to us. Just adding a lot of costs every time you add revenue is not the way to run a company. It's certainly not the way to run a mature company.
The investments, we're very mindful that the intangible investments are the highest they've ever been. That'll flow through D&A. It's also gonna flow through in terms of lower costs to serve, lower operating expenses, generally lower fraud, lower bank fees, all of those things, better service. If it doesn't do that, then it's not doing its job. Later on, as I said, you'll hear from Adam Thomas, our CTO, Mark Shaw, our COO, and Kate Svoboda, our Chief People and Culture Officer, how that is translating into real outcomes. We will go down organic and inorganic. We're very clear about that, I'll talk to Patricia a little bit later about that in the panel about how she thinks about it and how the board thinks about it.
It's gonna be part of the mix, because we frankly have the capability to do it and to do it well. Finally, as I said, winning as a specialist gives you that opportunity to go be a deeper relationship with our client in the world of cross-border payments. There's plenty of, you know, like I said, pitfalls about heading too far left or right on that. If you get into the world of cross-sell, it can be a real distraction, but you can add a lot of value to that relationship if you're focused on cross-border payments and doing it well. With all that, I will hand over to Selena, who's gonna share with you how that translates to a more valuable company.
Thank you, Skand. If we go to the slide 13. Great chart, this one. Skand has already taken you through that, you know, there has been some economic uncertainty through the second half of 2023. We are seeing some signs of stabilization, which is great. What is wonderful to see is how OFX performs through these cycles. Whether it's their initial Brexit vote, whether it's COVID, we have consistent performance through these cycles. Really, when you look at it, some of that consistency of performance is really coming from the B2B portfolio. In the B2B portfolio, it's corporate, online sellers, and enterprise. The corporates themselves are well diversified. Our corporates trade at least monthly, creating that reoccurring revenue rate. The reoccurring revenue rate in corporates is over 88% at the moment, which is excellent to drive that consistency and performance through the cycles.
Their use cases, whether it's paying suppliers, paying employees, purchasing equipment, they continue to trade through during cycles. You can see the B2B turnover is now 76.2% of the portfolio, up from 57.4% in fiscal year 2014, and the CAGR over that time period is over 14%. The other thing that's really nice to see in the portfolio is over this time period, the NOI margins have increased by 8 basis points. Okay? That's when you exclude same currency. What's really interesting is typically a B2B transaction is a slightly lower margin than a consumer transaction. Even though we've been growing our B2B business, we've also been making sure that we get that price elasticity and for the service we offer, we get a great price.
What is wonderful is the performance through the cycles. If we go to the next slide, we'll have a look at the diversification within other areas of the portfolio. You can see on the left-hand side, we love all three regions. Absolutely love all three regions. Our core region being APAC. APAC is Australia, New Zealand, Singapore and Hong Kong. That typically has been more than 50% of the portfolio, and we're starting to see that shift as we've driven and grown globally. It's really nice to see North America now is becoming our largest region at 42.7%. You can see the impact of Firma there. If you look at fiscal year 2022 at 28.4%, it has increased, one, from organic growth, but also the impact of Firma on the portfolio.
We also really like our EMEA region. Okay. You may remember, like, in December 2020, we got our Irish EMI licence, which allows us to now go into Europe, which is really exciting, and we've started the early stages of that growth strategy. Just this year alone, on fiscal year 2022, their revenue was up more than 5%. Over that period, the revenue for EMEA has actually grown by 50%, but it's just grown at a slightly lower rate than the others, which is why it's only 14.8% of the portfolio. The other interesting fact about our portfolio is it is a differentiator being this diversified and this global. A lot of our competitors are still quite heavy in their home markets. If you look at Wise, for example, Wise has 52% of their revenue coming from EMEA.
If you look at Payoneer as another example, very much Asia-focused. They've got over 56% of revenue coming from just Asia itself. Really nice signs in our portfolio. The other thing is, if you look at the diversification, geographic diversification helps in a couple of ways. One is that economic cycles in each country are slightly different rates, it's nice to add that diversification to the portfolio. The other thing that we see in the right-hand side is the currency corridors and also the opportunity for netting. Okay? If you look back in 2018, we were very dependent on the Aussie/US dollar. It was a large portion of our trading volumes. Okay? What would happen is the Aussie depreciated.
You know, if you're trying to buy supplies overseas, particularly in the U.S. or wherever it might be, it would become more expensive for businesses, and they kind of slow a little bit, impacting our revenue. 'Cause we've got the two-way flows, you can get both sides of that transaction, which is really excellent to see. You can also see on this chart the impact that Firma has had. Look at the CAD/U.S. and U.S./CAD. Really good volumes. We're less dependent on Aussie dollar, but really good volumes, but also really nice netting. Okay? Really nice netting going in both directions. The other reason the netting matters is when we don't get great netting, we have to move the money with our counterparts, and it does cost us a little bit of money to move the money.
Better netting is better economics for every transaction that we can generate and also less risk in the portfolio. The one that we're really excited about is Europe. As we go Europe, the one netting there that could be better is the US/Euro and Euro/US. As we grow in Europe, that netting should get better, and more diversification will help netting across the portfolio. If we move to the next slide, we'll talk about our investments in our platform. We've talked about this a lot in the past, but just to reiterate, we have a single global platform. Okay? Our single global platform runs all four segments in corporate, online sellers, enterprise, and our high-value consumers. It also runs all our regions on that one platform. There are local customizations where required, but we do try and build just one platform for four. Okay?
You may remember in fiscal year 2022, Skander has highlighted the AUD 18 million that we're gonna spend this year on intangible investment. We're gonna go through what is that gonna deliver and why that number has come about. You may remember in fiscal year 2022, you can see there that we spent AUD 10.5 million in intangible investment. We were actually expecting to spend more in that year being AUD 12.5 million. As all companies experienced through that period, there was an absolute war on talent for technology. Okay. Despite all the efforts, you couldn't actually get the people to help do the build work that you wanted to do. What we have done this year is we've developed outsourced partnerships for technology. We've also started hiring technology outside our core office locations.
This year, the AUD 18 million includes a catch change, but it's really exciting to see the tech professionals that we wanted to. We cover the progress that we've made this year in the fiscal year 2023 delivery. It's been a huge year for the company, and we're really proud of what we've delivered. As you may remember, in fiscal year 2022, we automated the incoming payment allocations. This year, what we did was we did integrated streaming, so we can have the payments coming in more than once a day, which is really exciting, and also faster USD payment and processing time. The hours for processing reduced by 9 hours. The other thing that we implemented was a consumer risk management process, which included biometric identification and verification systems for the world, for all regions in the world.
As a result of this, our verification in North America, success rate has gone up by 17%, and Europe by more than that at 25%. Okay. Like all companies, we are investing in cyber and data privacy and data security. Multi-factor authentication is a big deal. What does it do? It helps us stop those credential stuffing attacks. It helps us stop some of the botnet attacks and keeps us safe and secure. There's always work to do when it comes to cyber and data security. The other thing that we have achieved in a year is the Firma integration. It's well on track. We are excited. The first region to go live is Australia, which will happen in April. We're excited to get those customers onto a digital platform, and we're excited to make momentum in that area.
If you look at our investments in fiscal year 2024 and beyond, you get an indication of some of these things and a few new things for corporate. One, it's continuation of that payment engine. Right now we wanna move onboarding a bank from months to weeks, so it's really agile and flexible. More payments in more corridors, which allows for lower costs, better customer experience, and also bank fee reductions. We completed This year, we completed our consumer risk assessment process. In fiscal year 2024, we're gonna be looking at our corporate risk assessment process. Again, making sure that we flow those corporates through as easy as we can, but also make the jurisdictional changes that we need for each region and implement them as well.
The other thing that we wanna do is corporate and have a single digital platform for corporates. Right now, if you're a corporate, we love our corporates, and they love us. You can trade. If you've got a Global Currency Account, that's a slightly different platform than actually if you just want to do a spot or a forward transaction. What we wanna create for corporates is one single contemporary corporate platform where it has all products, but also allows us to offer multiple products and also increase our wallet share of our corporates. If we flip to the next slide, we'll have a look at cash. Everyone loves cash, especially at the moment. And how we're working through that cash generation. If you look at our cash on the left-hand side there, really strong cash.
We've walked you here from the half point to through to the end. You know, cash itself has gone. Net available cash has gone from AUD 92.9 million. It is AUD 88 million. If you look at the AUD 88 million, AUD 60 million of that is actually net available cash. When you take out the AUD 28 million that is held for collateral and bank guarantees. You can see from the flow here, what do we do with that cash? One is we have wonderful products with our customers that generate that cash. We use that cash to repay our debt repayments and also to invest in our one single global platform via our intangibles. If you look at our debt, we do an update on debt, is to fund the Firma acquisition we took on AUD 100 million of debt.
We have been paying down that debt and the current debt balance, as at the end of February, is AUD 70.5 million. We are well on track to repay the debt within four years. Okay. The other interesting one on the chart on the left is the collateral reduction. Okay. Collateral that we need to hold with our banks and counterparties is reduced from AUD 49 million to AUD 28 million. Why is this? You may remember in September 2022, it was probably one of the most volatile days for currencies, and the pound almost hit parity with the US dollar. When that happens, we need to post more collateral with our banking counterparties. As volatility eases, we can then get that collateral back. Part of this reduction is that.
The other part of the reduction is actually us working with our banking counterparties to ensure that we continue to renegotiate all our agreements and get better collateral outcomes for the company, which allows then more cash for us to invest in growth. Okay. We also have been very, very diligent on our cash balances. We are moving cash around the world for our customers. While we are moving cash around the world for our customers, we're trying to make as much interest as we can as that cash moves. The interest income on the portfolio as at December year-to-date, so the Q3 year-to-date, is AUD 1.8 million. Okay. Which is a nice tick up from what you would have seen in the half point. Okay.
The other thing that's really important in the events of the last few weeks and the Silicon Valley Bank and other banking issues, we bank with 13 tier one banks. Okay. We have cash. Our cash is safe and secure, which is important in this environment. If we flip to the next slide, we'll talk about our organic and inorganic growth. Our strategy is to target both organic and inorganic growth. We work really hard to grow organic investment and by investing in our single global platform, our marketing, and our wonderful salespeople. If you look over that time period, the five-year time period, you'll see that the CAGR of 13%-AUD 41 million came from organic growth and AUD 55 million came from inorganic. Inorganic growth is highly strategic and planned. Okay? We still believe there will be industry consolidation. Okay?
We think, we believe there are still opportunities out there like the Firmas of the world. We have active conversations. We have conversations with advisors, bankers, and competitors all around the world to make sure that we're in the deal flow if the deal flow is happening. We're also very careful on the opportunities that we look at. Some examples of this is the Firma acquisition and also our investment in TreasurUp. If we look at Firma is excellent. It was right on strategy. Corporate North America, okay, from a revenue perspective. We are so happy with how that performance has gone. One, we were able to fund it relatively easy with debt. Two, the performance. Revenue year to date for Firma versus their same time last year is up 15% coming from a single-digit growth rate, which is absolutely excellent.
The other thing it has delivered, which Skander touched on, is over a 30% EPS accretion in year one. We're well on the way for our integration and synergies, which we've all committed to the market. You can see that inorganic growth can deliver speed to scale. If you look there on the left-hand side, the inorganic growth. By the addition of Firma, we basically added five years of growth in one transaction, which is nearly really nice to see. You do need to have some patience to find the right opportunity at the right time. We also look for when we're looking at inorganic product differentiation. Our product team are always looking for ways we can competitively differentiate our product, and there's always a decision of buy versus build.
Okay? TreasurUp is a great example of the buy and not the build. It's an automated FX hedging and risk management platform, and it's really, is a great opportunity for our corporate clients to be able to use that in the future. Where we are as a company and being able to position for inorganic growth is we're in a great place. Okay? A couple thing, key things of why we're in a great place for inorganic growth is, one is our business and our transactions are relatively easy to integrate. FX businesses don't have really big, complex back books. Okay? They're also a transaction-based business, which makes migration slightly easier than some of the other complex products out there in the financial service as well.
We also have one global platform which can scale. We have a great team with a lot of experience in both M&A and execution. With this, I'll hand over to Elaine, who's gonna take us through. Elaine is our Chief Marketing and Product Officer. She's gonna take us through our strong client engagement.
Thank you, Selena. Good morning, everyone. As Selena mentioned, my name is Elaine Herlihy. I am the Chief Marketing and Product Officer at OFX, and I'm really pleased to take you through an overview of the B2B opportunity and how we are capturing it. Slide please, Maddy. Thank you. As Skander mentioned earlier, the cross-border opportunity is absolutely huge. There's an estimated $206 billion in revenue from cross-border payments in our target segment. As you can also see from the small box in the corner, our existing market share is small, at less than 0.05%. We have plenty of opportunity to grow. We believe that we have a really strong market proposition versus our competition, which I'll take you through, whether they are a digital player, an incumbent SMB, or indeed a bank.
To supplement the data on the left, which is from McKinsey in 2019, we've also done some proprietary research to dig deeper into the needs of corporates around FX. The statistics on the right-hand side refer to Australia, but we have seen some similar themes from the US and elsewhere. Over half of corporates have made an FX transaction, with 40% of SMBs trading internationally. The key concerns that corporates have are around being ripped off. A fear almost everybody has, but corporates really have this, as well as generally a lack of confidence in cross-border trade. In a smaller pulse survey that we did in the US, 60% of respondents said they had made an FX transaction, and 37% of those also cite that fear of being ripped off as a key concern.
Adding to this, we conduct qualitative research quite often with our clients, and we get a lot of client feedback, and we can see that these concerns are ongoing, and they are global. Thanks, Maddy. On the left side, you can see a really simple summary of the OFX value proposition. Skander's mentioned it. Selena has mentioned it. It's digital plus human, and you can see how this stacks up against our competitive set. We know through market research that the key drivers of consideration for businesses are, number one, understanding my needs. Number two, ease of use. You have a number of product or service features like a dedicated contact, fair pricing, self-service, multi-user capability and security. What we're seeing in the market is many digital players, who are described on the left, that serve a micro to small client, mainly on spot transfers.
They serve a client who is more price sensitive, providing a good digital value proposition but a limited service model. On the right-hand side, we have banks. These tend to be much more focused on service orientation in the larger side of the market. They tend to deal with medium to large clients who want a fuller, broader, full service model with value-based pricing, which is essentially pricing according to the value that your client sees in your service or your product. At OFX, in the middle, we have a sweet spot we believe, with digital plus human. We offer a great digital service, so our clients can transact online at their convenience. We know that businesses really value the ability to speak to somebody when they need and have that human contact with a specialist when they want it or indeed when they need it.
This is delivered by our corporate dealers as well as our corporate service team more globally. As one of our top dealers said to me on a trip some years ago, actually when I was in the U.S. He said, "Elaine, my clients, they don't necessarily want to call me, but they do like to know I'm here." It really captures the views of our corporate clients. We believe that this combination of digital plus human attracts a valuable client. We know we get higher ATVs than our competition, and it also allows us to command more attractive margins. Maddy. Moving to page 21. What we've done here is we have chosen four typical corporate competitors and assessed OFX's proposition in comparison. You can see how OFX has a compelling set of capabilities to serve the corporate market well.
In single partner, meaning that clients can get more of their needs met in one place. It saves them time, it saves them money. As you would expect, the ability to move money fast, predictably, and at a competitive price is critical. Overall, they are less price sensitive than consumers, and they are more likely to appreciate value for the price that they're paying. As we know, when we're dealing with people's money, trust, safety and security are critical, as again has been made apparent in the last few weeks. Beyond a spot transfer, though, corporates have a range of additional needs that when answered, helps them to run their businesses more efficiently. Focus on helping clients manage risk is really important. Approximately 10% of our corporate book use forwards, for example.
This has grown over the last two years. We are focused on growing that further. With volatility potentially impacting both the cost and revenue side of the book for corporates, managing currency risk is absolutely critical. We know how hard corporates work for their revenue and their profit. It's clear that this is a key need and indeed a gap for businesses. That's an area where businesses generally need somebody to help them and to guide them. That gap for SMEs is not as well served from either side of our competitors. You don't get so much of that from the digital players who are very focused on that spot digital transaction. On the right-hand side for banks, that focus and that service is really more available for larger clients.
We believe that that offer for us again hits that sweet spot for OFX. We have the treasury access, we have the risk capability as well as the specialist teams who can help clients with this need. As Selena mentioned earlier, the addition of TreasurUp will only help grow that capability for us in the future. Next slide, please, Maddy. On this slide, you can see that the focus on corporates is really paying off. Corporates have a more frequent need, as we've discussed previously, and an ongoing need, about five times that of a consumer. We are acquiring higher value clients that's driven both by the average transaction value of our clients, but the frequency of trading. That makes them considerably more profitable and more valuable than the corporate clients that are supported by many of our competitors.
As well as the human support that we offer through our frontline teams, we have a sophisticated and a mature engagement program for corporates via our marketing program. This includes client journeys that nurture, stimulate, and retain corporate clients to maximize that lifetime value and ROI. We have 17, very specific number, 17 corporate journeys that drive the conversion of registrations and secure that second and third transaction. We know that that drives adoption. We have triggered communications when we see inactivity outside the client's individual cadence of dealing, which we know actually drives that engagement and retention. We have also a number of additional triggered campaigns prompting the next best action a client can take based on pivotal events in the client life cycle.
On top of all of that, we deliver volatility campaigns, a record in this last financial year when the currency meets a specific threshold, as well as regular expert currency commentary and risk management education. All of this work has seen both our lapse and our reactivation rates improve in our corporate book. Finally, it's worth noting that we have very high engagement on our client comms. Our marketing opt-in rate is 62%. In 20+ years in financial services, I've never seen that statistic. We have a really low unsubscribe rate. Again, an indicator for us at 0.22% in this financial year. You can also see on the right-hand side, we have a high and a steady Net Promoter Score, which demonstrates how our clients value our service. Thank you for your time and attention.
I'll hand you back to Skander.
All right. Thank you, Elaine. Thank you, Selena. Maybe Selena, if you wanna join me. We've got time now for Q&A. I think, I think we've got 20 minutes. The way we'll do this is we'll start with questions here in the room. We'll take two from the room, and then we'll go online, take two and so forth, just to keep it fair. Any questions for me and Selena or for Elaine separately?
Andy, you talked about today took about AUD 28 million being required for bank capital. How much do you need for working capital to kinda run the business in terms of cash?
Yeah. My rule of thumb for working capital, it can change from approximately AUD 15 million. We've got a really nice chunk of cash there, I would always keep about AUD 15 million just for working capital needs. Yeah.
Okay. No, thank you.
Tony, when you talk about onboarding the Firma customers in Australia, can you just talk through that? Is that Firma customers that they already have in Australia that you're onboarding?
Correct. The way we're doing this migration, what we're actually gonna do is they're currently still on Firma systems. We will migrate them across to the OFX systems here in Australia. We've already got them on-site. We're already working with them. The Firma dealers are talking to them. With Yung bringing that together and that will be our first data migration. We have to bring across their history as well as their current details.
Do you expect any like, kinda, attrition related to that kinda migration?
Well, the Firma traders don't think so because as you may be aware, Firma have been trying to drive their own digital program over the last two to three years. In fact, the growth in transactions from Firma clients who've gone digital is double of those that have not. That's even with what I would describe as adverse selection, as in the traders have kept the ones, if you go back to Elaine's chart around, you know, high sort of silver glove service, they've very much kept those offline, so to speak. The ones that have gone online have typically been the smaller ones, and they've reacted very well to, even to Firma's platform, which would be less than ours. In fact, no.
If anything, again, for the eagle-eyed, who would've seen on Elaine's chart, the 14.8 transactions per Firma client versus the 20 something for the OFX corporate client, our goal is to grow and close that gap.
The other nice thing with that migration plan is Australia is their smallest region at 4%, but it's our biggest region. Make sure we get it right first, and then we'll flow through to the other regions up to Canada.
Okay. Let's check. Maddy, have we got questions online?
We've got one question, which comes from Ron Shamgar. He said, "Your peers such as Airwallex and Wise mentioned to the AFR in the last few weeks that they've seen significant increase in new accounts as clients move away from smaller banks. Can you comment on what you've been seeing and are you benefiting from this?
Yeah. We've definitely seen a lot of interest, and that's because clients who are particularly in the tech sector are, you know, concerned about the support that they're getting from their banks. There's certainly been heightened interests. We've also been thoughtful about the way we've messaged that externally. We don't seek to kinda, as it were, talk down banks or those types of things. In fact, you know, as Selena pointed out, we work with tier one banks. We very much see them as part of the infrastructure. Yes, we've seen good support. Even in the US, obviously that's where it's been a much more acute situation.
We haven't been running great big marketing programs saying, you know, "You've been let down by such and such, come and join OFX." Just to give you also a data point, we actually looked at all clients who might have or who had an account with SVB, and we looked at our forward positions and how many direct debits and so forth, and the exposure was very, very minimal, if anything at all. We're not expecting if that's on anyone's mind, any kind of adverse reaction or outcome from that.
Okay, great. We've got another question from Annabel Holden who said, "How much of the AUD 18 million in R&D spend is driven from cost inflation versus acceleration in activity? How is the spend split between maintenance and upgrades versus a move into broader offerings?
Yep. There is some inflationary spend in technology costs at the moment. Overall for our portfolio, I think it was about a 5% salary inflation last year. A little bit of that will be inflation. We always look at the portfolio of what we're investing in, like what is the core to keep us contemporary versus the new products, and how we invest there. Like, we make sure that we've got more in the new products, new offerings, making sure there's revenue generating items versus that has to keep the lights on and make us current contemporary. We haven't really released the exact splits of that. We can give an update of that the full year.
Just to add to what Selena said, not in the intangible investments, but in the OpEx, on that question of maintenance and so on. Clearly, we've been investing in cyber, that's much more of an OpEx-driven cost. Plus what you're seeing in technology is a shift across to SaaS-based costs. You'll see technology OpEx go up for that reason as well. They could be probably classed as maintenance as we move. We've moved, and you'll hear Adam talk about this after the break, you know, to cloud-based and so forth. There's a lot of those types of SaaS-based costs in technology, which is in the past, not something that we've seen as much of. They're all trying to push price rises too.
Just say on the B2B side, just talk through where some of the major gaps in that product portfolio would be versus some of your peers.
In case you couldn't hear that question, what are the major gaps relative to the peers? I thought, you know, Elaine's slide, the biggest single thing in our opinion is, you know, corporate purchasing, corporate card, whatever you wanna call it. Because what it does is, first of all, it provides the corporate client with a really simple tool to make these cross-border payments. Most of you, for example, would be paying your Google subscriptions or your Salesforce subscriptions. We find a lot of them are just paying with a corporate card, and if that's the most convenient way to do it, then fine. There's other transactions, travel expenses and so forth, that we would regard as incremental to those higher value transactions.
If the client can bring all that together with OFX, then, you know, generally that's a win for them because it's much, much simpler to manage. The other thing that Selena touched on briefly and so did Elaine is risk. We definitely think that things like what TreasurUp have built around basically automated hedging products, cash flow management products, they are really what... Especially as you move into more mid-sized corporates, they're gaps that we have today that we wanna be able to close with software as well as people.
I was gonna say, a lot of your growth has been driven by ATVs the last couple of years. Your marketing spend versus all your peers would be the lowest. Just talk me through the customer acquisition strategy to get an organic growth.
Again, if you couldn't hear that, the question was around your promo spend seems to be flat or low despite the fact that you're growing. Why don't you spend more money on marketing and win more clients? Is that more or less what you're driving at? The first thing I'd say about the total promo spend is it's really shifted. Although the total amount has more or less been flat, the proportion of B2B has grown very significantly. The typical CAC for an SME is significantly higher than a consumer. You know, obviously, Selena and Elaine do a lot of work around LTV over CAC, and it's a good trade to make. The challenge with marketing promo expense in the SME segment is how much you can scale to get your target type of client.
We're still working on that and, we're still gonna do more things in order to grow our clients, and number of new clients, number of active clients in the corporate space. What you've seen in the last few years is more of a shift in composition of that promo spend, and I don't know, Elaine, if there's anything you wanted to add to any of that.
Well, I think. Can people hear me?
Oh, you need to come down.
Yeah. They're saying they can.
Oh, they can.
Yeah.
Okay.
Oh, sorry. The key thing actually, as Skander said, is the shift in marketing spend, where actually it's almost exclusively targeted at corporates now. Where previously, you know, we have got a strong consumer book. I always say, in OFX, one of the nicest things that we have is the messaging and the proposition that we have for both a corporate plus a high-value consumer are quite similar. You don't have to run separate marketing campaigns or promo campaigns to get both. We target very much corporate, pretty much exclusively actually. There's probably more a bit of the spend in North America, where there's still some populations of high-value consumers like snowbirds, for example, who we wanna target. It's almost exclusively on corporate.
Actually what we're seeing is that spend is being redirected to that primary target audience, but we're still picking up consumers. As Skander also said, you know, the demand, we tend to spend to demand. Corporates are in market about 5% of the time. You need to be there at that point at which they're choosing you. Equally, we scale up and down our demand capture, and when people are looking for us, to make sure that we always spend to market.
Any other questions online, Maddy?
Yeah. We've got one from Daniel Stein. "Do you need much additional reg capital for a deeper card or multi-currency account product?
Sorry, reg what?
Reg capital.
Not really. Reg capital. Normally, you've got reg capital if you're holding deposits, is where you check to have some reg capital. Also if you're thinking of just cash that you need to run the business. If you're doing a lot of FX transactions and you've got volatility, you need the collateral with your banks. As volume grows, if those products would add more volume on the FX space, yes, our collateral requirements would increase, but I wouldn't expect a very significant change in our regulatory capital requirements.
Daniel might. Just to build on that, too. Daniel might be referencing consumer. That's certainly something that we've seen, regulators around the world, prudential regulators are looking at companies which have multi-currency accounts for consumers. Where in effect, the consumer's using it as a quasi transactional banking account. I can tell you, I remember going to London in 1990, no one as an Australian could get a bank account. Today you go there and you open up a Wise account, and you're all set. The question is whether the regulator says that's actually like a deposit account. That might be where Daniel's going with that. If that is deemed to be a deposit account by regulators for consumers, then reg capital will follow. Not in the corporate space, to Selena point. Any other questions online?
We've got Lach with his hand up.
No.
Can you please type it in the Q&A?
All right. Go for it, Toby.
Do you find any of your customers are using you and one of your competitors, maybe for a service that you don't offer?
Yeah. I mean, there's no question when you look at that transactions per active client-
Yeah.
You kinda match that with the question here from Owen about how come you're not winning more clients. We must be winning more transactions. We must be winning more share, which then, ergo, we don't have all their transactions.
Yeah.
I've touched on the smaller value transactions. We also see and by all means ask the client after the break, this question. We definitely see over time that we win larger transactions through Forwards and so forth, and having the service model, but there's plenty more to go. How's Lach's typing going?
It's not in the Q&A.
All right.
Is it in the external?
Yeah.
Just curious. It's been about 12 months More or less since you took out Firma. Just wondering updates around sort of negotiating the bank fees and things? That was one of the things you discussed around synergy that you could get over time.
We have been negotiating bank fees. It's nice that we're gonna get some synergies through in the Q4 . Some banks, two in particular we've got that we've reduced fees on because of the volume, and it's really just matching our price at the moment, which is great. The other thing. What we're doing, it's a kind of a two-stage negotiation. We're negotiating, one, for better price even though it's not integrated, okay. Then as the integration occurs, those flows from each of the countries will flow through the OFX banking relationships naturally. We will probably onboard some of the Firma banks. As they flow through our banking relationships, our pricing will apply, which is lower than what the Firma pricing is. We should start to see that through fiscal year 2024.
Yeah. I guess just one follow-up to the other part of the synergy thesis was also giving the Firma traders, you know, more access to the licenses and jurisdictions that they didn't have standalone. I'm just curious how that's also progressed the last few months as well.
It hasn't progressed. We're basically being very careful about that because access to our systems and how we actually do that. We've taken decision until we've got them migrated, they won't get access to that. That synergy will not happen in fiscal year 24. We expect to complete the migration, and some folks will start to get access to that through the year, but we're not banking that synergy until really fiscal year 25.
Okay.
I'm sure Lach will be in touch with how to enter. Any other final questions? Yep.
Just the AUD 80 million you flagged in terms of investment. I presume that's all going through the balance sheet rather than OpEx. I'm just interested in terms of how you would budget, whether the AUD 18 million is something that we should expect as a reset going forward or that's well above par to what you'd expect sort of in future.
I think AUD 18 million obviously is what to expect this year. Next year, we're kind of just in the final stage of budgeting process around about that amount at the moment, but we'll give you an update at the full year results. Because of those items that we talked about, it's continuation on the payments, the corporate verification, which is really important. What we're really excited about is that corporate platform, and it will take some investment to build that, right?
Some of that will flow through into FY 2024 and beyond, presumably?
Yeah. Yeah.
A question.
Right.
There's a few, I'll deliver them l at a time. This is from Lach Ceterio from MST. Lastly, a lot of positive commentary around B2B and long-term CAGR are being strong. One thing we can't really see is how B2B goes through the cycle. Were there periods where it went backwards? Do you expect to see B2B growth continue into FY 2024? Can you add color about how you expect to see it through the cycle?
Yeah. Well, what I'd say is, going back to the start of the presentation, sometimes it's important to look at cycles versus unprecedented, and I think we were in a little bit of unprecedented territory, but we still saw strong B2B performance. As I touched on, ATVs remained good. I would say there's been times when B2B has grown faster, but still strong performance through the cycle. As Selena touched on, margin accretion, it's why we love this business and, you know, just that segment. To Elaine's point, the upside is still there. The reason why we know we can just generate more growth is just look at the chart on transactions per active client, and that's before we add the product features that we really want to add.
That's before competitive intensity changes as a result of some of the things that I touched on earlier on. It's a kinda through the cycle segment, we're just getting going. We're certainly getting really good, you know, strong outcomes. Again, for the eagle-eyed, have a look at the transactions per active client on Firma, compared to OFX.
Okay, second question: Do you expect OFX to grow EBITDA in FY 2024?
We will update you when we provide you results.
Question. Is the AUD 1.8 million interest income from cash balance being captured in operating revenue or as net interest? i.e., is it included in the EBITDA guidance?
It is included in the EBITDA guidance because it's where it is captured is between revenue and NOI. It's included in NOI, therefore it flows down into EBITDA. Interest expense, though, is below EBITDA.
Finally, I couldn't understand the EBITDA margin discussion. Is there a possibility you may move to 40% over time, or was that aspirational, or how should we think about it?
I think there was confusion. The 40% is the McKinsey's Rule of 40, where if you take your EBITDA margin and you add your NOI growth, you should end up at 40. Some have an NOI growth of 20 and EBITDA margins of 20. We're at 30% EBITDA margin and our NOI growth at around 10. That's your Rule of 40. We're not planning to expand our EBITDA margin to 40 in the short term or anything like that. We definitely see levers around growing EBITDA margin. That's really where I'm sort of hinting at around the more revenue opportunities through better product for our corporate clients.
Of course, as we grow enterprise, and admittedly the growth has been modest, that's typically a higher EBITDA margin segment. As that becomes a bigger part of the portfolio, that will also drive EBITDA margin. That's it?
That's it.
Okay. Right. Well, thank you very much. We're gonna take a 15-minute break and then be back and hear from our clients, our team on the platform. Thank you. Right. It looks like we are officially off mute. I do want to apologize to the folks who are participating online. I know that at some point, we lost visuals, but you did get to see Elaine before she disappeared, so you know what she looks like. I think visuals have been restored. For the 2nd half of the morning, we're gonna hear from people directly. To kick that off, we're gonna have a client panel. I'm gonna ask Michael Judge, who leads Australia, New Zealand, who reports into Yung, to introduce a couple of Australian clients who are doing well globally.
They're gonna share a little bit about their businesses and a little bit about doing business with OFX. After that, we're gonna switch into three of our executives. Kate Svoboda, as I said, our Chief People and Culture Officer, is gonna lead a panel with Mark Shaw and Adam Thomas to talk about how we're putting this global platform into operation and to life. Michael, over to you.
Thank you, Skander. Welcome to everyone again today. As mentioned, my name is Michael Judge, and I am the Head of Australia and New Zealand here at OFX. Personally very proud to be sitting up on this panel this morning, but it brings me, you know, immense delight to be doing so with two very long-standing and equally very loyal customers to OFX today. Over the next 20 minutes or so, or perhaps even a little bit longer, you know, I'm hoping that both Bede and Tanya will be able to share with all of you know, some of their experiences, both past and present, that they have enjoyed, you know, with OFX.
As well as, I suppose, deliver a broader appreciation more than anything in terms of how they use our service and why it matters to their businesses. There will be an opportunity as well for some questions in the last five minutes or so of this morning's panel. You know, please feel free to direct those our way towards the tail of the conversation. Look, before we do jump in, allow me to introduce, firstly, Tanya Sayers. Welcome, Tanya.
Thank you.
Yourself, Bede Hendren. Thanks so much, guys. Tanya Sayers is the Chief Operating Officer at Enviro Technologies, a business that she has been part of for the past 13 years. I actually visited Tanya's office, you know, a month or two ago, still amazed today by the bandwidth of your role. You know, Tanya oversees the technical and financial functions within the business. She also has direct oversight and management for its global operations and its global supply chain as well. Bede Hendren. Look, Bede, probably outdoes us all to some extent today. You know, Bede has been with OFX since 2006. As a guy that's been in the business 13 years myself, you know, I think that's an incredible milestone, and we're very grateful for that, Bede.
Bede is, look, the Managing Director, and the Co-founder of Teed Up Golf Tours. You know, a business he co-founded and established himself in 2003. And later in 2007, he went on to establish Teed Up Golf Management, which owns and manages a number of golf courses, driving ranges, and sports facilities here locally. Look, there's some introductions. I think, a wonderful place for us to start today, you know, and a question that, you know, I'd ask of both of you is, you know, for everyone's benefit, you know, would you mind just explaining, you know, the nature of your business, you know, more than anything?
Really once you've done that, you can kind of introduce why foreign exchange is relevant, and you know why foreign exchange matters, you know, to both of your businesses. Tanya, do you wanna kinda kick us off?
Sure. There are two businesses within the Enviro Technologies portfolio. The one I'll talk about most is SOLAFT. That is an industrial filtration business. We supply filtration consumables to industrial customers. Those customers have generally got environmental conditions they need to meet through regulations. We're a global business where I have manufacturing, three manufacturing sites in China, one in Brazil, and in the middle of commissioning a new plant in India. We are at the moment 300 people globally, expecting to expand with India to probably around 350 by the end of the year. Because of the nature of our products going into mining, aluminum, alumina, we're dealing with the big mining companies, coal-fired power stations, waste-to-energy power stations as well. We ship products globally.
We are truly global in that we manufacture globally, but we also ship product all over the place. Hence, currency is one of our big things when we're consolidating everything back into the Australian dollars. I try and put a hedge in place naturally in some instances, but of course, there's always a exposure, especially when we look at our Australian domiciled businesses. That's where our biggest exposure is from an FX point of view, and that's where OFX comes in.
Great. Thank you. Be a yourself.
Sure. As I mentioned, our management business has some small FX needs in terms of paying suppliers. But generally our travel business is the one where we have the most need for FX. When we host or organize a golf tour internationally, which we're now, you know, cranking back up again, we always price the tour in the local currency, whether it be USD or EUR or GBP. Our clients then at a certain point in time have to convert that to the AUD and pay us. We host tours, as said, to the U.S. We have four tours every year that we organize to the Masters at Augusta for the golfers in the room. That's sort of the one tournament most golfers wanna get to.
We also do Scotland, Ireland, and South Africa. That's sort of four set tours. We mix it up a little bit. We've done tours to the Super Bowl, Rugby World Cup, Kentucky Derby. It's always golf tours, but we tie it in with some of the big sporting events that our clients love to go to. That business is probably foreign currency needs and hence the need for our OFX. Yeah.
Thank you. Now look, I mentioned you've both been with OFX for a while, Tanya 2018 and Bea, you know, 2006. You know, if we test the memory bank a little bit here, you know, let's go back in time firstly. Can you guys remember, you know, how you came to hear about OFX and how you initially learned about our business?
Had to stretch back the memories. 2006. I couldn't be woke for breakfast this morning. It was obviously early days, and I think it was called OzForex back then. An employee called up and just explained, you know, what they did and could they come out and have a chat and quote on a deal. I think it was Ian Ballan, the guy we dealt with at the time. We were currently with one of the Big Four banks. We gave them a sort of a tour to quote on when we were doing a conversion. The price was extremely competitive compared to the big banks back then.
It was really easy. It was an easy deal to do over the phone and happened very smoothly, and the payment was really quick. That sort of, I guess, awoke us to the opportunity that we're competitors to the big banks. Pretty much I think since then we've done something like 1,600 spot or deals since then. Yeah, that was our first. That was our connection.
Fantastic. Yourself, Tanya?
Similar story. I got a phone call, and I do have had a lot of phone calls around FX, but they got me on the right day. Someone was prepared to come out and see me, which, I think was one of the things that probably was the draw card. We had a meeting in the office, and they were able to explain some of the products and the offering. When you're running a business, you know that FX is important, but you've got other things that you need to do day to day. For someone to come out and sit down and talk to me and make me feel like an individual was wonderful. Then from there, via email, we were set up and away we went.
Unreal. It sounds like obviously you're both, you know, existing bank clients. You know, the FX piece was relevant but probably underappreciated, you know, at the time. You know, very early on in, in our relationship, you know, if you cast 12 months forward from when you first started, you were using OFX, you know. Again, can you guys just explain to us how you felt the partnership was different to how you were set up with, you know, your previous provider and equally your bank as well? What was different?
For me, I, being a financial background, we did a 12-month trial, as I put it, with OFX, and I had my back office record every transaction we did. At the end of the 12 months, we'd saved around AUD 180,000 on our FX just by using OFX rather than the traditional bank that we had been with. FX then started, you know, becoming more of a strategic position for us rather than just going in and doing spots through the bank. To me, that's probably what those first 12 months and then from then we haven't looked back.
I think for us, I think after that first deal, I don't think we ever went back to the, to the bank side of things because it's, you know, always significantly pricing better. We might have, you know, maybe the next couple of deals sort of done a comparison. Back then I hadn't spoken to anyone at the bank. It was all done online. No one had explained to me the difference between Spots and Forwards and Limits, et cetera. It was just, it's like completely different. You know, back then, you know, Ian came out three or four times over those first 12 months to talk through the different products and whatnot, so, which has definitely helped our business since then.
I think we'll definitely come back to the product piece 'cause, you know, it sounds like you're both kind of using, you know, a mixture of spot and forward, and there's a bit of kind of risk mitigation in how you both operate. You know, if we fast-forward kinda to current state, you know, both of your businesses no doubt are very different to what they were back in 2018 and absolutely since 2006. You know, as of today, you know, I think the question I have with you is: what is your experience with OFX? And, you know, how have we, you know, as a partner of yours delivered to your expectations?
Probably the big difference is now is your online platform now is so easy, so we're probably using the online platform. Which I think in the early days it was phone-based. We still know that we can pick up, and I think Joel's been there 13 years, yourself maybe 10 years. I know we can still pick up the phone if we need to. You know, two or three times a year on a particular big deal or if there's something a little bit more complicated, you know, we'll pick up the phone. Generally just the online platform, it's so easy to use. My team can use it, like over, you know, can oversight. Our suppliers get paid, you know, pretty quickly. From my, from my point of view, that's been great.
Tanya.
Very similar. We are able to use the online platform. The online platform allows me to have the different authority levels in place, which is quite important to me. I can have my back office put deals in as instructed, and then we can authorize them online. It allows me to print down the dashboards of what forwards I've got in place to report to the board around our risk mitigation policy that we have on FX that we review every month in the board meetings. I think the online, but also, when we've been doing a bit of M&A activity in the last little while and had a lot of larger transactions going through to Canada. Canadian dollar is not one that I was familiar with.
Being able to pick up the phone and talk to someone and look at what's happening was really important as well. I'm not an expert, so sometimes it's nice to pick up someone and talk to the person. I don't have time to look at what's happening in the markets, and when announcements are coming out. Being able to have that information when I need it, not all the time, but when I need it's important.
Thank you for that. Look, there's it's a bit of a platform, you know, use case there and equally you've already kind of mentioned as well, Tanya, you know, your use of, you know, the, the team at OFX. I think it'd be really good to just kind of boil down for us a little bit. You know, at a fundamental level, if there were, you know, really just one really compelling point which is valuable to your business, which helps you run your business. You know, if I was to challenge you to think about what that one thing would be, you know, would you mind just offering a perspective on that?
I think one, it's trust to me, and it's knowing that I matter. I think that is fundamental because when we dealt with the bank, I couldn't pick up the phone. If I picked up the phone, I didn't know who I was gonna talk to, and I didn't feel like I was just a number. You know, go online for their system and put it in, and I didn't feel like there was anything behind it. I think having a trusted partner, knowing that if I'm not sure on something, I can pick up and ask a dumb question and not feel like I should know the answer to it. I think that personal touch is really builds the trust, which means I don't look anywhere else.
I mean, I think for us, apart from obviously the price, competitive, which, you know, on the big deals that we're doing, you know, every point makes a big difference. I think it's pretty rare these days, I think, to have those relationships in any, in any company, someone that's been there like Joel, I don't know if he's here today. He's probably working. Probably a good thing, for 13 years or yourself for 10. Again, I think what Tanya says, that trust that we know someone at the end of the line when things may go wrong or, it's a complicated deal is to me, yeah, invaluable.
Okay. We'll hone in a bit more on the service point. It's something that, you know, we're passionate about OFX. Obviously, you know, we're gonna give you a bit of a prompt later in today's Q&A. Whilst we're there, you know, can you explain for us in what typical scenarios, or do you have any examples where, you know, the human element of our service teams and the relationship kind of really shone through?
For me, when COVID had obviously been in the travel business, everybody knows that our business came to a halt. We had forward deals for over lined up sort of over the next six to 12 months to pay for our tours. We had to postpone those tours, or call them off. You know, it was a pretty sort of scary time. Picked up the phone and spoke to Joel. Whilst we get by margin call, which is obviously understandable, managed to come up with an arrangement where we could move the forward deals, so we could still have that in place for when the tours could go ahead. I think without that, not sure we would have probably survived.
If it was back where I couldn't pick up the phone or, and everyone was sort of panicking those sort of first few weeks, that was probably critical for us to get through that. We could say to our clients that, "Look, you know, we can postpone the tour and still come with us." Yeah, that was probably the one time that the one that stands out.
Yeah. Fantastic. What about yourself, Tanya?
I've probably got one that's quite recent, actually this month, where we were moving for us significant amount of Canadian dollars. I've always used OFX more on the payment side because most of the local customers pay in AUD and I'm paying my China plant from Australia in US dollars. I've always been on the payment side, not on the receivable side. With one of the businesses we bought, we'd lent money and they were then repaying that back. It was a large deal, and I really wasn't sure what the best way of bringing those Canadian dollars back into the Australian dollar account. I was able to pick up, drop an email, said it. Shameem is always available. Even when she is on holiday, she's called me.
had a lovely Teams meeting with her, asking her about India because she was able to talk through different strategies, what was happening in the market with when the U.S. numbers were coming out on manufacturing that week. Of course, the RBA was also announcing beginning of the month. She then just talked through some of the strategies that I could use if I chose. we put in some limit orders. I went aggressive, came back at the end of the weekend, dropped them back a little bit, but actually ended up hitting really some probably peak rates in the Canadian, Australian dollar. on that deal alone, I think there was sort of $30,000 compared to if I'd taken the spot, and that was over four days. I'd not done limit orders before. That was a conversation.
Yeah, that's the type of.
Fantastic. Great examples. Thank you for sharing that. Look, it's often a difficult question to ask in this type of setting, you know, be great to touch on, look, a bit of constructive feedback. I know, as I said, we've been working together for a couple of years, you know, I'll ask a very open question in terms of, you know, is there anything that we could do as a business, you know, a little bit better?
Yeah, this was a tricky one to think about because, again, I've, like I've been there since 2006. There's been very few issues. One thing that would be great for our business would be some sort of travel card, FX travel card that our tour hosts can use while they're overseas to pay for dinners and drinks and some of the expenses that come up, because at the moment, they're just, you know, using a, you know, an Australian credit card, and obviously they still whack us pretty high with the transaction fees and the currency rates. Some sort of travel card would be useful from our point of view. Yeah.
Okay.
Tanya.
For me, sometimes it's probably more a minor niggle, is the fact that sometimes the money can take the latency from when I actually pay OFX to when it gets to the other party offshore can be, you know, more than one day. Generally, it's the next day, but it can be a little bit longer. For me, when I'm trying to get my teams to reconcile their accounts globally, and I've got money in transit that's not in the Australian entity, but it hasn't arrived in the China one. We do manage our business where we don't do payments for the last three days of the month. We work around that, but sometimes that is, can be a little bit inconvenient.
Before we move on, any other constructive feedback? No? Just sort of take the opportunity we've been given the group today. No, that's great. Thank you for sharing. Look, another kind of aspect of how we operate is that, you know, the competitive environment is certainly not lost on anybody. And, you know, the external piece is not lost on us, and at the same time, look, we don't take our relationship for granted, or albeit, you know, it is a fruitful one, and one of significant duration. Out of curiosity more than anything, do either of you know, get contacts to buy competitors? If you do, you know, why do you choose to stay?
I would get calls monthly.
Okay.
If not more frequently than that, from different places on FX. I probably am generally in meetings and busy, so don't take them all. I do, though. I am required by our board to price now and then, probably once a year, especially on this big deal we did at the beginning of the month. I actually did price with a competitor who didn't come in anywhere close. But I would say while price is, of course, the most important, even if they came in on the same, I probably wouldn't be doing the switch anyway, because once again, it's around that trusted and long-term partnership. But I do get a lot of calls. Absolutely.
Not to me recently. Pre-COVID, I think obviously a lot of people realized the travel industry is probably not a good one to target at the moment. We haven't had for a while. I know pre-COVID, again, probably not as many as Tanya, but three or four times a year, someone bring up and say, "Hey, you know, they can unbeatable on price," et cetera. We may, you know, again, probably once a year, just test the market. Again, they would either come in very similar and not enough to even think about making the jump. You know, and often they didn't come in cheaper anyway. And again, it's not worth the jumping for the relationship point of view. Yeah, from my point of view, it hasn't been an issue.
Okay. Now, a question that, you know, I know Skander and Selena get asked a lot about and, you know, investors in the room, you know, ask us this question, you know, quite regularly. In terms of, you know, the increase in transaction value and the increase in transaction frequency that we've certainly seen through parts of our portfolio, and frankly, it's persisted, you know, post-COVID. I'm curious to understand whether that's something that you've experienced in your business. If so, you know, why, why do you think that's the case?
Well, obviously in the travel business, it was pretty much zero fortwo years there. We pivoted and did some local, you know, regional golf tours and Australian-based golf tours, really just to keep our team employed along with, you know, JobSaver. We managed to keep everyone on board. There's now a massive pent-up demand. This year our transactions have sort of come back to almost what they were pre-COVID. We see that certainly the next two or three years, there's a lot of pent-up demand for travel and for golf tours. From our point of view, it should be back to pre-COVID level, you know, by next year, which is obviously good for us and good for you.
We were quite fortunate not to be really affected by COVID. I didn't have to put anyone on JobSeeker or anything like that. We saw a little bit of a downturn in 2021, not really in the Australian market. This year we're seeing a little bit of a downturn in our Chinese business locally. The rest of the global business, we've been on a CAGR of probably 11% for five years and 15% for the last three. Could even do 19%-20% this year. We've seen growth across the globe. The industrial sector is, with Russia having sanctions on the aluminum, we are seeing that a lot of pot lines are coming on stream, especially in South America, even in Australia a little bit. Production's been wrapped up in other areas.
When a pot line's been down, they need to rebag their whole dust collection system. We've got bags for them. We've seen a lot of an increase from that point of view. Transaction-wise, we've also, the board over the last three years has been probably a little bit more focused on putting in risk mitigation. Forward covers, I've got a percentage of exposure that needs to be, have forward cover against. From that point of view, we've increased the amount of forwards, as well as the business increasing. M&A activity for the last two. We bought another business, and as I said, in Canada. This is a filtration business, but it's magnetic ferrous metals, in hydraulic oil systems, so into the mining.
Now I learned a little bit about hydraulic oil systems and Caterpillar 797s and all these wonderful things. You know, that M&A activity has been large deals for us. You know, AUD 6 million-AUD 7 million, which is large for us, in one go. We plan to have a few more of those as well. We don't see our FX requirements reducing anytime soon.
Look, the final question I had for you both is just one around evolution. you know, you both kind of got, you know, businesses which are growing year -on -year. You have businesses as well, which has frankly operated through, you know, some pretty messy cycles. you know, certainly today's cycle is, you know, a little bit different again. you both touched on this, but, you know, I kinda wanna double click on the point, around risk management. you know, by all accounts, you both kind of used spot limit orders, forward exchange contracts. If I may, I'd just ask you to share some of those experiences through those product lines.
What have you liked about them, and what have you learned through, you know, mixing it up a little bit, as your business have grown?
You want to go first?
Go.
Probably the easiest way, I guess, is to give you an example of how we, you know, price it and run our tours. The US Masters Tour, which is April every year, is our biggest tour, and we start selling that, you know, 18 months in advance. We price it in USD. A client might book that tour today, they pay an AUD deposit. They know on the 1st of November this year, we'll go to them and say, "We're now gonna convert the USD price to an AUD." In our terms, we say we'll get the best of the Big Four bank rates on that day. What we actually do is we go to OFX and we get a forward deal to probably the end of February.
That's when we have to pay all our suppliers. There's a four-month lag from when we get the money from our customers and when we have to pay our suppliers in the U.S. We lock in a forward rate, and that's the rate we give to our clients, and it's traditionally always been one to two cents better than the Big Four bank rate anyway. Our clients get a better rate. We have the security of knowing that we've used the same rate that our customers have paid us, that we'll pay our suppliers. You know, since we've been doing the tours, you get, you know, the GFC, Brexit, COVID. I think the Australian dollar's got as high as AUD 1.10 against the US dollar and as low as AUD 0.50.
If we tried to pick it, we could obviously, we could win, but we could also lose pretty badly and be out of business. A lot of our clients say to me, you know, "What do you think the US dollar's gonna do?" I say, "Well, if I knew that I'd be going on tours, not touring." Even the experts, you know, don't seem to know, and they say one thing and the US dollar goes the other. For us, locking in that forward rate on the first of November is critical to our business. It just takes all the risk out of it. We know and we know our suppliers are gonna get paid. That's been the biggest...
We've looked at limit orders and we've obviously used some spot deals, 90% of it is forward deals around those tour payment dates.
For what it's worth, Bede, I'd probably answer the same if a customer asked me the same question. Okay. Tanya, what's been your experiences?
Yeah. Unfortunately, I can't back to back the currency quite the same. Some of my lead times are like 9 to 10 months. If I'm bringing fiber from Europe to China to make into yarn, to weave into a cloth, to make a bag, to ship it to Australia, to get it installed. When you've got a nine-month, I really don't price the FX. We keep track of all the contracts, especially if we're doing large government contracts, keep track of that. For me, it's just more around a risk diversity. I look at the exposure we've got for the next six months, and as a business, we try and have 50% of that covered either through US dollars in the bank that we might have received from customers or through forward cover. Everything else is at spot.
Me, it's been more around just trying to smooth the ups and downs in the market, not necessarily try and get the best rate at that time because there's no winner in that. It moves around so much. For me, it's just really around being able to have a bit of predictability, and certainty for some of it in the next six months. Sometimes we win, sometimes we don't, but it's that certainty that's important when I'm reporting back to our board.
I see. We do have, you know, a couple of minutes left. You know, by all accounts, I'm happy to open the questions up to the floor. Are there any questions either for, you know, Bea, Tanya, or equally myself?
Just curious if you've started using the TreasurUp product yet. Is that part of?
It's not available.
Not available? Okay.
Yeah.
Nothing else out there. Okay. Well, a very, very sincere thank you to Bede and Tanya. You know, it's a two-sided thank you, I think, you know, not only for your business over such a long period, but equally for taking the time out of your days to join us today. Thank you again.
Thank you.
Thanks, Tanya. Okay. Thanks very much. As I promised, there's no one who can tell the client experience better than a client. We really, really appreciate you taking the time out. Let's switch gears a little to how we internally are taking that $18 million of tangible investment, turning into something that clients value, as you heard from Tanya and Bede. To do that, Kate Svoboda is gonna introduce Mark and Adam, and they're gonna talk about our global operating system and our technology and other platforms to make this. Yeah. Over to you, Kate.
Thanks, Skander. Thanks very much, and welcome to this panel discussion in which, as Skander just said, we're gonna talk about the way in which OFX's technology and operations functions provide a safe, reliable and scalable platform for our clients, along with expert human support when they need it. My name is Kate Svoboda. I'm the Chief People and Culture Officer at OFX. I've been with OFX for just over two years now. It's been an exciting two years with the company because we've grown pretty significantly in that time, and been investing in both our digital platforms and our operations capability to meet the needs of our clients. We've also completed our first acquisition, which of course, requires a lot of attention and effort to ensure a good integration.
I've worked for over 20 years, and that feels like a long time, in, people teams in financial services, including banking, funds management and insurance, and am now enjoying the fast-paced world of, global payments. I'll pass on to you to introduce yourself, Adam.
Sure. Hi, everyone. Adam Thomas, chief technology officer. I've been here at OFX for about four years now, just over four years. Prior to that, I was in management consulting, working with PwC, IBM, and then went into industry and worked at News Corp, and I was the chief architect at News Corp in Australia and globally. I came to OFX as leading up our engineering team and been CTO now for about two years.
Mark.
Mark Shores, I'm Chief Operating Officer. I've been with OFX just over five years, been terrific to see the progress we've made over that time. My background's in banking and financial services. I've had a variety of operational and risk management roles for both Australia and New Zealand over the last 20 years. Prior to OFX, I was the head of operational risk and compliance for Australia at ANZ.
Great. Thank you. Adam, you get the first question. You mentioned you've been with OFX for a little over four years now. Can you tell us about the technology strategy that you've developed and are leading at OFX?
Sure. Well, in case you haven't been paying attention, we have a single global platform. That platform's evolved over time, but it's allowed us to evolve and grow into new markets around the world. We've also used it. The reason we've emphasized that is because we have teams around the world in our different regions that all operate on that same platform to service our customers. We have a follow the sun model. As Australia goes to bed, the UK picks it up. We also innovate our own products, which I'll talk about a bit later. You know, our platform, the front end is fairly simple for our clients, but most of the development effort is in the back end.
We spend most of our time focusing on compliance, risk management, pricing, and we integrate with different service providers and banks to provide the set of currencies that we enable our customers to use. We have a hybrid architecture, so we use a combination of in-house development and global vendors for packages. We like to use SaaS for capabilities that are not unique to our business, like customer management. And that gives us access to a roadmap of features that we can roll out over time at fairly low cost to our business. Where we focus our strategic investments is on our internal development, on our...
Where we wanna have differentiation in our product, or economies of scale, or maybe we don't wanna be locked into a vendor's roadmap or their pricing models. For example, we've built an end-to-end payments engine that allows our customers to send money to us in many different ways, and then in different regions, and then we can pay that out via our different banking relationships that you heard Skander talk about earlier today. As I said, we're in the cloud. We've always been in the cloud for a long time, so we're fairly early adopters in the cloud, but that gives us the ability to be able to roll out change quite quickly, and do it in a safe and reliable way.
Our engineering teams are now doing about 20 updates to production every week. We also have found lately, in the last one to two years, that security's become a more important focus, so we've been investing, as Skander said, more in security. We have a Chief Information Security Officer internally and also a dedicated security team that works across all of our teams to make sure that we keep our customers safe. We also have an external vendor that provides a 24 by 7 security operations center, monitoring our logs and our platforms. If there was a cyber incident, we have a managed detection and response contract in place for them to be able to jump inResponded.
I guess lastly, you know, from a talent perspective, as it was alluded to before, we have seen a war on talent, particularly in technology here in Australia. We've diversified our talent strategy. We now have OFXers in the technology team all around Australia, in New Zealand. But more importantly, we've found a global vendor that we can tap into to get access to engineers, and we can scale up those teams and scale them back down as necessary. We still like to keep our IP close to the business, but we can have the ability to respond to business needs.
Cool. In terms of where we're up to in executing on that strategy, where would you say we are?
I don't think your technology strategy is ever finished. It evolves over time as customer expectations change or the business needs. I think we're making some great progress so far. I'd say we have this advantage. What we've noticed is that the more that we invest in improvements on the customer experience, the more it translates into operational efficiency inside the company. For example, if we focus on faster payments, it's great for the customer, but it also means less effort on our side to support those transfers. As you heard earlier today, we've been investing a lot in our onboarding process for our consumers in the last 12 months. We can now get the majority of our customers onboarded in minutes. When...
if a customer does need to be, we need to do due diligence on them, we've also been investing in the workflows and the behind the scenes to be able to automate that process or to speed up that process. In the payment space, we've been doing a lot on the straight-through processing of payments. I think Selena mentioned earlier that we're now getting very high allocation rates for our customers making payments to us. You got to appreciate that customers don't always fill in the fields in their bank statements exactly as we'd like, and so we have to try and match that money to the client's deal in an automated way.
We've really got a high degree of automation there, which, as I said, improves the speed of their payments, but also reduces the overhead on our staff. Lately, we've also been working on making it faster to integrate with new banks. Then I guess, that's all great when all the automation works, but when it doesn't work, customers want to be able to call us, as we heard earlier. We've been investing in our customer management platforms and case management so that we can service the customer better.
Thank you. Mark, maybe you can talk to us about how technology and operations work together at OFX.
Yeah, sure. OFX very much is a digital business. you know, more than sort of 90% of the transactions are booked online. The technology is obviously a key part of being able to deliver that service. I think, you know, in financial services, and particularly in international payments, it's never true that, you know, 100% of payments end-to-end transactions go perfectly seamlessly through with no intervention. What's incredibly important is how we work with technology to help solve those issues for customers when things don't work perfectly. Compiling that experience and understanding of banking and payment systems and processes that our operations people have with systems that help them to resolve the issues for the customer. We don't take a zero-operations approach, I guess, at OFX.
We're not looking to say that we could automate away all of the operations of the company. Instead, what we think about is how to use technology to really, augment the capabilities of our people. You know, taking away some of the low-value type of processing stuff, automating things that actually, you know, are not things that a human's gonna add a lot of value to, so that people can really focus on how to, assist the customer or provide better service to the customer. There's probably a few ways that, you know, we've been doing that. Some of the things that Adam sort of talked about.
On payments, you know, having this payments engine that we've been developing with direct connections into banking partners and configurable rule sets that allow us to sort of start being able to process payments by the best rail automatically, and we can kinda configure that, and our operations staff can make quick changes to that. You know, for example, last weekend, we made quick changes to stop any payments going to Silicon Valley Bank till we knew what was happening there. The ability to do that quickly is obviously incredibly important. Also on the way that payments are allocated back to customers. When customers pay in those payments to us, being able to automatically allocate those without a whole bunch of manual intervention, and it's well over 80% or about 80% of our...
those payments are now, you know, allocated with zero human intervention at all. All the process just happens automatically. No one needs to start and stop the process. Which, as Adam says, has improved the speed, and in some corridors, that's improving speed up to 40%. Also takes away that, you know, manual effort that we need to apply as well. In onboarding and fraud detection, you know, we're now using biometrics to support the onboarding piece. Using biometrics to scan identity documents, prove identity through video, and so forth. Which not only provides better control, but it also means we haven't got people manually, you know, reviewing identity documents and trying to decide if it's the right person or not. Which means they've got more time to really focus in on the red flags.
Where are those sort of, you know, for the customers that the identity is good and we have no concerns, they can be straight through processed. Where there are something that might not be right, that's where our people can focus.
Great. How do you both drive alignment between the technology and operations functions?
Yeah, I mean, I guess it starts with strategy, right? We have one global strategy. You know, the whole executive team is part of developing that strategy and that, you know, that really is about us being very aligned on what we are gonna focus on and what we're not gonna focus on. That flows through to our planning process. It's really aligned to the key, you know, outcomes we're trying to achieve. You know, faster, easier customer onboarding, you know, fast trackable payments, better customer service. You know, we align our teams around those pieces. You know, we've got people who, you know, understand the details around how payments to particular countries are going to work or, you know, how to verify a company that's operating behind the trust.
Those people work with our product and technology teams to really make sure that we can develop technology to support those processes. Well, the way we've organized product and technology is based on outcomes, the customer outcomes. We have teams or streams around onboarding, client experience, payments, customer management, and we also have enterprise and online sellers as a stream. Each of those streams has about two agile teams that work very closely with Mark's team and Gavin's team, so that they can focus on customer outcome. We do yearly road mapping. Obviously we're starting to do, we're locking down our plans for FY24 right now. We also review those priorities every quarter.
We do find, you know, generally we stick to the same plan, but every now and then we need to change the priority of those teams. It could be based on external events, like a regulatory requirement or a change of strategy internally. Within the teams, we try and really focus on building up the domain knowledge of the technology team. I've always found in all the teams I've led that the closer that they understand the customer and the commercial outcomes of that stream, the more innovative they can be in their solutions. And they can also talk with the business users, in the same language.
Great. Just to sort of keep it all real and a bit in the way Michael asked, some of our, some of our customers for constructive feedback, I'm gonna ask you both, you know, where have things gone wrong?
Yeah, sure. Doesn't always go, get it right. I'll give you an example. Several years ago, when I first joined, we used to only do one big release to production every month, sorry, across all of our teams. It was pretty obvious if we broke something, we knew what we broke, and we could either fix it or roll it back. We now have 10 teams working in parallel, all deploying into production all independently. As I said, we do about 20 releases per week on average. That means that if one team deploys something, sometimes it's not obvious if they've impacted another team.
We did have a case recently, for example, where, you know, we misconfigured the outbound emails to try and improve email deliverability and indirectly caused an issue for the customer service team trying to onboard new customers. You know, we learn from these mistakes. You know, we put in controls to try and make sure that that never happens again. We always make sure that we focus on what's best for the customer.
How do you also think sort of our culture is helpful in that regard?
I think, we try to have a blameless culture when we're investigating the issues. OFX is great at getting everybody to rally behind, you know, a potential M&A or it could be a regulatory requirement or whatever. It's small enough that everyone sort of rolls up their sleeves and tries to get involved. You know, I think we have a great culture in sorting that out.
That's a nice segue into people. Where do you see our digital plus human offering becoming more powerful?
I mean, for me, you know, operation, as I said, I think it's about how we use that technology to augment the capabilities of our people. You know, taking away some of that low-value tasks, so we can really use them to help our customers in the best way possible. You know, I think we have this follow the sun model, right? Not just on our technology platform, but with people. We use those people around our eight offices to provide a 24/7 service to customers. Having that one global platform is incredibly important for us to being able to scale the service in all of those countries globally. I think, you know, where it really comes to life is for clients, right?
It's, you know, we still take probably about 250,000 calls per year from customers. And it's, you know, it's really the people who deliver that service to customers in some of the sort of situations that you heard, right? When there's an issue or a problem or something's not working, it's having our teams, our customer service teams talking to the client, talking to our operational teams to sort of understand if there's an issue with our bank or another bank or working out what the problem is and being able to resolve that quickly for the customer.
That combination of, you know, the technology that helps us to kind of deliver the service with the people who work on problems when things go wrong is I think, you know, a huge part of what OFX's value proposition is. I think, in the technology area, I'd say that probably a great asset for us is having access to global talent. We used to be fishing in a very small pond here in Sydney for all of our talent. Now that as a result of COVID lockdowns and the increasing demand for tech talent, it's forced us to look elsewhere. That's not only benefited the access of talent, but we also find that teams are more stable. We've had a higher retention rate since we've had this remote hybrid operating model.
That means that as we invest in our people, we get long-term returns out of people. Kate, I might turn it back to you. Turn the table to you. Do you wanna tell us a little bit about how you think about our people strategy?
Yeah. You know, probably best characterized as good old-fashioned CLC. Talent, leadership, and culture is a good way to think about it. In terms of talent, it's how we attract, retain, and grow great talent. OFX has, you know, a fair bit on its side in relation to that. Firstly, we're global. That offers a real point of difference and interest for people who are seeking diverse career experience. As Adam mentioned, we have a hybrid model of working and that's provided a lot of really valuable flexibility for our people, but it also means we've been able to attract talent in a diverse range of locations, and that's been really helpful to us. We're also really good at internal career mobility. I actually went back and had a look last night.
More than 10% of our people advise they have had a promotion or a role change over the last 12 months, and that's, you know, clear evidence of the fact that we look to promote and develop our people from within. We also provide global mobility, so we've got a number of people who transition roles globally. Leadership. Here's a little bit of HR gold for you. Management is our third highest engagement factor for our people after work-life blend and diversity and inclusion. Our senior management are rated 4.2 stars on Glassdoor. In terms of leadership, we've also invested in three tiers of leadership development for our senior leaders, for our middle level leaders, and for emerging leaders.
One of the biggest benefits of these programs is that they're global, so our leaders get the opportunity to interact with each other across the regions, and that has benefits for them being able to connect with their peers globally, but it also it supports our global operating model. Culture, we don't think it just happens, but we think it's very much leadership led, and it requires ongoing investment. I really don't think you're ever done when it comes to culture. We definitely think about our investment is paying off because the sort of data points in relation to that are, our employee engagement has increased from a low of 59% in 2018 to 74% in 2022.
Glassdoor ratings have increased from below three stars in January 2019 to 4.4 stars in January 2023. Our top three Glassdoor ratings are around culture and values, diversity and inclusion, and work-life balance. Also, our voluntary attrition is at its lowest point in four years, including COVID year. It might be a really simple way to think about it, we definitely think sort of TLC approach is paying dividends for us. I will hand back to Skander now.
Right.
For the rest of the presentation.
Thank you. All right, Tricia.
Oh.
Wanna sit here.
She wants the chair with Paris, so that's...
Better? Okay.
Is that okay?
For our last discussion, before any final questions and a wrap, obviously delighted to introduce Patricia Cross to you. Some of you have already met Tricia. Some of you would know of Tricia through her experiences outside OFX, but I thought it'd be very, very helpful for Tricia to share a little bit about her perspectives since she joined OFX. Maybe let's kick it off with just help people understand a little bit about your background.
As I said to Skander, this definitely should be more about OFX than about me. You have my bio there. I've got quite an international background. Came to Australia, though, 30 years ago, very happily so. I'm a serial international banker and company director. I've served on three of the six major banks, Australia, NAB, Macquarie, and Suncorp. I also served on the Aviva plc board, which is a life insurer in the UK, and I currently spend my time with OFX and Future Fund and Transurban.
Okay.
That's me in a nutshell. Three kids. Big dog.
With that sort of background, why join a little company like OFX?
It's a great company. It does have a fantastic group of people working here. I like the model, the way that we do work together. It always had a good reputation with its management team. The board is strong and very much like the strategy as I've learned more and more about it. I was delighted by the risk management culture when I came into the organization because everyone knows about the perils of, you know, misbehaving in certain spaces in financial services. There's none of that evident there. In fact, OFX is well regarded by regulators and people that are playing on the broader scale in the international community in terms of how they handle things. A lot of pluses to that.
I love the fact that the platform is scalable, and I know you're hearing that ad nauseam, but it's just so important to be able to operate globally in a well understood way, but to be able to scale up from the way that you started and to, you know, work within certain processes and parameters and ways of doing things. You know, that's kind of it. I just thought, you know, why do I wanna go to another big board and do the same old thing, you know? I did start my career in over-the-counter derivatives. Well, no, I started my career in foreign service. It's a long story, but I did eventually get into over-the-counter derivatives. We actually were the team that invented these things.
We did it on the back of international capital markets arbitrage because we were enabling customers to fulfill a deep-seated need to actually borrow in other countries and manage their financial risk. It seems so not surprised that no one has ever done before then. This was the early eighties. It started up in Scandinavia, actually, and then came down the States. Of course, now the States say we were the first to do interest rate swaps, but actually, it all started in Europe.
Interesting.
Yeah. I just love being able to do things and create things that make a difference. I'm passionate about the international economy. I do think that financial services banks very much, but especially companies like OFX have a big role to play.
You've been through a few of these, major events, let's say, in the last few decades, and you've joined OFX with those things in mind. Anything at this point that you would highlight as sort of meeting and exceeding expectations versus things you think is we've got to work on particularly?
Well, definitely, like I say, what exceeded my expectations is the management team. Any company board that someone joins, no matter how much due diligence you do, you just don't know what you're getting into until you're actually sitting there among people. What a great delight it was. As well, the board has terrific experience, especially in enterprise change, in payments, sure, in financial services, but having people that are constantly questioning the way that we're going about doing things. You know, that's all been a delightful surprise. I already knew about the financial position of the company because, of course, that's the first thing that I look at, and sorry, folks, I do love cash and a strong balance sheet.
Also I did see, you know, there's that potential, the acquisitive mindset is very strong in OFX. That was also, I wasn't surprised, but I was very encouraged to see that even though they'd just done Firma, they were developing the playbook and, you know, very disciplined about how they were thinking on going on with it.
Good. Just building on that, what sorts of skills do you want the board to have? What areas are you focused on as you think about the board and how the board can support investors, represent investors?
Yeah. I think it's important to have a board that is both experienced in terms of being on listed company boards. That's really important. In a small cap listed company, you need people that actually know how to deal with listed markets. Aren't going to make steps, but really know how to prosper there. Also to have people with a little bit fresher point of view as well. It's important to have a very inclusive boardroom, so I like people that are naturally inclusive. You know, you don't want to have all A types that have been running big companies and, you know, are pontificating, because I've definitely served on boards like that. That's, that just doesn't bring out the best in the team.
It's great to have the financial services experience that we do. And some of that deep consulting experience is so important too. Basically, everyone's got to very much understand their way around a balance sheet and how that interacts with what you can do with your customers. I do have a long list of demands, don't I? It's handy also if they've been involved in a bit of M&A.
Good segue. How does the board think about M&A? What's your kind of message to investors about how you're encouraging management around that or what's your sense of M&A for OFX?
I think I said earlier, one of the things that attracted me and delighted me as I got into OFX is that notwithstanding that OFX had just done, you know, a relatively big acquisition with Firma, that they had a strong sense of purpose where they wanted to take the company in terms of future acquisitions. There is a lot of opportunity out there right now. We need to be judicious and make sure that we continue to do things that are accretive to the long-term development of the company. The big message I'd give is that I have had a very strong training, especially at Wesfarmers, but also Macquarie, in not jumping too quickly.
I also got the experience from others of, sometimes if you jump too quickly, you're gonna pay too much or do something that doesn't make sense. Just kind of combining all of that, but it's clear to me that this company has growth prospects, inorganically as well as organically. The thing that I personally like to look for, Skander, and I know you hear this all the time, is I do like logical incrementalism. I like adjacencies. That's something that Macquarie's been terrific at. And the other thing Macquarie's really good at is they fast fail. I'm hoping not to fail anywhere.
I think it does, you know, the board and management team have to know, you know, what you're going to be looking for, both in the short term and the long run term. Yeah.
Excellent. All right. You talked upfront about the large pools that OFX may have access to. What about global? Tell me a little bit about your perspective. Obviously, you, as you said, you've served on the AVEVA board. You've obviously grown up doing business in the U.S. and Scandinavia and other places. How do you think we can be a better global company?
I'd say most of my work prior to Australia was actually in Europe, even though I don't sound like it. We do have a global platform, as we know, and we actually have the offices in each of these countries so that we can hand off the book around the world. I did the same thing at the NAB. You know, from my very early days, I joined the NAB as the treasurer, and then I was running their global institutional bank. It's just really important to be able to pass your book around to people that you trust that are going to manage both your position and your customers.
Okay. Another question we get a lot from investors is around ESG. Maybe give us your perspective on how the board's thinking about that.
Yeah. Well, I'm passionate about ESG, and I spend a lot of time in this area. I think it all starts with governance, though. I have to say, I think they got it backwards in calling it ESG because if you've got your governance right, then you really are gonna be focused on having a sustainable company. Sustainable companies are ones that do behave well in the environment, who have a great social license and reasons for that social license and strong governance that underpins all of that. In terms of governance, I think it's really important that you do have an agreed way of doing things, that it's well articulated, both internally and externally. We as a board have a great respect for all of our regulators.
We deal with many regulators and with policymakers. OFX is very well-regarded, far preceding me, with global regulators and policymakers, and we are leaned on for advice about all sorts of things. We have a role to play in terms of data privacy, cybersecurity, AML, fraud, pricing, customer behavior, All of that selling. We do take our governance role seriously. We're not complacent about either. We are in a good position, but you can never be complacent because there's organisms trying to disrupt what's happening in governance in a bad way. In terms of environment, you'd all know that OFX itself has a fairly low carbon footprint.
However, we really believe in trying to enable our customers to do what they can to, you know, have a dialogue, an ongoing dialogue, and to be encouraging of any company, irrespective of whether they're a high emitter or low emitter, in making the transition and to do what they can to influence the transition. Also, we've chatted around the board table, you know, we can see that it would be good to have more standardization around this, around how carbon is reported and how it's measured.
I've been speaking at forums, you know, with ASIC, especially saying, you know, "This has got to be done so that we can kind of all get on the same page." I'm generally pretty optimistic about that, even though you can trot out a lot of figures that show that it's not going as quickly as it can. I think the intent's there. Then in terms of social, we mentioned our workforce before. We have very high engagement. That was another great surprise at OFX. I've only been here since August 2022, as you know. We believe that our people should be enabled and feel included in all of the decision-making in the company, irrespective of what level they're at in the company or their role.
We really try to encourage people to speak up and be included. Diversity is incredibly important in that respect. It helps us to form better performing teams. We're constantly looking at that. As you probably know, I founded the 30% Club in Australia. That's because, again, I saw a need for something that wasn't there. We're constantly having our lens on diversity and inclusion.
Including yesterday.
Including yesterday. you know, the thing about inclusion, and enabling our employees to speak up is we're also, you know, trying to enable our customers, to be part of the system. if you're not doing that at home, you can't do that with your customer and stakeholder community.
Great. Last question from me, before opening up to the floor. Any other things you think investors ought to know about the way the board's thinking about the company that I haven't covered? Any other final messages?
Well, the board is nice, has a nice little point where, you know, it does really quiz management on certain things in a constructive fashion. An example of that, I was telling one of our investors that some board members were choking on their coffee one day, read about the Airwallex, you know, editorials following on SVP. The board was saying, "Oh, we need to do more hustle, hustle." You know, management pushed back and said, "Look, you know, we're not ambulance chasers," and really it's more about encouraging the system to look after itself and, you know, participate as you can in that. It is an example that the board is very conscious of needing to be constructive, yet challenging.
There is definitely opportunity in the current environment for OFX. It's just a matter of how we go about doing that. I do think especially the next couple of months are going to see, you know, more of a shakeout. We've talked about consolidation. I think there's just gonna be so much focus on equities, especially in the smaller caps, on shorter duration stocks that are, you know, making profit, do have strong balance sheets. All of that has just got to deliver opportunities for us. You know, however, there are continued risks. It is an environment where, you know, business confidence has gone up and down a little more quickly than we anticipated because of what's happening in the States.
You know, we're never complacent about that. You know, we're hoping that we get the opportunity side of that, but not the, any negative side of that. I mean, it's pretty crazy in the States right now. Anyone who watched the news this morning, when you flipped from the Trump news and looked at, you know, what Palestine's saying, you know, you can work yourself up if you want to.
Good. All right. We've got a little bit of time for questions. I'm looking at Maddy. Are there any questions online or are we-?
Yes.
Yep.
We've got some questions online from Marco Correa. On the share price and the pressure on that in the last six months, do buybacks fit into the capital management framework?
I'll start and then I'll hand to you. Any good board always looks at all aspects of capital management, including buybacks. We do continue to add to the capital structure of the company. We have to balance that with the ongoing strategic needs of the company and what we may or may not be doing. Skander?
Nothing I could add to that.
Thank you. A question for Skander. On a quarterly basis, NOI has been down sequentially in Q3 2023 and Q4 2023 by a few percentage points, confirming the softness was isolated in high value consumer, and this is again from Marco.
I mean, obviously this is a trading and performance update, but yes, what we've seen in terms of the softness has been, you know, very largely, we will break it down for you, obviously, when we do the full year result in high value consumer. The corporate portfolio has been resilient, and we feel great about it. Certainly high value consumer off again some pretty big highs. Which again, I think is not unusual. I keep talking about what's cyclical versus unprecedented. Have a look at, you know, high value consumer over the last sort of five to six years. We've seen this play out before. We know, again, if you look at prior periods, that we see high value consumers reactivate.
I think I shared some data points in the past about clients who are as old as sort of 2005 inactives coming back. That's what actually tends to happen with OFX and the high value consumer business. It's a very good business, just not on a straight line up, like corporate is.
That's it for them.
Great. Any questions in the room? Yep.
Tricia, keen to hear your and the board's collective thoughts effectively on how the medium term, you know, things like blockchain and stablecoins are, you know, weighing on certain decisions or considerations in a future of the company.
Sure. I'm a big fan of blockchain. The board's a big fan of blockchain. You know, the way that could be used, especially in an integrated, comprehensive ledger, is very handy indeed. We've had a lot of discussion around crypto, not going there at this point. Might ask Skander.
Sure. I can comment on that. Yeah. Just to build on that, we've said in the past that let's start with what the client's looking for and the problem that we can solve. To Patricia's point, blockchain looks like the most promising from a technical perspective to help drive speed, security, immutability. Crypto appears to be more of an asset class than a currency, certainly at this stage. We've also said in the past, to investors that our take is, if you go back to the first point, is that the great catalysts for us at least will be central bank digital currencies. Our target segments, as you heard up here, are not speculators. They're not people who are looking... In fact, the whole presentation, they're trying to reduce risk, not take more risk.
A central bank digital currency could be an alternative for them around how do you move money quicker, more securely, those sorts of things. The working group internally and our technology teams and our product teams, that's really where we're focused.
If you're just able to expand on that in the sense that the blockchain, for all its, you know, sort of advertisement, will have speed, security, et cetera. Surely that would mean at the margin you might see a lower fee, you know, on that line of business than perhaps what it was today, five years ago, et cetera.
There's two areas, Cam. One is what blockchain could potentially do is drive faster settlements. To your point and what Mark talked about today, clients are seeing 80% of transactions less than one day. You heard clients saying, "Listen, sometimes it's more than one day. We don't like that." If it gets to instant, and we think it will get to instant, then, you know, potentially that's blockchain enabled. We could do instant, by the way, today. But we choose not to because we'd be taking on some credit risk to do it. If blockchain allows us to not to do instant without taking any credit risk, then we'd look at that. The second thing, which I think is a very important factor, and it's...
I think it's underappreciated is actually privacy and security. A lot of the data that we use and that you're seeing cyberattacks around is because it's in silos. Blockchain allows you to distribute the data, which makes it a lot more secure and a lot easier potentially to protect. That is a trend that, you know, has yet to play out. You know, with one of the reasons why cyberattackers target banks and finance companies is there's lots of data sitting there that they can go access. In a Blockchain setting, they can't get to it quite as easily 'cause it's distributed.
A couple of questions. First of all, notes in your CV where, you know, you're an innovator in terms of over-the-counter derivatives. I'm interested in terms of your thoughts where you see innovation with OFX, ongoing from the core product. Secondly, I'm just interested in terms of how wide you view casting the net in terms of acquisition opportunities. Is it really more Firma style acquisitions or are you thinking a bit broader in terms of adjacencies to the company?
Okay. Well, if I start with opportunities at OFX. OFX has been principally one line focused on payments. Wallets came along. OFX has done a little bit there, but not, you know, it's not been the signature products offering. The future of OFX, though, will be around that whole value chain. If you think about the customer, needing to make a payment, start at the beginning about the reason to make the payment, whether it's the purchase of something or an invoice for a product or, you know, and then taking that through to the end game. I think there are various points along that chain that OFX could investigate, getting into. We do look at a wide gamut of products and services, and we discuss them. I was chatting about cards earlier, for example.
You know, we deliberately decided not to do certain things because they've either not met where we're at currently in our customer offering, or we deliberately decided that we didn't wanna go there. I think that there is strong opportunity, though, when you do think again about the customer enablement and what the customer needs. TreasurUp, for example, although we don't have it implemented in Australia yet, that is going to assist companies in looking atMore the risk management piece. You know, if you just think about the customers that we had here today, you know, they're invoicing their own customers. There's a piece around that.
There's definitely a huge piece around the whole risk management on foreign exchange exposures, and that was where we took the dab, for example, when I was running the wholesale institutional bank. The reason why I was promoted from treasurer to running, you know, this bank within the bank was because we said, 'Let's help our customers manage financial risk.' It's pretty logical. Amazing the pushback we had at the time. That's usually what we seek to do at OFX. Do you wanna add to that on the acquisition side?
No. That's good.
Sorry, the second part of the question was?
Well, it was innovation and acquisition.
Oh, innovation and acquisition. Sorry.
Yeah. I think you pretty much covered. Maybe just talk about as a board, you know, just looking at the framework in terms of risk parameters.
Sure.
Sort of what's the showstopper in terms of acquisition.
We don't wanna do an acquisition that's overly dilutive, actually, in any way, really. We are looking for companies that have, you know, a special sauce, doing something in that customer value chain that we really like. We are very cognizant of linking any deal we do with the future reward of the deal in terms of how whoever we buy out might be rewarded. We're always considerate of that.
Yep.
We are agnostic about exactly. I shouldn't say we're completely agnostic about markets, but because we do have a global footprint, and we're looking to do more in our global areas, we're looking, you know, globally. Very cognizant that Australian companies have got themselves into a lot of trouble offshore, so we're pretty careful about it. The board is just, you know, every board meeting and in between board meetings, looking at various things. A lot of underwater activity.
Yep.
Do you wanna add to that?
No. Maddy? Yep.
We've got some online follow-ups from Lach. Sending your questions overall. Firstly, Bea from TDOT mentioned a travel card would be very handy. Is this something on the OFX roadmap? If not, why?
Yeah. I mean, I think Elaine put it up on her chart around what we don't have. Corporate card is definitely the sort of thing that we know and honestly, Bea wasn't, excuse the term, teed up to say that, but, you know, genuinely, that's the sort of thing that we hear from time to time. We've also seen candidly competitors do a better job than us at putting that product out in the market. We know clients want it. That is definitely on the roadmap. Not so much, to be honest, for consumers. We used to have a travel card, and it's good to see Gary here, who's one of our co-founders. The thing about the travel card for consumers is it sort of takes you down from the high-value consumer segment that we're really focused on.
It's certainly convenient, but, you know, as Tricia and the board constantly remind me, capital is limited and it costs money. If we're gonna do that, what are we not gonna do? We're much more focused on corporate.
The other thing about corporate is that there's more, there are more bits in that value chain. The corporate credit card is just another way of getting that connection.
Sure.
There's a few more. See how many we can fit in with time. A question for Adam. What's some of the features you're impressed with that your competitors have that OFX lacks and is on the roadmap?
Sure. Well, as you could tell from my answers before, we're pretty much working on every part of the whole customer experience. I guess when I look at our competitors, I think we're trying to improve our speed, and we're doing that currency corridor by currency corridor. You heard that we're about to work on our corporate onboarding experience, and we spent a lot of time focusing on consumer. In the past, to onboard a corporate, you have to onboard the directors and the individuals of the company, so you really have to get the consumer right first before you can move to corporate. I think you're gonna see a lot of progress there. I share the same sentiment as other conversations.
You know, there's definitely a lot more opportunity outside of just the core transaction. We're just trying to get ourself set up so that we can move into those spaces. Does anyone want to say anything?
No. I mean, I think I've talked about it. I think competitors done a great job on speed, great job on simplicity, that we could certainly adopt and are adopting.
I think Elaine wanted to add to.
Yeah. I would say it's like a seesaw, right? You know, you're constantly moving up and down on these different things that clients value. I think it's what's really important around this is to come back to what corporates value, actually. It's really around that digital ease of use, specialism savings. You've heard the panelists always talk, you know, I will check you on price, make sure you're competitive. You know, you have ancillary things like cards is definitely in the considerations that we know would be really useful as the clients have said. Equally, you know, you've also seen from Selena presentation that we're really focusing on the corporate platform before we add sort of additional products and services onto that.
I do think coming back and going, what helps you win in corporate, particularly as well as the top value consumers, is where we'd be, we should be putting our money where our mouth is.
Question for Selena. Is the net cash generated flagged on slide 16 net tax? Is there a disconnect with where the underlying EBITDA is tracking? Looking forward, how should we think about operating cash flow versus underlying EBITDA? Should they largely match?
Yeah. That side does include tax payments. Okay? There can be some ins and outs on the tax payments because you've made your installments through the year, but also because of our investment in intangible investments, we get quite a good R&D tax credit comes back, and that comes back once a year, which is not obviously in that cash flow for that period. You will see over time, you can go back, we have a pretty good conversion rate from EBITDA to operating cash flow. You can see that always in a half year and full year results. It is a good conversion rate there. It, if you just look at the moment in the first half when we looked at that conversion rate, it was lower, but it was lower because of two things.
One, which was the transaction fee on Firma. There were some transaction fees on Firma, but if you looked at underlying cash conversion, it was more than fine. Also we had to post some cash for collateral because it was so volatile in that first half.
Thank you. Are there any cost levers available to pull if the revenue outlook is more challenging?
Do you want me to take that one?
I can.
Fine if you go, Skander.
Yeah. We're always looking at that. It reminds us of, you know, back when COVID hit. When COVID hit in March of 2020, we had a great revenue, and then after that it was quite soft. As a business, what we always look at are what are the levers in that business that we need to shift and move if the revenue is not there. We usually stage gate it at stage one, stage two, and stage three if the revenue's not there. Obviously if the revenue's not there, the demand is not there, therefore you're not gonna spend as much on marketing. If the revenue is not there, you're not gonna pay as much as commissions and bank fees. You have some natural variable costs in the business that won't be there if the revenue is not there.
Then we go through the other stage gates of, okay, if it really does drop, hiring freezes, all that sort of stuff. We can put those into play if we need to.
Which we haven't had to do.
Yes.
Thank you. Just a final one, question for Patricia. There was some talk of what Macquarie does well, one thing is its allocation of capital to the most efficient means. With OFX, given the recent share price weakness, if accretion available initiating a buyback starts to look far more attractive versus further acquisitions, how dynamic is the board thinking about a buyback versus further acquisitions?
The board is continually looking at all options available.
Great.
Thank you.
That's, I think that's everything online. Let me just check. Sorry, there's one more question from Marco Correa again. Given the volatility and lower business confidence mentioned earlier today, has the corporate book held up better than internal expectations over the last six months? How should we think about the I can't say that cyclicality of the corporate book and its correlation to macro factors such as GDP, capital investment and business confidence.
I think, Marco, we've talked quite a few times this morning about how corporate performs through the cycle. You can see that, especially if you add the comment that I made about the consumer being pretty soft, especially in the second half, especially in the Q4 , those results really, if the consumer's not doing well, then there's something wrong, the NOI number to where we wanted to get. Another data point, which is have a look at where we are and produce a good result like that. Your corporate, if it creates, if there's such a headwind around macro factors.
We feel pretty good about corporate and I probably wanna just triple emphasize this point that some of these signs that you're seeing now into late February and March, especially around corporate confidence. Like I said, China reset. We're certainly past halfway on interest rate rises. Inflation rates are slowing. You kind of heard from our clients how they're getting more optimistic about particular use cases, as a result of all that, you know, corporate is a through the cycle segment, no question.
That's everything online.
Terrific. Well, look, thank you so much for those who are here physically. It's great to see you in person. Thank you very much to those participating online for all the questions. Thank you very much to my global executive team and to Tricia for sharing the OFX story. We'll obviously communicate again in May when we announce our results. Thanks for your time and also big thanks to the team at Citadel-MAGNUS and Adelaide and KPMG for staging the event. We really appreciate it. Thank you.