A BNP Paribas partnership feature
As we embark on this year’s conference season, we can expect an array of new announcements, research findings and white papers to be published. One of the most distinctive, however, is ‘Journeys to Treasury’, a flagship thought leadership initiative by four major players: BNP Paribas; EACT (European Association of Corporate Treasurers); PwC and SAP. Following this initial publication, the aim is to establish and develop an ongoing conversation between some of the key participants in the treasury community to reflect treasurers’ evolving priorities, and the solutions and services that are emerging to address them. As Jean-François Denis, Deputy Head of Cash Management, BNP Paribas highlights,
“Our main objective in devising this study was to reflect the different facets and viewpoints on some of the topics on which our corporate treasurers are focused, rather than the single dimension that characterises most industry reports.”
The themes of ‘Journeys to Treasury’
One of the first priorities was to identify the themes on which the report would focus, which was challenging in itself given the breadth of issues in which treasurers are engaged. Damien McMahon, Partner, PwC explains,
“This project first started life at an EACT meeting where treasurers discussed and debated the issues that were most important to them, and whittled the long list into a shorter list that became the key themes of the ’Journeys to Treasury’ conversation: innovation, and changing expectations in this area; the ‘anytime, anywhere treasury’, and cybercrime and fraud.”
While these themes are familiar to treasurers, what quickly became clear during initial conversations was the lack of clarity on what was really happening in these areas, and the implications for their business. As Jean-Marc Servat, Chairman, EACT comments,
“In a fast-changing environment, there is a great deal of ‘hype’ around industry buzzwords, but treasurers need a way through this to understand what really matters.”
Continued innovation
Emerging fintech players have the potential to complement and in some cases disrupt existing solutions and services from banks and established technology vendors; however, their success in achieving this will depend on adoption. Although there is appetite amongst corporate treasurers for solutions that help to overcome inefficiencies and allow them to contribute value in new ways, there are a number of blocking factors. In particular, existing banks and technology vendors have built relationships of trust over many years, which is particularly important bearing in mind the value and sensitivity of transactions and information managed in treasury, which newer players lack. There are also concerns over security and risk, lack of regulation, and the ability to integrate new solutions within the existing technology infrastructure. Treasurers are also wary of being ‘early adopters’ of new, unproven technology, and to working with vendors that may not be viable in the longer term. Damian McMahon, PwC outlines,
“Generally, we are still seeing fintech companies having the biggest impact in the retail space, where the population is higher and solutions are easier to adopt. Over time, the success of these solutions then create expectations and confidence amongst corporate treasurers, particularly those that operate in retail industries, so they then expand into the corporate space.”
Some of the perceived obstacles can be overcome by working with fintech companies in partnership with existing banking and technology partners and indeed, partnering or integrating these solutions within their value proposition. As Christian Mnich, Senior Director, Treasury and Risk Management, SAP discusses,
“Like banks, ERP vendors are partnering with, and investing in fintechs, whilst also providing the technology platforms on which they are growing their business. These partnerships and investments allow major technology vendors to build new capabilities into their solutions to meet evolving customer demand very quickly and precisely.”
New technologies such as blockchain, and developments of existing capabilities such as big data are already having an impact in certain industries, but they will not become priorities in corporate treasury until a detailed value proposition and proven solutions have been developed. This will change in the coming years, but as Jean-Marc Servat, EACT emphasises,
“While we are seeing new terminology and technologies emerge, the concepts themselves are not new, and are part of the ongoing journey of technology innovation. What is perhaps changing, however, is the potential for disruption, challenging banks and technology vendors to review their business models and the way that they engage with customers.”
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‘Anytime, anywhere’ treasury
Treasurers are accustomed to a 24/7 mobile world in their personal lives, but the implications are still becoming clear professionally. Furthermore, the implications of ‘anytime anywhere’ treasury extend beyond whether transactions, information and key tasks previously accessible through a laptop are available on a mobile device. Initiatives around real-time/instant payments, both domestic and cross-border, are becoming more immediate, supported by governments, regulators and industry bodies, but the value proposition for corporate and institutional payment users is not yet well-defined. Furthermore, there are outstanding concerns around erroneous or fraudulent payments if they are processed in real time. Jean-François Denis, BNP Paribas outlines,
“Real-time payments will become a reality but the pace at which they will develop is uncertain. Likewise, adoption will probably be local, hence fragmented. Real-time payments will complement cards and cash and provide retailers with an opportunity to offset weaknesses in other payment methods. They will also bring opportunities to players operating on a payment on delivery basis, thus potentially accelerating the supply chain. Yet the journey to use by corporations is challenging: instant payments will have to move into high-value payments, and there are quite a few miles to go considering their starting point is low-value cases.”
While mobile treasury and real-time payments may not yet be top of treasurers’ agenda, their use is likely to develop over time to become ‘business as usual’ as a new generation of treasurers who have different expectations of technology becomes more influential.
Cybercrime and fraud
Inevitably, the relative priority of the topics discussed in ‘Journeys to Treasury’ will vary between treasurers, but preventing fraud, whether internally or externally initiated, should be high on every treasurer’s agenda. Damian McMahon, PwC suggests that this is not yet the case, however,
“Although combating fraud has become more important in recent years, some treasurers are still in denial about their vulnerability to attack: indeed, most of those who do not think they have been attacked already have simply not yet discovered it.”
Jean-Marc Servat, EACT continues,
“Many treasurers are uncomfortable discussing cybersecurity and fraud as it is commercially and reputationally sensitive. Furthermore, with technology now everywhere, with multiple passwords, security tools etc. it is easy to become complacent and lower our defences.”
Christian Mnich, SAP agrees,
“One of the difficulties for treasurers is balancing convenience and efficiency with security and control, and this is not always easy to achieve in practice. Technology needs to be secure, but there is a human element to most fraud attempts, so processes need to be absolutely robust, and regular training provided to users.”
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Themes of ‘Journeys to Treasury’ Continued Innovation – Discussions around blockchain, fintechs and big data are commonplace, but what could they mean for corporate treasurers and what action should treasurers be taking? ‘Anytime, anywhere’ treasury – With mobile devices and social media driving 24/7 communication and e-commerce, how are treasurers’ demands and expectations changing? Do treasurers need round-the-clock services from their banks? – and how do they want to access them? Do they need instant, or real-time payments (and collections) in line with changing retail and business models? Cybercrime and fraud – Few companies are untouched by cyberattacks and corporate fraud. While digitisation and financial innovation bring enormous benefits, they also bring new forms of risk. Where do the major threats come from, and what should treasurers be doing to protect their business?
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The ongoing journey
As the title implies, ‘Journeys to Treasury’ is not a one-off report but part of an ongoing industry conversation. As Jean-François Denis, BNP Paribas outlines,
“Inevitably, the current initiatives that are under way, some of which have the potential to be transformative, will be of varying interest to treasurers, not least due to their own roles and responsibilities, and the business of which they are part. For example, a treasurer of a retailer will have different priorities to the treasurer of a company that operates solely in the B2B space. However, of the three topics outlined in ‘Journeys to Treasury’, cybercrime and fraud is the one that impacts on every organisation globally, and should therefore be highest on treasurers’ list of priorities. At the same time, it is important to keep emerging innovations such as blockchain on the radar, even though these may not yet be day-to-day priorities, as developments in these areas have the potential to transform the way that corporate treasury and the wider financial services community operate.”
Finally, as Damian McMahon, PWC concludes,
“We hope that as a result of reading the first ‘Journeys to Treasury’ report, treasurers will place themselves on the innovation curve and see where they are ahead and where they might be lagging behind. In areas where there may be scope for improvement, we offer practical tips and action points, while for those in which treasurers are ahead, we hope that they will engage in the debate and participate next year.”
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Jean-Marc Servat |
Damian McMahon |
Christian Mnich |
Jean-François Denis |
