Published: September 01, 2011
It may seem inconceivable in a world of smartphones, tablets and laptops that communication can still remain quite so difficult. Ordering your holiday reading material, checking the weather forecast at your destination on the way to the airport, and using your phone as your boarding pass are no longer anything special. Over recent years, we have witnessed the growth of collaborative information sharing, where parties can engage in a dialogue to gain real-time access to information. For example, while electronic communication using email and SMS messaging was a major step forward in instantaneous communication, both are unidirectional. With social media, however, one way communication is replaced by a dialogue or even ‘multi-logue’ across a community of individuals who share something in common, across a single network. The business community is benefitting from greater collaboration just as much as individuals, including leveraging more structured forms of collaboration. For example, SWIFT connectivity enables banking and corporate counterparties to communicate across a single network, with significant potential in the future for a wider range of services and information exchange. This article explores the theme of collaboration in treasury, and considers some of the opportunities that exist.
Treasury departments are typically small but as Erik Seifert outlined earlier in this Guide, they are taking on an ever wider set of responsibilities, both to influence the factors that affect working capital, and to respond to increasing globalisation of the business. This leads to a changing set of knowledge and skill requirements, which may not fall within the traditional forms of treasury and finance education programmes. Furthermore, as the diversity of treasurers’ roles, and geographic reach of their activities expand, treasurers increasingly face dilemmas that no-one in the department will have dealt with previously. For example, it may be strategically important for a Swedish company growing in Asia to offer distributor or customer financing in Indonesia. How does treasury go about setting this up, bearing in mind that the regulatory and cultural environment will be quite different to the company’s home markets? Conferences, seminars and roundtable events are very valuable in facilitating dialogue and knowledge sharing, but they take time away from the business, which is particularly difficult in a small team, as well as incurring costs. It is also ‘hit and miss’ as to whether you will meet people with the relevant expertise.
As people share experiences and best practices, the professionalism and richness of insight across the industry as a whole is enhanced.
Accessing a common platform with a large membership of professionals working in similar fields, who combine diverse skills and experiences, allows treasurers and finance managers to open up a huge body of knowledge and tap into the expertise they require in a convenient way. Not only can individuals access the information they need, but as people share experiences and best practices, the professionalism and richness of insight across the industry as a whole is enhanced. This was the original rationale behind the formation of the Benche, the online meeting point for the financial community, founded by SEB. Although SEB facilitates the Benche, it is open to any financial practitioner and their bankers, vendors and advisers. Since launching the Benche and extending its reach across trade, cash management and custody, it has become a primary reference and communication forum for finance professionals, with around 5,500 members and 20,000 visitors each month. Visitors originate from over 200 countries worldwide, with members from large multinationals through to small and medium-sized enterprises, together with their banks and advisers. We quickly realised that the Benche had a major role to play in relieving the professional isolation that many practitioners were experiencing, not only those located outside their company’s headquarters or in countries without an established treasury community, but all those dealing with new challenges or expanding into new countries. Furthermore, recognising that many people have connected to one or more online social media sites, we have extended the accessibility of the Benche by linking to Facebook (http://www.facebook.com/pages/The-Benche) and Twitter (www.twitter.com/thebenche), and podcasts are now available through iTunes. [[[PAGE]]]
Despite the phenomenal level of interest in the Benche, and its proven ability to connect professionals in a trusted, relevant and high quality forum, social media is still in its infancy. However engaging a concept social media may appear in the personal space, there remains a significant proportion of the business community who are sceptical about the role that social media can play in supporting efficient, effective communication and information sharing for business. There are a variety of reasons for this. The most major is the issue of security and trust. On one side, how do you avoid confidential data being shared? How do you ensure that the way in which a representative of a company presents him or herself is appropriate? On the other, how can you trust the information you are receiving, and how do you know that the people with whom you are engaged are who they say they are?
Using a forum such as the Benche has the advantage that membership is restricted to the finance community.
These issues are a greater or lesser concern in some companies and countries than others, depending on the culture and acceptability of social media. Inevitably, companies will need to establish frameworks for the responsible use of social media in business but using a forum such as the Benche has the advantage that membership is restricted to the finance community, and all interactions can be audited, which is more difficult at conferences or using telephone or email. Furthermore, it is unrealistic to think that a treasurer will make a business decision exclusively based on advice received from a source that may be unknown; therefore, social media cannot and should not be considered as an alternative to sound business decision making practices.
The growth in collaboration is not only apparent in the growth of social media for ad-hoc communication between individuals, but also for more structured information or transaction sharing. SWIFTNet is becoming well-established amongst larger multinationals for communication with multiple banking partners. Trading portals for seeking multiple quotes on FX and money market transactions are now used by a large proportion of treasuries, enabling greater transparency of decision-making and price discovery and enhanced straight through processing. Over time, we see that portal technology that enables companies to communicate in real-time with multiple counterparties will develop further. For example, if companies can seek competitive bids for treasury transactions, then why not payment files or packages of receivables for financing? Use of bank-neutral connectivity solutions such as SWIFTNet would further facilitate this approach as files can be routed through to multiple banks through a single channel.
The potential for greater collaboration extends not only between treasury and its professional and banking counterparts but also more widely across the financial supply chain. From the raising of an initial purchase order through to cash collection and reconciliation, there are a series of communications that take place between a company and its suppliers and customers throughout the transaction cycle. With alternative financing too becoming more prevalent amongst companies of all sizes, banks are also part of this process. Use of common communication platforms to facilitate transparent and automated collaboration between counterparties is still in its infancy, with supplier platforms now provided by some banks, but with proven benefits of collaborative frameworks, the opportunity is substantial.
The Benche is one important element in the revolution that is taking place in the use of new media and collaborative technology within the financial community. Social media will become an increasingly important source of contacts and advice amongst our client base and across the wider profession. Over a relatively short time, SEB has proved that social media and online collaboration tools have a major role to play in facilitating professional as well as personal objectives. Looking ahead, the Benche and our wider social media offerings will continue to develop to enable financial professionals with a variety of roles and expertise, from new entrants to experienced senior managers, to share practical insights, engage with likeminded individuals and address topical issues. More structured communication too, leveraging common collaboration frameworks, has the potential to revolutionise the way that players across the financial supply chain interact and exchange information.
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