The Treasurer’s Voice: New Technology & Social Media

by Helen Sanders, Editor

With the arrival of the iPad 3 (in time for my birthday, hurrah!) huge expansion of the mobile and tablet market, and frequent reports of the penetration of social media into almost every aspect of our lives, is the use of new technology and social media amongst treasurers living up to the hype? Or could the question be posed another way: are treasurers, together with their banks and suppliers, leveraging the potential of new technology?

This month’s survey attracted somewhat fewer responses than the two we have run most recently. This comes as no surprise. Unless they have a technical background or experience, many people in treasury and finance lack confidence when discussing technology. In reality, using the right technology and leveraging new communication methods have the potential to make treasury tasks and information flows easier, more convenient, and less complex. If it seems incomprehensible, it’s probably not the right tool. This report looks at the findings from TMI’s most recent reader survey, focusing firstly on the use of new technology and secondly, social media, with contributions from Treasury Strategies, Inc., SunGard Corporate Liquidity and SEB.

Use of new technology

Figure 1 illustrates that a minority of treasurers are currently making use of new technologies in their professional roles, such as mobile devices, SaaS or Cloud-based solutions or specific new functionality such as eBAM (electronic bank account management). The most popular technology currently in use is mobile technology (23%) which is not surprising as it also the most established. Scott Coffing, President, SunGard Corporate Liquidity, comments,

“We hear many people talking about mobile applications.  Our customers are frequently on the road or work in a flexible or virtual environment and they need access to their workspaces from anywhere.  We are responding to this demand with the latest releases of our software.” 

A larger proportion, however, have plans to engage with these technologies in the future. Banks are also developing their mobile offerings rapidly, and their customers are making use of them. For example, Citi recently announced that $1bn of transactions had been processed through CitiDirect® BE Mobile.

eBAM is the clear winner in terms of future technology plans, with more than half of respondents either currently implementing eBAM or planning to do so. This is an interesting finding, and suggests that treasurers are more attracted to solutions that deliver specific business benefits as opposed to placing a particular value on the method of deployment. Scott Coffing, SunGard explains,

“Many of our customers are asking us about eBAM.  The current process of bank account management is labour-intensive, time consuming and error-prone.  eBAM software applications automate and modernise the process to allow treasury departments to make better use of their resources and to provide them with more transparency and accuracy.”

[[[PAGE]]]SaaS and Cloud-based deployment bring the opportunity to implement solutions conveniently without the need to maintain the technical environment, which can bring considerable value; however, the greater value is in what the solution itself delivers, such as cash or risk management tools. Scott Coffing, SunGard, explains a little more about these forms of technology deployment,

“When it comes to SaaS and the Cloud, SunGard has a deep heritage and expertise, and we have helped these offerings grow and evolve in the market.  Currently, the main choices for customers are:  ‘Private Cloud’ which is a single client dedicated environment; ‘Public Cloud’ which is a shared environment sometimes known as SaaS; and ‘Business Process as a Service’ or BPaaS which allows you to outsource not only the IT environment but also all of the mundane tasks around operating a treasury.  The majority of new SunGard AvantGard customers ask us to host and manage their application in one of these forms, and we see this trend growing in the future.”

Value of new technology

Although the proportion of users of each type of new technology differs, the value delivered by each appears to be quite similar (figure 2). Once again, however, eBAM is a clear winner in that 28% of respondents indicated it brought the greatest value, although it has been introduced most recently, and is therefore employed by the least number of respondents. A number of respondents commented on the benefits of eBAM to their business. Other comments related to mobile technology. While respondents were attracted to the convenience and portability of mobile devices, they wanted to see a wider range of functionality delivered through mobile channels.

This is an interesting observation. Treasurers typically use mobile technology to gain snapshots of balances or exposures, approve transactions and in some cases, make payments. The potential for mobile technology in the financial sector is immense; however, while respondents indicated that they wanted more functionality through mobile technology, no-one was able to express exactly what it is they want.

Looking more widely, mobile technology has huge potential, but the opportunities are perhaps greatest in emerging markets. For example, while 2.5 billion people do not have access to sanitation, and 1billion people lack access to clean water, it is remarkable that 5.1billion people have a mobile telephone (OECD) equivalent to 68% of people in emerging markets. Obtaining access to banking services, healthcare advice and education are all becoming increasingly dependent on mobile phones, as well as being essential for doing business, so people are often spending more than 50% of their income on their phone.

In Kenya, while a large majority of the adult population has a mobile phone, only 20% have a bank account. M-PESA (‘M’ for mobile and ‘PESA’ for money in Swahili) is an electronic payment and store-of-value system accessed using mobile telephones, launched commercially by Vodafone’s Kenyan affiliate Safaricom in March 2007. The service has grown rapidly, with more than 70% of adults registered within four years of its launch. In November 2011, M-PESA had over 14 million subscribers and well over 28,000 agents across the country. The solution has now been rolled out to other parts of East Africa.

Initiatives such as m.Paani, launched by young entrepreneur Akanksha Hazari, focus on using mobile technology as a platform to provide key services, such as safe water, sanitation, education, healthcare and energy, to the world’s poor. m.Paani won the Hult Global Case Challenge 2011 for promoting clean water. This social enterprise promotes loyalty programmes in the highly competitive telecoms space so that communities earn ‘drop points’ that enable them to fund water and sanitation projects.

With such pioneering and transformational opportunities using mobile technology, is there the potential in treasury to harness mobile technology beyond simply replicating certain functions in the TMS or electronic banking system through a mobile device?[[[PAGE]]]

Drivers of technology deployment

According to this survey, nearly 80% of treasurers are looking to new technologies to increase process efficiency and automation (figure 3), with control over processes also a priority (54%).

As Laurie McCulley, Partner and Head of Technology Practice, Treasury Strategies, Inc. observes,

“These results illustrate that treasurers overwhelmingly see the opportunity to use new technologies to increase efficiency in their teams, even beyond the systems already deployed in their treasury organisations.  This represents a strong call to action for treasury system vendors to develop new features that translate into client use of new technology, such as mobile devices.”

Scott Coffing, SunGard continues,

“Each organisation has its own tipping point for turning to new technologies to solve its issues.  In addition, there is an ongoing need to find process efficiencies within most corporations.  The demand to become more efficient each year is just a fact of corporate life.  Introducing or upgrading technology-based automation is often the only card left to play. 

 “Survey respondents also cited enhanced controls as a key driver.  Finance executives cannot afford to operate blindly. It is imperative to have greater transparency into operations and liquidity positions.  I think that finance executives increasingly see how networked their operations are with the other parts of their organisations and with external counterparties.  Using technology can help finance executives achieve the enhanced controls that they need because it can establish better connectivity to these entities and increased transparency into these relationships.”

Laurie McCulley, Treasury Strategies emphasises the future potential for new technologies,

“The results of this survey emphatically reinforce what treasurers are telling us: visibility extends beyond PDF files in their inbox to the need for intelligence about their treasury activities.  Intelligence is not limited to the PC on someone’s desk – for treasury to operate as the financial nerve centre, new technologies will be key.”

Challenges to new technology deployment

There are a range of challenges, however, that impede the use of new technologies. Most significantly, treasurers are not certain about what value new technologies bring to their department (38%), and they may also meet internal resistance, either from senior management (35%) or internal IT (40%). Lack of integration with existing solutions is also a challenge, noted by 36% of respondents. Nineteen per cent of respondents indicated other concerns, but these were almost exclusively related to worries about security. Consequently, while promoting new technology, with functionality that delivers specific, demonstrable business value is important, there is also significant effort required to convince people internally how these can be deployed in a secure and integrated way.[[[PAGE]]]

Use of social media

While new technologies are making their mark on corporate treasury, slowly but surely, far fewer treasurers are convinced of the value of social media in treasury (figure 5). LinkedIn is the exception, with 73% of respondents either using or planning to use it. Tony Carfang, Partner, Treasury Strategies, Inc. is positive about the potential of social media in treasury,

“I was encouraged to see that well over half of the respondents claim to use social media for their professional treasury purposes.  That clearly says that social media can be an important channel for treasurers.”

He continues,

“LinkedIn, far and away, is the social media channel of choice.  Treasury professionals select LinkedIn over bank-sponsored networks by 3.5 to 1.0.  It will be a challenge for closed bank networks to reach a critical mass of discussions and content to meet the appetite of treasurers.

“Treasury usage of LinkedIn surpasses both Facebook and Twitter, each by a factor of 4.5 to 1.0.” 

Bearing in mind the degree of media attention on social media, and the ‘f’ (Facebook) and funny little bird (Twitter) logos are now ubiquitous, you would think that we spend most of our time on social media sites. Not so, according to this survey. There are undoubtedly internal challenges to engaging with social media as we will discuss in figure 7. However, there are likely to be wider issues too. One is a generational issue. In developed countries, social media is often considered the domain of the young. In emerging markets, this is far less the case. For example, as of today’s date, 159,170 Facebook users ‘like’ Citi’s page. In contrast, 365,855 ‘like’ Citi India’s page.

As figure 6 illustrates, those who use social media professionally, such as LinkedIn do so mainly to communicate with peers (36%). Tony Carfang, Treasury Strategies notes,

“It is encouraging to see a social media value proposition emerge.  Over three-quarters of treasury professionals who use social media do so to communicate with peers.  Two-thirds use it for information discovery and problem solving.  One-third use social media to seek out references or case studies.  These are pretty robust value drivers.”

[[[PAGE]]]

However, while treasurers are looking for social media sites to address practical issues and source case studies, this is not typically the role of social media portals currently. The Benche (www.thebenche.com) is a striking exception, however. The Benche is a community portal hosted by SEB for cash management, trade and custody professionals, their bankers and advisers. The site receives more than 22,000 unique visitors from 150 countries each month, spending on average three to four minutes on the site on each visit. Since The Benche was first launched, Chad is the only country that has not fielded visitors to the site. Patrik Havander, Head of Concept and Packaging, SEB Merchant Banking describes SEB’s approach to social media,

“Social media is just one element of our customer engagement programme, but we recognised the potential from an early stage. For example, when finding out how to solve business challenges, often in farflung regions, who is better equipped to help out than other professionals who have already done so? We wanted to establish a portal that would enable treasury, trade and custody professionals to communicate, share ideas and solve problems. There was no social media site that had been designed for this purpose, so we developed it from scratch.

“Although The Benche is hosted by SEB, access is not restricted to our customers, and banks, vendors and advisers are also welcome to join. The broader the user base, the richer the content becomes, and the more value that it delivers.”

There are also a range of community groups in LinkedIn, but respondents indicated that as these proliferate, their value is diminished due to fragmentation and the additional time it takes to engage in multiple online discussions. When it comes to sourcing case studies etc., this typically remains the domain of traditional industry media, whether on-line or in magazine form.

Scott Coffing, SunGard, notes that social media’s communication role can be an important dimension to vendor or bank relationships with their customers,

“We believe social media provides an additional and immediate pulse point with our customers and the market.  We have several touch points with our customers.  We have User Group Meetings, one-on-one account reviews, our annual survey, etc.  These traditional venues are quite formal and therefore the feedback they generate can be quite guarded.  The feedback via social media is usually more immediate, frequent, and very direct.  People are simply much less inhibited about commenting on products and services over social media than they are in more formal settings.”

Patrik Havander, SEB explains how the bank is extending its social media offering into client support,

“We are extending the social media concept to provide a platform for implementation projects, that can often be complex and geographically diverse. We are extending The Benche concept to allow everyone engaged in a project, including customer resources, SEB project team members, other banks and vendors to share information and address problems through a single, secure site. If issues arise that cannot be solved by the project team, they can tap into the wider base of expertise through The Benche.”

Challenges to the use of social media

As with the adoption of new technologies, social media also brings challenges in terms of how it is used in practice. Concerns about the benefits that social media can bring are the most considerable issues, raised by a startling 100% of respondents. Internal resistance, either by IT and/or senior management, is also significant (55.4%) and many are unable to access social media sites from company networks.[[[PAGE]]]

Although it may be difficult to see how generic social media sites can play a role in treasury (although banks such as SEB are doing so successfully as part of an integrated customer communication framework), The Benche is designed specifically for the purpose. Patrik Havander, SEB discusses some of the challenges of social media when used in a professional context,

“One question is the extent to which individuals represent their organisation on social media sites. Initially, it may be difficult to overcome the view that opinions expressed should be legally vetted to determine the way that a company’s brand is represented and how confidential information is protected. On the other hand, if users remain anonymous, other participants may not feel that they can trust their contributions. As the social media world matures, however, people are becoming more experienced in how best to engage with other professional users, and recognise that interacting through a professional forum brings minimal potential to damage the company’s brand.”

Conclusions

New technologies bring considerable potential in treasury for increasing the efficiency, cost-effectiveness and convenience of treasury activities. In addition, by reducing the need to maintain technology solutions in-house (such as SaaS and Cloud-based solutions) costs can also be controlled. However, as yet, a great deal of this potential remains largely untapped, in terms both of limited adoption of current solutions, and perhaps solutions that have yet to be developed using existing deployment methods such as mobile devices etc. Treasurers’ clear priority is to address specific business challenges, which explains the appeal of eBAM to facilitate efficient and secure bank account and signatory maintenance.

The value of social media is more elusive, except for community forums designed specifically for treasurers, trade and finance professionals, such as The Benche. In addition, treasurers are largely happy to use platforms such as LinkedIn for connecting with peers, online discussions and job opportunities. The appeal of social media for professional purposes is likely to change, however, as the current generation of social media users becomes more influential in the treasury and finance community. Furthermore, the perception of value is far greater in emerging markets, with large communities of professionals who have had less opportunity to engage with traditional media and conferences for communication and sharing ideas. The risk is that continued proliferation will result in further fragmentation of content and communication. To avoid this, it is likely that we will see a fusion of social media community forms and traditional forms of media that provide thought leadership and case studies, to create a more comprehensive ‘one stop’ communication and business intelligence channel.