Digital Transformation: Corporate Fad or Tsunami of Change?
A joint interview with Sophie Michel, Head of Channels and e-Banking and Steven Lenaerts, Head of Product Management Global Channels, BNP Paribas Cash Management
Sophie Michel and Steven Lenaerts are cash management and e-banking experts with BNP Paribas Cash Management. Here they share with Katia Fau, Senior Business Reporter with BNP Paribas Cash Management, their views on what digital transformation entails as well as its impact on cash management processes and, more broadly, on financial strategies.
We are seeing a great deal of innovation in cash management – to what extent do you think it’s reasonable to describe this as a ‘digital transformation’?
Cash management is the bank’s primary transactional activity, and it is digital by nature. Long before the growth of web-based technology, we were developing paperless methods for managing customer relations. Furthermore, what were referred to for a long time as ‘new communication technologies’ have given us both the ability to create a more interactive experience for users, and the opportunity to increase the value of customer communication by offering services tailored to each of our connectivity channels. For example, mobile technology means we can offer personal digital signatures in a more convenient way when validating transactions. Consequently, digital technology is integral to our business, and as we continue to find innovative ways of delivering our solutions and services, we contribute further to the digital transformation that is undoubtedly taking place.
What does digitisation bring to cash management today?
Payments and collections, as well as the associated reporting processes, are already dematerialised wherever possible. So far, digitisation has allowed us to build scalability, security, efficiency and reliability, but increasingly it is enabling us to move from transactional and reporting into the domain of the management processes associated with what we do.
eBAM (Electronic Bank Account Management) is a good illustration of this. As the opportunities for digitisation have increased, we needed to decide in which processes digital innovation would offer the greatest value to customers. We did a great deal of analysis with our customers, who emphasised that account administration is amongst their most important new priorities, particularly for companies operating in several countries. We have therefore been investing heavily in this, with the first eBAM solution that we are launching aimed at these multinational companies. In particular, the solution gives treasurers and finance managers real-time visibility of user permissions i.e., who is able to do what across all their accounts. It also enables the paperless management of authorised signatories and the proxies associated with these. As well as simplification and automation, our eBAM solution also enhances security in the bank account management process.
Speed, efficiency... is digitisation a panacea for cash management?
Not on its own, no, as other factors obviously have an influence: business organisation, financial, regulatory and security-related aspects, amongst others. For example, globalisation is affecting businesses of all sizes. As corporations expand across multiple jurisdictions, regulatory compliance in each of these markets becomes increasingly complex.
The phenomenal digital expansion that we are witnessing is also creating new security challenges, however, which leads to a dichotomy. Although the benefits of cash management digitisation are clearly apparent and quantifiable, this needs to be balanced with appropriate internal controls and external security.
Treasurers need to produce reliable and consolidated data, and treasury reporting must be complete, consistent and timely, including compliance with requirements that may vary from one country to another. As a result, the treasury environment has never been so complex. At the same time, treasurers have key operational and strategic objectives on which they need to focus.
Can digitisation offset this increased complexity?
Digitisation is not a type of switch that is turned on or off: effective digitisation relies on the right technology, processes and a range of other factors. For example, the use of recognised industry standards such as XML formats is a prerequisite, as is an extensive knowledge of the regulatory requirements of each country, such as the use of personal digital signatures.
It’s important to remember that digital innovation does not happen in a vacuum, nor does it rely on a single participant: instead, it requires collaboration across the cash management community: banks, treasurers, financial directors, software publishers, and the new players in the digital economy.
Additionally, while digitisation means greater simplicity, it also lets us reinvent the customer experience to make it more intuitive, therefore adding more ‘softer’ but no less important benefits, like user satisfaction or even enjoyment.