Cash & Liquidity Management

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Pondering Payments The Editor explains why the treasury and finance profession is on the threshold of one of the most exciting and potentially transformative periods seen over the past 24 years, especially in regard to payments.

Pondering Payments

Pondering Payments 
By Helen Sanders, Editor


Ten years ago, the collapse of Lehman Bros and the rampaging financial crisis that followed started at Sibos. Despite the whirlwind that followed, the eye of the storm, in a room full of the world’s bankers, was eerily silent. The lights at the Lehman booth were, quite literally, turned off, and over the course of a day, the conference emptied out as senior executives power-walked their way to the exit clutching their phones, ashen-faced.

Until this year, Sibos has been a very different place to pre-2008 days. The focus has been largely defensive: how to tackle the regulatory compliance burden; how to protect market share with the threat of new, fintech-shaped thunderclouds on the horizon; how to face up to the reputation of being the global ‘bad guys’.

What a difference this year. Gone is the defensiveness, gone is the mutual suspicion that has tinged previous events. Instead, conference sessions and exhibition alike at Sibos were infused with dynamism, enthusiasm and renewed confidence. Yes, banks compete with each other, and yes, they may compete with technology companies in certain situations. More often, however, technology companies and banks complement each other. As a result, there is a new-found momentum behind collaborative efforts to address the challenges that affect everyone and on which no-one competes. For the first time in many years, the customer was central to almost every presentation and panel discussion. But what does this really mean – and are corporate customers ready or interested?

What’s a ‘mainstream’ treasurer anyway?

So far, I have been in this industry for 24 years and counting, and in some respects, a great deal has changed over this time. When I started my first treasury role, we sent payments by fax, having run around the building looking for people to sign, we settled securities via telex (actually quite exciting, I always felt like the security services), we typed confirmation letters manually, and our ground-breaking electronic banking system was an excruciating dial up. The reconciled cash position was written on an A3 pad every morning (a job I was singularly poor at) and updated on a whiteboard throughout the day. Unusually, we had a treasury management system, an in-house built monstrosity that had cost millions. Despite being impossible to interrogate, update or integrate, it was long considered ‘irreplaceable’ as it produced a particular board report on which the business apparently entirely relied (incidentally, when it stopped being produced, I don’t think anyone either noticed or cared). Two years later, our reality was already quite different, as an early adopter of a modern treasury management system, with efficient processes and reporting that many treasuries today would still aspire to.

While we were probably pioneers (although I’m not sure we ever considered ourselves as such at the time) over twenty years later it’s not always easy to see how treasury processes have moved on. Technology has certainly evolved, and the opportunities for process automation, efficiency and control, online dealing, integration and data analysis have vastly improved. Expectations have also been transformed, not least in the way that treasury interacts with, and contributes to, the wider business. However, while the opportunities have increased, too few treasurers are realising the potential that exists. There are still treasury functions of large companies that lack a treasury management system or efficient ERP treasury module. There are still treasurers who shrug resignedly when asked why they cannot integrate bank statement information into their systems, whether through lack of availability of bank systems, inconsistent formats or lack of internal priority.

Even for those treasuries that have implemented or upgraded to modern systems, policies and processes over the past five years or so, many lack the time, motivation or in some cases ambition to understand and contribute to the innovations that will challenge and change payments and collections in the future. Firstly, there are advantages to doing so, specifically to support the business more effectively as geographic expansion continues and business models become increasingly digital. Secondly, however, there is an obligation to tackle the internal fraud and external cybersecurity threats that are becoming more prevalent than ever. As FIS’ 2017 Corporate Payments and Bank Connectivity Report: Simplifying the Global Payments Journey survey report observes,

“Increasing controls (55%), payment fraud (54%) and cash visibility (48%) are the top challenges and drivers for a payments project. The continued era of cybercrime has become so widespread, complex and frequent, the role of the treasurer has evolved to a much more active player in mitigating this type of risk. Treasurers are relying on system providers to reduce the likelihood of a cyber-attack or any other fraudulent event. Those without access to the latest in payments technology feel the most exposed, and are addressing that exposure through payments improvement projects.”

The treasury and finance profession is on the threshold of one of the most exciting and potentially transformative (a word I detest, but I don’t feel it is hyperbole in this situation) periods I have seen over the past 24 years in a number of areas, including payments. Whether the focus is to mitigate risk or create value through cost efficiencies and serving the business in new ways, there is a unique opportunity for treasurers to shape the payment environment of the future, but this will require engagement and the end to complacency. There are undoubtedly obstacles, but there is perhaps more momentum behind overcoming these than we have seen in the past.


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