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Treasurers’ top tech wish: cash forecasting

Anton Abraham at BAML outlines what’s hot and not for corporate treasurers’ digital demands.



Anton Abraham, BAML

Top of the corporate-treasurer wish list when it comes to technology is visibility in cash movements, says Anton Abraham, director and treasury advisory executive for Asia Pacific at Bank of America Merrill Lynch.

The global treasury advisory team’s members were all previously treasurers, and so he advises corporate clients in what he says is a “bank-agnostic” way.

Today, the majority of work is around digitalizing the treasury.

But that means different things to different companies. Treasuries in Asia, whether for leading regional companies or multinationals, lag in tech adoption compared to centers in North America and Europe.

On the positive side, though, they now have plenty of options to catch up or leapfrog. Software-as-a-Service and cloud-based models make it possible to subscribe to sophisticated solutions at a very affordable rate. And some regional treasury centers in Australia and Singapore are already at the cutting edge.

Multinationals in oil and gas, mining, commodity trading, automobiles and technology tend to be at the forefront of investing in treasury technology to drive automation, digitalization and enhance financial risk management. They are more likely to use fintech to make incremental improvements.

But the biggest pain point among all of these clients, big or small, is similar, and nothing new: “The priority is visibility and control over cash,” Abraham said. “It’s foundational.”

Here are his takes on what’s in demand – and what’s not – from the region’s corporate treasurers.

Hot now

  • Working capital visibility: “Cashflow forecasting is the biggest need,” Abraham said. No single piece of technology can provide it. Companies rely on extracting data from multiple bank and enterprise systems. Forecasting skills also depend on corporate management and organizational setups, and how centralized their operations are across Asia’s fragmented landscape. Abraham says BAML is in a proof of concept with a fintech on cashflow forecasting, but it’s not yet ready to deploy.
  • Bespoke: Fragmentation leads to a never-ending drive for standardizing processes, which is a major factor in how treasurers select their tech platforms. Yet the new landscape in tech, offering cheap but good “treasury in a box” solutions that can be easily tweaked, means corporations can buy affordable, bespoke software.
  • Integration: A treasury fit for purpose probably means more, not fewer, “best of breed” solutions: for core treasury, for FX, for data, AI for visualization of data or risk management, for payments, for APIs to primary banks, for host-to-host connections with other banks. But “integration is the challenge,” Abraham said.
  • RoIs: To successfully modernize treasury systems is not a day job for the finance team: it’s a big project that needs C-suite buy-in. That means treasurers need to define the return on investment for their bosses. This usually comes down to reducing operational risk, as well as improving group funding costs (by, say, using technology to share liquidity across departments, support an in-house bank, or reduce the number of bank accounts).

On the horizon: APIs

Application programming interfaces can enable a treasury to pull data directly from a bank on demand, in real time, as opposed to waiting for the bank’s scheduled (and often generic) reports. “APIs are the next frontier of connectivity” to banks, said Abraham. But this comes with caveats.

First, APIs work best when a treasurer has only a few transaction banking relationships. Large multinationals, however, use dozens of banks, and they aren’t going to develop such links with all of them. Therefore, if a treasurer goes down this route, it will limit APIs to its primary banks.

APIs also require not just integrating into a bank’s systems. It also requires the corporation’s enterprise management vendor (such as companies like SAP, Oracle, FIS or Ion) to build and integrate APIs on behalf of the corporate client.

APIs represent yet more fragmentation in processes, and standardization in APIs is a long way off. “We’re working with a handful of clients for APIs, but this isn’t mainstream yet,” Abraham said.

On the horizon: Faster payments

Some multinationals are interested in leveraging the emergence of faster payment systems in domestic markets, which enable real-time payments and visibility in those places. Companies are asking banks how they can piggyback off domestic infrastructure to enable faster payments across borders.

“But this is very new,” Abraham said. And the variation among national rails means corporations are still working out details such as whether they can attach remittance advices, whether they can include open banking information, or whether there are size limits on payment transactions.

BAML works with Ripple and SWIFTgpi for various means of routing international payments, but generally Abraham says corporate clients don’t ask about these initiatives.

Not in view

  • Supply-chain finance platforms: Abraham says the bank doesn’t hear from clients about some of the sexier solutions that DigFin covers, such as P2P marketplaces for invoices, blockchain-based supply-chain solutions or using blockchain for trade finance. Some large, more sophisticated clients are dabbling in these areas, with trade finance of particular interest – but the complexities of trade finance, with its many participants, means tech solutions are a ways off.
  • Tokenization: Companies such as Rakuten, Samsung and Jaguar Land Rover have announced they are creating digital tokens to use for inter-company or ecosystem payments. At some point, corporate treasurers could find themselves juggling fiat currencies, vouchers, rewards points, corporate digital scrip, and Libra-like stablecoins. Abraham says however this is not something he gets asked about by clients.

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