There have been a number of postings during the past few days that reference quotes or topics from Sibos, which is typically the largest global corporate banking industry event and has been conducted remotely now for two years. As an aside, the 2022 version is scheduled for November in Amsterdam, and we would expect on-site will be back by then. Posted in bobsguide, this particular article’s topic has been gathering steam now for a couple of years, being largely driven by open banking tailwinds and API technology. We listened to the referenced session, featuring several top treasury management executives from both the banking and industrial sectors. So, the reality of instant treasury is in motion.
‘Instant treasury is poised not only to improve efficiency and help create a more strategic treasury function, but also provide monetary benefits and cut down financing costs… “A continuous real-time view [on] our cash position helps us to meet not just [our] daily but also our liquidity management demands,” said Sharon Wang, treasury director at Alibaba during a Sibos 2021 panel on Thursday… “Credit limits can be freed up more quickly […] enabling more business without adding risk.”…
She added that Alibaba earned an extra $29mil in interest income by keeping buffer balances to a minimum… “By using the cash received within the same day [corporates] can reduce overdrafts or bank loans – in other words, financing costs.”’
This would have seemed very ambitious just a couple of years ago, but obviously some firms (such as Alibaba) are executing against this vision and technology providers are helping them to get there. We would expect the continuation of the faster everything trend across the cash cycle with new fintech vendors approaching it from a platform perspective. The technology driven approach using AI and RPA only works if the company has undertaken a digitalization initiative across the enterprise since an end-to-end view is required if optimization is the goal. There is certainly a ways to go with standardization required in a multi-bank connectivity environment, but this is clearly the trend.
‘As an instant treasury function becomes more of a reality, standardisation of data inputs and outputs will be key in enabling real-time visibility for corporates with global footprints… “Standardisation is important. A body like Swift could really help [in developing] a single way of connecting with all the banks,” said Anita Mehra, corporate vice president of global treasury and financial services at Microsoft… Banks themselves have acknowledged it’s no longer feasible or desirable to tie corporates to one bank…
“The times of making it difficult to work with other banks – those times are over,” said Christof Hofmann, head of corporate and payments solutions at Deutsche Bank… “Clearly you must embrace multi banking, you must embrace joint standards and you must convince clients by the solutions you offer and not by how much you try to tie them to you.”… Banks therefore need to transition away from being merely a banking provider to being a banking partner, said Schwartz.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
