At last week´s EuroFinance conference, European treasurers met in Budapest to discuss best practice approaches to handle disruptive innovation from a regulatory, organisational and technology perspective.
Deep in the Regulatory Jungle: New regulatory requirements are keeping treasurers busy. Asking treasurers in Budapest which regulation challenged them most, it was really a neck-and-neck race between EMIR and SEPA. But there is more to come. Basel III, which was considered a regulation impacting banks only in 2013, is now discussed among corporate treasurers as well. Anticipating capital restrictions, banks have already increased credit margins and fees on loans and decreased returns on short-term deposits. And for companies with lower credit ratings, the bad news on interest rates gets even worse as banks are taking a closer look when it comes to financing. In the longer term, banks are likely to change their corporate service offerings to increase the stability of bank deposits or launch incentive programs to drive more transaction business. Last, banks might focus on their most profitable relationships and start cherry-picking clients. Therefore, corporate treasurers and banks took the opportunity to meet in Budapest to review how they work together now and how to collaborate in future.
Do More with Less: The increasing regulatory requirements as well as their companies´ global growth strategies impact treasury´s scope and organisation. As treasurers have been asked to take over more strategic tasks in the past few years, we see 92 percent of finance professionals consider treasury a key contributor to business success today, responding to the "EACT Treasury Benchmarking Survey" this summer. Additionally, most of them think the function´s importance will further increase within the next three years. What goes hand in hand is that treasury´s scope is growing into new areas such as commodities, supply chain financing or insurance. Thus, treasurers are forced to find ways to stay a valuable partner to the business, as only 24 percent see their staff increasing within the next three years. No surprise, then, that treasurers discussed at EuroFinance how to continue to do more with less.
Get the Basics Right: Consequently, many finance professionals came to the Reval's stand to discuss how technology can help them to handle regulatory challenges, but also how to automate operational tasks in order to take the tedious daily routines from their to-do-list and increase efficiency and control. Today, many treasurers are still keying bank account balances and market data into various spread sheets, reconciling email or fax deal confirmations or copying payment information from one system to another. Operating like this, it takes them a long time to gain visibility into global cash flows and exposures with high levels of operational risk.
Attendees came to Reval's stand to see how its Software-as-a-Service (SaaS) solution for Treasury and Risk Management (TRM) can help them to improve cash flow forecasting, collaborate with global subsidiaries in cash management or set up cash pools in different currencies. As treasurers start seeing cash and risk as two sides of the same coin, questions on cash-related exposures followed. How can technology help to manage liquidity risk, counterparty risk and FX risk – the top three financial risk management concerns? Last, treasurers were interested to see dashboard and analysis in many system demonstrations looking for easier ways to provide their CFOs with a solid basis for decision-making.
Aside from demonstrating how technology can help treasurers with operational and strategic challenges, Reval also helps treasurers to understand the value innovative technology can bring to their treasury function and to build business cases for technology projects.
As budgets are tight, IT departments are reviewing their company's technology landscape thoroughly with the aim to identify key systems to focus on. Although no company can survive without proper handling of its cash flows, treasury systems are normally not considered key technology. Therefore, SaaS technology becomes an interesting alternative, as the responsibility for maintaining and updating a SaaS TRM solution is clearly with the vendor. Aside from looking at cloud technology, the increasingly complicated regulatory framework gives finance professionals good arguments for technology projects and many build their business cases around compliance and related risk.
Challenged by today´s disruptive market and regulatory environment, treasurers must assimilate to remain a useful strategic partner. As staff and budget are limited, technology was considered the most effective enabler to transform treasury by many treasurers in Budapest.