Treasury Today Country Profiles in association with Citi

Walk…Don’t walk!

Two go-karts racing close to each other

The hype around treasury on-the-go looks to be little more than just that – hype. Treasury Today lined up a brace of banks to see if they have a persuasive argument for the adoption of mobile for treasury. Should treasurers change their working habits to take advantage of mobile devices or avoid them like the plague?

If 82% of respondents to a treasury-specific survey said they had not adopted a certain technology and only 12% said they would consider using it somewhere down the line, it might seem that the time was not right for that technology. But that is exactly what the Treasury Today European Corporate Treasury Benchmarking Study 2012 revealed about the adoption of mobile treasury devices. The statistics are supported by anecdotal evidence gleaned from conversations with many treasurers that suggests mobile solutions are not on their radar right now.

Nick Diamond, Head of Cash and Payment Sales, Commercial Banking, Lloyds Bank, admits that although many system providers have already created mobile versions of what they do, there has been “some reluctance” within treasury to adopt these solutions despite the level of noise – at conferences in particular – that says mobile is the next big thing.

For the naysayers, the issue of security is often raised and usually stems from fear of it being compromised whilst in use. “The viewpoint is that, if you step outside the ring-fence of office security by using a mobile device, you may be compromising that security by offering more opportunity for criminals to hack into the system,” says Diamond. “The fact is that all electronic technologies are open to hacking as criminals become more sophisticated. As a bank, we are investing vast sums to protect against that. I think it is right for treasurers to take appropriate measures to protect against hacking, but I don’t think it should be a reason why they do not embrace mobile,” says Diamond. Paul Taylor, Head of Regional Sales, GTS, EMEA, Bank of America Merrill Lynch (BofA Merrill), agrees, stating that the authentication and validation tools on the bank’s mobile channel are just as robust as that of its normal treasury offering. “There is no heightened risk or sensitivity because it is mobile, on either smartphone or tablet,” he argues.

Another reason for not adopting mobile, notes Diamond, centres on its apparent incompatibility with the typical treasury operation, this being “very much office-based”. The major concern, he observes, “is in taking the cycle of treasury processes out of the office environment and in doing so stepping outside of the comfort zone”. A similar reluctance to “embrace the new” can be seen in the persistence of use amongst treasurers of the spreadsheet, even though newer, more efficient technologies may be available.

Waiting for the next generation

The driver that will change this view, Diamond believes, is the slow but inevitable generational shift within the industry. “A new generation of people coming into treasury are comfortable working with mobile because it is the way they lead their personal lives,” he explains.

The problem also has its roots in poor perception-management by the industry. “There is some expectation in the mobile space that some super-app will be created,” says Taylor. This expectation, he believes, is distorting the conversation where people are asking if mobile is useful but referring to something that is not precisely defined and therefore too easy to dismiss as something that is not needed. Indeed, when talking about innovative technologies, particularly mobile, Taylor notes the common perception is “that it is trying to solve a problem that does not exist”, is often what leads to rejection.

The response from some players in the mobile space is not to try to create that ‘super-app’ that will negate the need for so many other channels, but to deliver the “logical on-the-move extension” of existing treasury services. In BofA Merrill’s case, for example, this means smartphone and tablet access to its existing cash management portal. It is not a means of phasing out all of its other channels, states Taylor, but a way of giving clients access to data wherever they are on a device they already have with them. “It’s about options and accessibility.”

However, Diamond believes that the current lack of appetite has dissuaded many mobile solution providers – banks and technology vendors alike – from venturing as fully into the mobile environment as they might like. As such, not all functions are available on mobile and so the user experience is often a pale imitation of the traditional office-based system. “We are in stalemate at the moment: there is not really the demand for the industry to go the whole way with this and make it the same experience treasurers have in the office; but, on the other side, until the treasurer sees all of the functionality to enable the true remote working experience few will take it on with any real enthusiasm. It is a Catch-22 situation.”

It is almost a case of mobile solution providers having to wait until the next generation of treasurer comes up through the ranks before they invest with any real commitment. Until then, the thought of mobile treasury will remain less appealing to the old school who knew life before the smartphone, at least for making significant transactions. The reason for this is in part due to the physical limitations of using a small device to look at and to manipulate multiple fields of numerical data. Diamond counters this argument, pointing out that the move from phone-based applications to those of the larger tablet-style device has alleviated the problem to a degree.

From personal to business

The generational shift into treasury of more a sympathetic user-base starts with consumer change and that, says Diamond, is something that today’s treasurers need to consider, even if mobile treasury is not on their personal agenda.

Just as internet banking has seen widespread adoption, so mobile banking is starting to reach the mass market. Diamond reasons that if mobile phones and tablets are used to make transactions on a day-to-day basis, why wouldn’t they enter business life? “There is often an overlap between what people do in the personal and business space and eventually they tend to influence each other,” agrees Maha El Dimachki, Head of Corporate Sales, GTS, EMEA, BofA Merrill.

Whilst she says many treasurers are happy to carry out certain limited functions on an iPad, different markets present different views, and some are more receptive than others (she notes that Asian countries such as India, Korea and Japan are extremely well-disposed to mobile, whilst there is still some reticence in the UK).

Diamond’s belief is based on the emergence of a retail “omni-channel” in which a consumer visits a bricks-and-mortar shop, accesses reviews and checks prices online and, if the retailer is sharp enough, orders the product online, maybe even for delivery in-store. All of this has an impact on how goods and services are presented, bought and paid for and ultimately how the business is funded.

Cash, cards and, to an extent, cheques will continue for a long while, but businesses – certainly retail and utilities-based operations – need to understand how their customers are behaving differently in the sales cycle and re-designing their business model if necessary. Whilst this may not be part of the treasury function per se, if the way in which consumer behaviour changes in line with the omni-channel model, the consequences for treasury in terms of cash flow, forecasting models and funding certainly will be a concern.

“More so than ever, the treasury group cannot act in isolation,” warns Diamond. “They will have to get much closer to their commercial departments.” When a payment is made electronically there is always a data footprint attached. This data can be used to steer the business in its response to buying and payment behaviours and product and service delivery models. In this respect he cites a retail client (no name forthcoming) that has successfully placed a treasury employee as the conduit between its e-commerce development team and treasury.

Narrowing the gap

The role of the bank also changes as a consequence of shifts in customer behaviour. With the commercial banking side usually talking to treasurers and the retail banking sector talking to SMEs and consumers, now is the time to close the divide says Diamond. The insight that a bank should have into the customers of its clients in terms of demographics, spending and payment patterns (both individually and en masse) can prove just as valuable as the business’ own data. This information, he notes, can have very positive results in shaping future business models and pinpointing areas of opportunity. “The whole area of mobile innovation and omni-channel service gives us the opportunity to do that.”

For now, the structure of a treasury operation, the segregation of duties within the team and the mobility of the treasurer will dictate the usefulness or otherwise of mobile, says El Dimachki. If authorisation can be handled in-office then there will be no need for this functionality on a mobile device, and perhaps view-only access will be sufficient. Those that believe there is a greater security risk will have to overcome that in their own way; the banks that provide solutions do invest large sums into the protection of their clients’ data and whilst incidents do occur, they are rare.

The mobile revolution is not yet a revolution for treasurers and how it fits into changing market places and demographics of the different regions is an on-going story. To make an impact it seems that the solution should answer a specific need that treasurers have and should not harbour distractions that detract from the usefulness of the device and it should never be seen as a means of replacing an entire existing traditional platform.