As the annual UK ACT conference made its welcome return to Manchester after several years away, it pondered whether there was revolution in the air or whether treasurers preferred the slower pace of evolution when it comes to meeting tomorrow’s needs. Treasury Today sat in on the debate.
“The word Evolution, synonymous with gradual and continuous development in morals and ideas, is brought forward in certain circles as though it were the antithesis of that fearful word, Revolution, which implies changes more or less sudden in their action, and entailing some sort of catastrophe.” This line of thought from French writer and anarchist, Elisée Reclus, taken from his 1891 publication, ‘Evolution and Revolution’, suggests that the two opposing forces are in fact different sides of the same coin. For him, evolution naturally follows revolution, suggesting that at some point a radical idea becomes part of progress. So, where does the noble art of treasury fit in all this high-minded philosophising? Right here at the ACT Annual Conference 2015 it seems.
Preparing the ground with its now customary event theme, the ACT conference, which ran from 20th to 22nd May this year at the Manchester Central convention complex, urged the claimed 1,000-plus delegates (more bankers than corporates according to several observers) to think in terms of ‘The Age of Treasury – evolution or revolution?’, making Manchester an entirely appropriate location – as an early investor in the textile industry, it became one of the country’s most important cities during the Industrial Revolution.
With a hall full of exhibitors and a list of headline speakers that included Sir Richard Shirreff, former Deputy Supreme Allied Commander of NATO and Baroness Manningham-Buller, the former Head of MI5, as well as scores of treasury professionals from the likes of Vodafone, Diageo, Dyson and SABMiller on hand to unwind some of the programme content, perhaps more questions were raised than answers given. But that is the nature of philosophy: ask a question that is likely to cross-examine a way of life (whether it is life in general or corporate life) and you will have a debate on your hands. This is a good thing.
In fact, designed precisely “to encourage more discussion and debate”, in the run up to the main event, ACT offered, as usual, a number of ‘workshops, roundtables and masterclasses’. This year they touched upon themes as diverse as treasury in LatAm, FX risk management, working capital management and business systemic risk management. And although potentially partisan in their delivery (Orbian talking about ‘the perfect supply chain finance model’ for example), the high levels of attendance at such sessions suggests treasurers have a thirst for knowledge regardless of their stance on evolution or revolution.
Keep one eye on the future
So to the sessions and day one’s plenary saw David Bloom, Global Head of FX Strategy, HSBC, remind us that “treasurers need to perfect the art of juggling” by which he means balancing day-to-day requirements with the need to keep one eye on the constantly changing environment of regulation, technology, taxation, accounting and so on. This theme was picked up later by Christopher Burgess, Regional Sales Director of Bellin, who feels treasurers “should be aware of the latest innovations”. Hardly surprising given that he represents a technology vendor, but then James Davies, Treasury Operations Manager at Dyson, concurred, explaining that “monitoring trends and keeping up-to-date with the latest developments in technology is key”, and adding that treasury systems must be “robust but also flexible to change”.
If it was ever doubted that treasurers are a far-sighted bunch then Alan Drew, Group Head of Treasury at the John Lewis Partnership, stated loud and clear that “treasury is all about tomorrow and as far forward as the organisation’s planning horizon allows”. Similarly, Clive Drinkwater, Director of UK Trade & Investment (a UK Government department) urged treasurers to “find the time to lift themselves out of the mire of daily tasks” and to consider and plan for strategic developments.
Drinkwater’s agenda was perhaps less about progress and more about protection, arguing that “it is easier to handle crises if you see them coming, rather than waiting for them to arrive” – not a bad thing in itself given the financial volatility faced by most businesses. Mitigating risk is part of the treasurer’s lot though and Auna Dunlevy, Head of Treasury Front Office at Royal Mail, urged all to address the risk profile of their respective Boards in line with the strategic plan as well as keeping an eye on the moving markets and regulation “to ensure that your treasury strategy has the flexibility to cope”.
Honesty is the best policy
The award for ‘complete honesty in front of a peer group’ goes to Pedro Madeira, Interim Director of Treasury at Heathrow Airport. He offered up the fundamental truth that it is unwise to stay up until 4am in ‘ACT Gala Dinner’ party mode if you are appearing on a panel the next day. Having more or less lived through the experience, Madeira did well to tackle questions on career development in front of an unusually well-attended final-day session, many in the audience seemingly empathising with his condition.
On the same panel was the somewhat more buoyant Jiameng Teah (JT to her friends and colleagues), Assistant Treasurer at Vodafone. She spoke of the importance of “having an open mind and being resourceful and innovative” when building a career. Having come to the UK from China several years ago, she told of how she overcame certain immigration and work permit complexities to forge a successful career. By making several intelligent tactical moves (away from the legal profession) she was able to ease herself into the right place at the right time in order to start climbing the treasury career ladder – something which he has achieved with good humour throughout.
JT also spoke in a genuinely passionate way about career development for women in treasury, commenting on certain challenges (including the often ‘confrontational’ nature of male financial professionals) and the importance of mentoring and making connections. Although Treasury Today champions and organises a successful series of international events around this theme, it is rarely touched upon by conferences.
Regulation, however, is something of a mainstay at most events of this nature. One of the major concerns right now for Royal Mail’s Dunlevy and The AA’s Head of Treasury, Asim Iqbal, is EMIR reporting, with Iqbal feeling fortunate that he is able to “pick up the phone and talk” to his banks. Another threat to contend with is the onset of KYC for corporates, where companies not only need to collate, store, manage and update their banks with validated information but also face the burden of verifying the identity of their own clients. “It’s painful,” said Dunlevy of the process. She feels it is essential for treasurers “to keep educating ourselves and to have the foresight to make it part of policy”. Iqbal anticipates “challenging times ahead”, especially as many treasurers are expected “to do more with less” but he is waiting for the banks “to come up with a novel solution”. Treasury Today published a piece back in February 2015 on just such a topic.
Perhaps not so novel is the concept of supply-chain finance (SCF). Having been around in one form or another for a very long time, the topic at this conference was that of its sustainability. James Kelly, Head of Treasury at Rentokil Initial, asked somewhat provocatively “if we all just paid on 30-days wouldn’t the world be a lot simpler”. Although this elicited many nods of agreement, he admitted that whilst this would indeed be beneficial, the constant working capital tension between buyers and suppliers is unlikely ever to ease and no one was likely to break ranks first.
This tension is precisely why SCF exists. The ACT’s Peter Matza took to playing Devil’s Advocate, asking why, if it is so good, so few are using it: a straw poll of the session revealed around 2% had adopted it so far. Cranfield School of Management lecturer, Simon Templar (not THAT one) was on hand to argue that although SCF has emerged as a practical solution, “it has not yet crystallised”. To be truly sustainable, Templar believes it must see large corporate buyers assuming the role of stewardship in the whole supply chain and not (as the popular press are only too happy to report) use it as a means of tying suppliers into punitive and ultimately unsustainable contracts. Not least of the reasons for this, Templar added, was the fact that sourcing and on-boarding good new suppliers is actually expensive.
A snapshot of the exhibition
The ACT conference of course also incorporates an exhibition and this year around 80 exhibitors including banks, technology vendors, infrastructure providers and other stakeholders were in attendance. “CFO candy” was on offer at the Wieltec stand. Not the usual free mints for passers-by but the latest dashboard offering from its partner, TMS vendor, Trinity. The visualisation software, developed by JasperSoft, dynamically configures to whatever device it is being viewed on and the data presented can be chosen and displayed in a multitude of ways, explained Wieltec MD, Philip Wielenga. Aside from the dashboard, he was keen to advance his views that an increasing number of treasurers are talking in terms of “bank independence”, many being concerned by the observable retrenchment of institutions in the GTS sector.
Over at SWIFT, Neil Gray, Director Corporate Solutions for UK & Ireland, also spoke of the rising interest in “bank agnosticism” and how SWIFT Alliance Lite2 was enabling even mid-sized corporates to on-board with the infrastructure provider. On other matters, SWIFT, having successfully piloted its mobile version of the 3SKey security device, is anticipating its release possibly in Q3. Currently based on a full-size USB token, the re-worked security solution will soon work on mobile devices with micro USB and Lightning ports. On the financial reference data side, a new SWIFTRef API now allows developers easier lookup of the various codes that identify financial institutions or businesses such as BICs, IBANs and LEIs.
The ACT exhibition floor may feel like the bankers are out in force but many in attendance point out that they are here to meet their clients and solidify their relationships. In turbulent times – and with corporate thoughts turning to bank independence – this is hardly surprising. Of course, the vendor community does much the same and most hope also to pick up leads in the process. But some of the Manchester delegates have a clearer agenda. Australian firm Visual Risk, for example, was promoting its newly opened UK office, its Sales Director, Glen Giffen, explaining that the target will initially be UK corporates as they have no intention of over-extending the operation. Multi-bank portal provider, MyTreasury, a regular of the treasury conference circuit, was here again but this time MD Justin Meadows was drawing attention to the platforms relatively new and long-awaited FX functionality.
In a once crowded and now heavily consolidated TMS market, new entrants are rare. It was therefore interesting to find Ubiquity amongst the regulars. This ‘new kid on the block’ is offering a platform that has its roots as the in-house built system of UK-based Totemic Group, a financial services group of five companies with £4bn under management. The full-function web-based system has been proven in this environment over several years, says Nigel Brewin, Ubiquity’s Sales Director. The platform is now being offered out to other users, initially as a solution for smaller firms looking to move off spreadsheets. Its USP is its rules-based engine which, says Brewin, is able to automate many functions allowing treasurers to focus doing what they do best.
And this is precisely what treasurers crave most. With anecdotal evidence (drawn from casual conversations at the event) that treasurers are now somewhat bored with the unrelenting onslaught of regulation and the low or no yield environment, it is clear that they now want to get on with their professional duties and look to making progress at every turn. In this light, as long as there is progress, the conference question of evolution or revolution remains largely academic, however, anarchy is unlikely to be on the treasury agenda anytime soon.
Next year will see the ACT event alight once more in Liverpool.