Treasury Today Country Profiles in association with Citi

How might 2016 shape 2017?

Athlete on the 2017 starting line with 2016 behind them

As we approach December, many treasurers are looking forward to the opportunities and challenges that lie ahead in 2017. But, in many respects, these challenges and opportunities will be shaped by the events and trends of 2016. Here we look to the future by reviewing the big talking points of 2016.

The past 12 months have been nothing if not eventful. Against a challenging macroeconomic backdrop, treasurers have faced numerous challenges, from cybercrime to continuing low interest rates. Meanwhile, technological developments including blockchain-related milestones and the rise of outsourced applications are providing new opportunities for treasurers to operate more efficiently.

Cybercrime and fraud

Concerns about cybercrime have been mounting in the last couple of years. In February, the scale of potential breaches became apparent with the theft of $81m from Bangladesh Bank – an event which has made corporate treasurers far more conscious of the risks.

Meanwhile, other types of cyber threat are also becoming more sophisticated – such as Business Email Compromise (BEC) scams, whereby fraudsters send emails to finance staff, attempting to convince them to make urgent payments to overseas accounts.

The rising threat of fraud was highlighted by Kyriba’s 2016 Treasury Survey, which found that the number of companies which had been the target of attempted fraud had increased by 20% since the previous year.

Brexit and beyond

The outcome of the UK’s Brexit referendum on 23rd June sent shockwaves around the world, but with the terms of the exit yet to be decided, the impact for corporations remains unclear. Nevertheless, there is certainly concern about the impact of Brexit. Research published by Greenwich Associates in August found that over a quarter of European companies intend to move away from UK banks once Britain leaves the EU.

Currently, British banks can use passporting rights to offer financial services across the EU and European Economic Area (EEA) without requiring authorisation in individual countries. Concerns have been raised that if these passporting rights are withdrawn as part of the Brexit negotiations, some financial institutions would move their headquarters to another country within the EEA.

Aside from this issue, Brexit has had wide ranging implications for treasurers, with currency, gilts and swaps affected alongside a considerable impact on pensions and investment strategies. “Whilst the uncertainty will need to be considered in more detail and managed accordingly, particularly in light of ongoing liquidity in ever more febrile markets, it does offer scope for some lateral thinking and reassessment of how best to manage the risks,” comments Chris King, Group Treasurer of Vita Group.

Beyond Brexit, other geopolitical events have featured prominently in 2016. “Political instability in the Middle East and Africa has led to the largest involuntary migration since the Second World War,” says Mitko Iankov, Head of Market Development – GTM Europe, Thomson Reuters. “This has unwittingly fuelled the populist politics within developed Europe, further exacerbating the protectionist attitude and popularity of extreme politics.

Making the most of cash

Aside from these challenges, treasurers have continued to grapple with perennial concerns such as effective cash management and good forecasting. This is particularly pressing in the continuing low interest rate environment.

Meanwhile, many companies continue to hold high cash balances. In May, Moody’s reported that non-financial companies in the US were holding $1.7trn on their balance sheets. With interest rates on bank deposits still low, companies with significant excess balances are looking for other uses for their cash.

“We have a lot of surplus cash,” explains George Dessing, SVP, Treasury and Risk at Wolters Kluwer. “Capital allocation has been a high priority for us in 2016. We recently announced our intention to do an acquisition as we are continuously looking for opportunities to support our organic growth strategy, so we are keeping active on this front.”

In other cases, the focus is on extracting as much excess cash as possible by optimising working capital management processes. “Companies are not getting the returns on their deposits that they used to, so there’s a real need to try to squeeze cash out anywhere you can,” comments Jennifer Boussuge, Managing Director, Head of Global Transaction Services EMEA at Bank of America Merrill Lynch. “This has been accompanied by advances in technology which are allowing companies to unlock previously inaccessible working capital.”


Technology continues to develop and present new opportunities – and some treasurers have been watching the arrival of enhanced solutions and improved functionalities with interest.

“At the beginning of the year, we were planning to adopt a new treasury management system, but we haven’t yet managed to get all the necessary approvals internally,” says Marianna Polykrati, Group Treasurer of Chipita. “The delay has turned out to be a good thing though – I’ve noticed that there are new systems coming out offering better solutions and lower costs, so I have been reviewing all the systems that are now available.”

Recent developments in the TMS market have included a move towards outsourcing the operation of applications, with larger corporations looking for application management and managed upgrade services.

Another topic which has developed over the last year relates to the rise of fintechs and the impact on banks. In the past, the focus of this topic has tended to be on the prospect of competition between banks and fintechs. However, there is some evidence that this has begun to shift, with the focus moving to collaboration.

Other areas of focus include the rise of virtual account management solutions which enable the reconciliation of multiple accounts. Meanwhile, talk around the possibilities of blockchain has begun to translate into action, with some new initiatives recently announced.

Looking ahead

Alongside these issues, innovation and development continue across a range of treasury activities, providing new ways for treasurers to manage cash more efficiently. As we move into 2017, treasurers will be keeping a close eye on these opportunities – as well as remaining cognisant of the challenges.