In his many years working in transaction services, Mark Troutman, DBS’ new Group Head of Sales for Global Transaction Services, has yet to encounter such a great opportunity for treasury departments to drive efficiency and support the business, as exists today. This is largely due to the wave of digitisation sweeping over financial services. In this exclusive interview, Troutman discusses what treasury teams should be looking for and explains how DBS is delivering cutting-edge innovation.
Group Head of Sales for Global Transaction Services
What are the key trends impacting corporate treasury departments?
The big issues for corporate treasury teams have not changed a great deal over recent years. Efficiency and driving costs out of businesses continue to be a key area of focus. This has been evident in many of the conversations I have had with clients since joining DBS, and they are very keen to see how new technology and digital solutions can help them in this respect.
The volatile geopolitical environment around the world means that corporates are continuing to pay close attention to managing risk. Here in Asia, the big challenge for treasury teams is staying abreast of the changing regulatory environment in key markets like China, India and Indonesia. Treasury teams are also working proactively, thinking through their treasury models and processes, to allow them to be nimble. This will enable them to quickly react to any regulatory changes and ensure their business is compliant, whilst also managing liquidity as efficiently as possible.
The region continues to offer many opportunities for corporates to grow. This is especially true in emerging markets like Indonesia and Vietnam as they rapidly develop and build large and vibrant middle-classes with ample spending power. To tap into these growth opportunities, many companies are rethinking their business models and are leveraging new technologies to drive innovation in their business to reach these new consumers. This, in my opinion, is the biggest emerging trend and one of the most exciting aspects of doing business in this region.
How are corporates across the region looking to leverage innovation?
It is obvious that all companies are interested in digitisation, be they old or new, and what it might mean for their business. Across the region, however, corporates are at different stages of interest. For example, we have some clients that have already begun to embrace it and their business has materially changed as a result. In these organisations, we find that treasury is often deeply involved and has KPIs encouraging them to innovate.
Whilst there are companies pushing ahead, it would be fair to say that most corporates are at the nascent stage of exploring what is possible. What I have found since joining DBS is that many of our clients are very curious and keen to learn from the work the bank has been doing across the entire organisation. They want to understand how this might be applicable to their own business.
How is DBS working with clients on digital innovation?
At the first stage, it is about education. But, very quickly, these sessions have broadened from simply educating our clients, to brainstorming new ideas for their business and mapping out how these new solutions might be implemented. We have been running a significant number of these ‘co-creation’ sessions recently, and through the use of a human-centred design approach, we have delivered some impressive outcomes. To provide an example, we recently worked with shipping conglomerate Maersk and helped it set up an entirely new business line that enables it to offer finance to its customers when shipping their goods.
There are smaller-scale, but no less meaningful examples of our co-creation work with clients. For instance, insurance major, MSIG, was keen to drive efficiency and costs out of business processes to improve its bottom-line. We worked together to find places in the business that this could happen, and we co-created a solution that leverages APIs to digitise the insurance premium collection process for MSIG. The result was impressive because not only did this solution create efficiency, it also improved the customer experience that MSIG offers to its consumers, potentially boosting future revenues.
What opportunities are there for treasury teams?
Fundamentally, the day job of treasurers has not changed: treasury teams effectively manage risk and liquidity. What has changed is the reach the department has internally. Many treasury teams are now closely involved in a wide-range of business conversations. Because of this, treasury teams are increasingly needing to obtain a holistic overview of their operations, to understand their strengths, areas for improvement and, most importantly, how the treasury function impacts the businesses’ offerings.
Whilst this might not have been possible before, technology is now enabling them to do this. For example, DBS recently launched its Treasury Prism online simulation platform. This powerful self-service platform allows treasury teams to view and optimise their regional liquidity structures and the underlying cash management processes at the country level. Treasury Prism produces a plan with which we can work with our clients to leverage exciting new technologies like APIs to deliver value and drive efficiency.
Is innovation creating challenges as well?
In addition to all the benefits, the proliferation of technologies within corporations creates some well-documented risks, notably an increased exposure to cybercrime. One challenge that is less discussed, however, is that many treasury teams are struggling to find banking partners that can match their own digital ambitions. Treasury teams can, therefore, find it difficult to build a roadmap for the future and fully understand the possibilities that exist today and tomorrow.
Related to this, treasury teams are also finding that banks are providing them with inconsistent information around best practice liquidity management, particularly in the wake of regulatory change. Treasurers that I have spoken with recently have expressed their frustrations with this and how it hampers their ability to make informed decisions. In my view, it really highlights the need for corporates operating in Asia to work with a bank that fully understands the region and is close to the regulators.
What is on the corporate agenda for 2018?
The changes we see in corporate treasury in 2018 are both evolutionary and revolutionary. Treasury teams will continue to look for efficiency. They will be mindful of geopolitical and cyber-risks, and they will continue to support the business as it seeks further growth in the region by adopting digitised solutions.
But, more broadly speaking, we will certainly see more corporates disrupting themselves and becoming more digitally focused in 2018. We believe that this provides treasury departments with a unique opportunity to take the lead internally. By working with banks, such as ourselves, that are living and breathing digital, they can show the business what is possible and be the catalyst for change.