Treasury Today Country Profiles in association with Citi

AFP 2018 Chicago: banging the drum for new technology

Person beating snare drum with drum sticks

The Association for Financial Professionals (AFP) sets out its stall next week in the Windy City, as sessions on emerging technologies at its annual conference aim to bridge the gap between talk and action.

For financial professionals, the conference season ranges from small-scale niche events to the big beasts, such as Sibos and the Association for Financial Professionals’ (AFP) annual gathering.

Last year a scheduling snafu saw the two events overlap, but with Sibos 2018 in Sydney already concluded last week, the AFP’s four-day gathering in Chicago kicks off this Sunday and is expected to attract upwards of 6,500 delegates.

How to gauge the mood of America’s treasurers and CFOs ahead of this year’s event? Corporate coffers are still feeling the benefit of President Trump’s largesse, thanks to the cut in the corporate tax rate from 35% to 21% in January. Meanwhile the US economic recovery is well into its ninth year, with growth in the third quarter still running at a robust annual rate of 3.5%.

Yet at the same time, the threat of an escalating trade war between the world’s two biggest economies and its potential collateral damage is evidently spooking global stock markets, while S&P Global reported this summer that the US corporate load is a record US$6.3trn – 40% more than a decade ago when the financial crisis broke.

However, the principal focus at this year’s conference is on emerging technologies – another topic on which there is likely to be a variety of opinion. That’s not surprising when the World Bank confidently predicts that the A$110m (£61m) global blockchain bond it successfully brought to market in August is the first of many, yet respected economist Nouriel Roubini dismisses blockchain as “the most overhyped – and least useful – technology in human history” and “in practice, nothing more than a glorified spreadsheet.”

Earlier this month the AFP published its latest technology survey, which suggests that US corporate treasury and finance executives are enthusiastic about the potential of blockchain, artificial intelligence (AI) and robotic process automation (RPA). At the same time, relatively few have actually implemented these technologies within their functions and only one in six is prepared for the changes they will bring to treasury and finance functions.

Of 708 firms polled, 6% had adopted blockchain or distributed ledger technology while 79% said they had no plans to do so. The figures for AI were little better, at 11% and 70% respectively. Asked whether they were concerned that the new technologies could make their job obsolete, 41% of survey respondents hadn’t given the prospect much consideration, although 34% expressed unease and 7% were extremely uneasy. The remainder were indifferent, but confident they were suitably equipped to work alongside the new fintech.

Fortress America

It’s no surprise that the topic of cyber-security again features in several sessions at the Chicago event, but this year they are accompanied by a report on the growing cyber conflict between nations.

The New York Times’ national security correspondent David Sanger, who is keynote speaker at an AFP executive breakfast, believes that low-level cyberwar involving espionage and sabotage is here to stay. It’s a threat that organisations can no longer stay aloof from as increasingly they are becoming “collateral damage”.

Another keynote speaker, CNBC senior analyst and financial industry expert Ron Insana, also covers a topic that has moved onto the treasury agenda relatively recently – the state of ‘Fortress America’ as the rise of Asia’s emerging economies and shifts in US foreign, fiscal and regulatory policies threaten its impregnability. Insana will consider the implications should the pillars of the fortress – energy independences, manufacturing, technological innovation, demographic and political stability – weaken and assess the resulting impact on the US economy, industry and financial markets.

Turning to the more bread-and-butter issues concerning treasury, the Chicago conference will feature the ‘payments hub’, a central location for all sessions and networking events relating to the issue of payments. On the agenda is a range of issues, from the experience of early adopters of real-time payments (RTP) in the US to payments and application programming interfaces (APIs).

The US has been a relative latecomer to RTP, which has only started to gain traction in the past 12 months after the bank-owned ACH The Clearing House (TCH) launched its RTP system, which is scheduled to be “ubiquitous” by 2020. However, the AFP itself regularly reports on the marked reluctance of US corporates to move away from using cheques for B2B payments and dispatching them by post.

With many of the AFP’s members working for multinationals, the educational sessions include a focus on the implications of Brexit and also how companies are preparing for the European Union’s (EU) money market fund reforms ahead of the compliance deadline of 21st January 2019. However, the massive investment switch from prime funds to government funds that occurred when the US’s own MMF reform took place in 2016 is unlikely to be repeated in Europe – due largely to the negative returns generally offered by sovereign paper.

Lastly, a further sign of the times at the Windy City event is the inclusion of a Wellness Zone offering tips on deep sleep, all-day energy and power meditation. AFP cites a recent survey in which 78% of companies polled cited employee well-being as a critical part of their business plans. This could either reflect growing concern over the incidence of stress and burn-out or the fact that ten years on from the crisis, most US corporates are sitting pretty rather than battling for survival.