Blockchain, artificial intelligence and digital currencies are just some of the technologies that have had a lot of buzz in recent years, and when they arrive often the starting point is ‘We’ve got this great technology, what can we do with it?’ This is a classic case of a solution looking for a problem, as Stephan Bohner, Head of Financing and Markets at Roche, explains.
For the treasury team at the Swiss healthcare multinational, however, the approach is one of common sense: “We always come back to the business objective,” Bohner tells Treasury Today. Once the objective has been identified, then they will look for ways to leverage the technology that best meets the requirements.
This has helped them stay on the straight and narrow, and not get distracted by the buzz around the latest technologies over decades as treasury has been continually innovating. Since 2004, for example, the Roche treasury team has been heavily automating its processes. “Process automation has been crucial to everything we do,” Bohner tells Treasury Today.
As part of this journey, the enterprise resource planning (ERP) system needed to be upgraded with an add-on that would give flexibility in the automation. With the company running an in-house bank, all producing statements across time zones, numerous efficiencies were gained from the automation, which in turn supported the centralisation model that Roche treasury runs on.
More recently, attention has been turned to how artificial intelligence can be leveraged for data analytics, especially when it comes to cash flow forecasting and decision making. This again, is not using technology for technology’s sake, but there is a clear objective and a business case for investing in such technology. “If you can forecast your cash better, you leave less idle balance on our account – you can invest strategically for longer,” explains Bohner. “Normally you roll funds for one, two or three weeks because you don’t know what will happen,” he adds. One application of artificial intelligence is to use a cloud service provider to run data models on the data that is derived in the treasury systems – the computation occurs in the cloud – and then is available in the company’s system.
The treasury team works with a number of systems, but when it comes to adding another system, there are a number of considerations. Bohner explains that it doesn’t always create efficiencies because if you add another system, you are duplicating the data especially if all the parties have to be brought onto the new system to synchronise with the old. “There’s always a big hurdle in bringing in the next system because the synergies go away,” says Bohner.
This goes to the heart of the ‘single source of truth’ that treasuries need to operate effectively. Blockchain – and distributed ledger technology – could potentially be a tool as all the parties have to acknowledge the information, and they all have visibility of it.
However, it’s not always as easy as that and such solutions could create new problems. Bohner explains that blockchain could potentially solve issues with the handling of invoices, for example. However, he says that a shortfall of this set up – which would be ideal in theory – is that the old infrastructure would still have to exist alongside it. “Ultimately you would still need to replicate everything that happens in that system. You have to have financial reporting and that reporting system must know whether an invoice has been paid or not – you are increasing the complexity. You can bring one process nicely into one box but you still need to consider how to connect and exchange information with the legacy IT environment and communicate with older technology, without jeopardising the benefits and beauty of the new technology,” he says.
