Photo of Neil Doyle, Anita Prasad and Jayna Bundy, Microsoft, Barbara Harrison, Citi and Mohit Manaktala, Bank of America Merrill Lynch.

Microsoft Treasury continues to demonstrate innovative spirit in leveraging leading edge technology trends to drive business impact. In their latest project they are looking at blockchain and the scenarios where this latest technology could help corporate treasury. This is certainly One to Watch.

The challenge

In the last decade, whilst Microsoft’s business has grown tremendously – revenue has more than doubled from approximately $40bn in 2005 to over $90bn in 2015 – the size of the treasury team has not changed much. So how do they get everything done? The answer is by leveraging technology.

As George Zinn, Corporate Vice President and Treasurer at Microsoft, says: “Microsoft’s treasury demonstrate innovative spirit in leveraging cutting-edge technology trends to drive business impact. The team has been a pioneer in deploying technology-based solutions that leverage not only Microsoft technologies but also third-party solutions to stay at the leading edge of their field.”

The solution

This has played out in different ways over the last decade. Where cash management is concerned, the goal was to connect with banks via SWIFT rather than bank specific VPNs. They have now standardised to XML across treasury and accounts payable teams. Prasad cities improvements in managing data flow and partnerships with banks.

Once treasury had electronic visibility of cash around the globe, and understood what the counterparty exposures were, they wanted to be able to drive real-time business intelligence based on this data. They focused on creating actionable, visual business intelligence and have leveraged several technologies such as Microsoft SQL 2014 and SharePoint where they can house all of this information. Treasury have also leveraged Office 365 and Power BI capabilities, available both in Excel and in SQL environment, so that the treasurer, CFO and CEO can get BI at the click of a button. Zinn adds: “That was a couple of years ago and now the team has moved to Microsoft’s Power BI technology that enables business insights via dynamic data visualisation tool. In a 2016 Magic Quadrant report, Gartner positions Microsoft as an innovative leader in BI and Analytics platform.” The treasury team leverages this Power BI based analytics, which can be accessed as a free app on the web or on mobile phones.

Treasury have also spent a lot of effort on increasing mobility; putting data in the cloud so it can be accessed anywhere, on any device (handheld or desktop) in a secure and reliable manner. For example, treasury are now able to process wire payments – including large dividend payments and bond interest payments – through Windows 10 phones, with the relevant approval process and user authentication happening in a very secure manner over the phone.

“Moving data and applications to Microsoft Azure coupled with our Active Directory authentications allows us to access and process our data anytime and anywhere in a highly secure manner,” says Jayna Bundy, Director of Treasury Capital Management at Microsoft.

The other area they are looking at is blockchain – particularly the scenarios where blockchain could be really helpful to corporations. Pankaj Gudimella, Director in Treasury at Microsoft, says: “Microsoft provides the technology via Azure Blockchain as a Service (BaaS), and we’re working with strategic banking partners to explore use case scenarios for corporate treasury teams. As with most new technology, it may take several years for this to come to fruition, but we are currently in the midst of a proof of concept (POC) project.”

Best practice and innovation

Microsoft’s treasury team demonstrate a unique and consistent effort to embrace technology to always be at the leading edge of deploying new innovation – both their own and from third-party solutions. They were the first ever corporate to deploy SWIFT MT messages, the first with SWIFT ISO XML 20022 PAIN messages, the first with real-time visibility of global cash and now are at the forefront again with blockchain solutions. Without a doubt, a treasury team worth keeping an eye on.

“For the future, there are several possibilities,” says Anita Prasad, General Manager, Treasury Capital Management at Micriosoft. All corporate treasury teams manage investment portfolios, some more complex than others, for example. From the moment the trade is initiated, the trade confirmation, and eventual movement of cash and underlying security can take three days. For a cross-border trade, this can be even longer. The amount of authentication, trade confirmation and legal documentation lead to the delays in settlement.

Prasad says: “To me that is a very realistic use case scenario for blockchain, to speed up these processes to achieve same day settlement. For corporates, this would mean lower counterparty risk and there would also be a much lower regulatory capital requirement, reducing the cost of operations for the banks and therefore for their clients.”

This technology is still in a nascent state, of course, and it is important to consider who is going to be authenticating the identity of the bank and the corporate, Prasad says. But its future is sure to be bright, when implemented by a company with a history such as Microsoft’s.

Key benefits

• Access to data anytime and anywhere.
• Leveraged technology to be at the leading edge of new innovation.