Today’s business environment may be fraught with challenges – but the changing landscape also presents numerous opportunities for companies to evolve and grow. To better understand these dynamics in more detail, Treasury Today’s Sophie Jackson hosted a lively and informative roundtable discussion with three leaders from Bank of America during Sibos 2024. The conversation explored the challenges treasurers are facing across different regions, as well as the changing payments landscape and companies’ efforts to improve their supply chain resiliency, efficiency and agility.

Supporting corporates

Christian Stolcke, Head of Global Financial Institutions, NBFIs and Governments, Global Payments Solutions, began by highlighting the challenges faced by corporations in the current economic environment. “We are clearly moving from a high-rate environment, that’s globally long in liquidity with higher GDP growth, into a more uneven GDP growth environment across markets,” he noted.

In this climate, corporates are looking for strong banking partners which can support them in their operating environment across the globe. “They’re also looking for resilient partners that are continuously investing in at-scale technology and operating environments,” Stolcke added.

Given the current focus on cost efficiency and effectiveness, he emphasised that banks need to be very competitive in their rates. “They also need to be scalable globally and accompany corporates throughout the world to support their needs.”

Evolving priorities in APAC

Winnie Chen, Head of Asia Pacific Global Payments Solutions, said that since recently joining Bank of America she has spent time visiting various locations across the region. This has allowed her to see first-hand the transformation of the payments landscape and the corporate adoption of real-time payments, “which is very advanced compared to the rest of the world.”

She added that treasurers are looking at multiple ways of improving their liquidity management and managing their FX positions more effectively. Other areas of focus include the evolving regulatory environment and the growing focus on fraud prevention.

On another note, Chen said that treasurers “are continuing to look for better ways of managing their capital structure and liquidity, as well as taking into consideration geopolitical uncertainties to make sure their businesses can continue running in a cost-effective way.”

Increasingly, companies are seeking to diversify their supply chains for improving their supply chain resiliency, efficiency and agility. “They want to be closer to their customers, which has led to new production facilities closer to these consumption centers. We have seen a lot of foreign direct investment going to different parts of the world, such as South-East Asia or even the Middle East,” she said.

Digitisation, liquidity and regulation

Adrienne Bloom, Bank of America’s Head of Asia Pacific Financial Institutions, Corporate Banking, argued that treasury “is now really managed as a business”, with treasurers currently focusing on three key priorities: digitisation, liquidity and regulation.

Where digitisation is concerned, companies can gain greater business insights by getting rid of paper and removing friction from processes, while creating a single source of information.

“The second priority is around liquidity,” she said. “It’s quite a volatile market at the moment, and treasurers not only need the right tools to manage their liquidity, but also the tools to forecast liquidity, because you need to be able to predict it going forward.”

Citing regulation as the third priority, Bloom noted that multinational clients are navigating increasing volumes of regulation across core markets in Asia. “We can help our clients to solve that problem. The opportunity there is to work not only with a global bank, but with a bank that has a local presence to really help treasurers with the issues they have in each location.”

In particular, she highlighted the different approaches that countries in the region are taking towards their interest rates, which presents a challenge where forecasting is concerned. “There are also exchange controls, and different ways that you can process payments in each location. So treasurers need to be aware of how they can move money around to avoid the issue of trapped cash.”

Evolving payments landscape

Returning to the topic of the ever-changing payment landscape, Chen emphasised the significance of developments in real-time cross-border payment rails. “We need to help our corporate clients understand how different payment rails will actually add value to their day-to-day operations, and also help them improve their client experiences,” she said.

As such, Chen advised against a blanket adoption of multiple different rails. “We take a consultative approach based on industry-specific nuances, advising clients about the latest developments and how those actually fit into their overall operating flow,” she explained. “For example, real-time payments might not be the right solution for a company’s client experiences. Companies might want to collect money faster, but do they really need to send money faster? It all depends on their business model and their client base.”

Stolcke, meanwhile, talked about three major trends in the area of payments:

1. The consumerisation of payments. “Corporate treasurers now expect to have the same experience that they have as consumers, where everything is digitised,” said Stolcke. “When they want to do FX or cash pooling, they want to be able to do it in real time, wherever they are.”

2. 24/7 payment availability. “In some locations this has been driven by regulation, and in others by the end consumer needs,” said Stolcke. “As Winnie said, it is not necessarily about sending payments faster – it is about sending them at the right time.”

3. Enrichment of payment data. Stolcke also spoke about the worldwide adoption of the ISO 20022 message standard, which supports richer payment data. “Companies will want to monetise that into new services and new expectations with their clients,” he explained.

These developments require treasurers to have a clear understanding of their end clients’ needs, while experimenting with new technology in a selective way: “You can’t align yourself with all the innovation that’s out there – you have to pick and choose.” At the same time, treasurers need to choose the right banking partners and technology partners to support their goals.

But as Bloom pointed out, the rise of real-time payments also requires companies to manage the risk of fraud even more robustly. In a real-time environment, fraudsters are able to take money and move it across the system much quicker, she noted. “So that’s a big challenge.”

Fintechs, ‘co-opetition’ and the importance of talent

Stolcke described the evolution of the partnership between fintechs and traditional banks as ‘co-opetition’ – in other words, a combination of cooperation and competition. Citing the example of Early Warning Services – the network owner and operator of payment solutions app Zelle – he explained that fintechs have an important role to play in providing services for the industry.

“Fintechs are also very important clients of ours,” he added. “As they grow, they sometimes graduate to become fully regulated banks themselves, thereby becoming competitors as well.”

Nevertheless, he argued that there is plenty of room to for fintechs to co-exist with established players in the banking ecosystem. He highlighted the role they are playing in helping banks “become faster and more agile in the deployment of new technologies, and better at fulfilling our client promise.”

For corporates looking to partner with third parties, he said it is important to “experiment and look at the various partnership models across the industry, and then fully risk assess those partnerships in order to go forward.”

Meanwhile, with the industry evolving at such a rapid rate, attracting and retaining talent is becoming increasingly essential to a company’s continued success. “We are now in a scenario where innovation in the industry is being driven so much faster, both on the banking side and on the corporate side,” reflected Stolcke.

Alongside the rise of new technology and artificial intelligence (AI), he pointed out that consumers’ needs and demands are changing fundamentally. In this environment, he said, “We need to develop and advance the talent that will drive decision making and change in this industry. This is a challenge both on the banking side and on the treasury side.”

Last words

Summarising his key takeaway from the conversation, Stolcke said: “I think it’s a much more complex operating environment, which requires corporates to have the right partners to invest in resilience and be ready to change.”

Bloom said leading themes for the bank’s clients included safety and transparency, as well as the need to manage in a very complex environment. “And there has never been a more interesting time to be in this business, because there is so much going on.”

For Chen, meanwhile, there is much to gain by discussing best practices with transaction banking peers, as well as with the corporate treasury community. “There’s so much that we all can learn from each other and share with each other,” she concluded.