Evolving from a passive back office focused function into a proactive leading-edge business partner, Kenya Airways’ treasury explains how it is leveraging digitisation to meet the changing needs of this innovative carrier.

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When an airline is seen as being at the forefront of connecting Africa to the world, and the world to Africa, it had better make sure that its treasury operations can keep up. So it is that Kenya Airways (KQ), which for over 40 years has been the flag carrier airline of Kenya, has a financial function characterised by its progressive approach to digitisation.

Carrying over four million passengers every year to 54 destinations worldwide, 41 of which are in Africa, demands a nimble multi-banking operation. Notably in October 2018, Kenya Airways made history as the first African carrier to initiate non-stop flights between Nairobi, Kenya and New York. Given the expectations of its customers, many of whom want a fully digital booking experience, its treasury has been moving away from its traditional service role towards that of a “strategic player in the business”, explains Geoffrey Langat, Head of Treasury & Corporate Finance, KQ.

Improving the efficiency of treasury, strengthening its internal controls, and bringing about closer integration with the rest of the business, has been a long-term project, adds Benson Muhoro, Treasury Manager, KQ.

Driven by the desire to improve the customer experience, and thus the airline’s corporate image, he says the aim has always been to secure near real-time information sharing, enhancing treasury’s internal and external business partnerships and, of course, supporting revenue growth opportunities for the airline.

Langat explains that the ‘big picture’ view fully emerged once provisional ‘needs analysis’ had established a hierarchy of priorities. A dedicated project team, drawn from treasury and its various internal customers, set a project scope spanning areas such as automated shared services in Nairobi, multi-bank account visibility, and, more recently, online and mobile ticketing. For each core component, he says the team issued RFPs.

Key partner

One of the most important ‘quick wins’ was driven by the airline’s expansion into several new territories across Africa, and its subsequent additional banking requirements. With online access necessary for each relationship, payments presented a challenge, recalls Langat.

“We needed a solution with a simple login, that could issue payment instructions across all our banking partners and, on the same login, retrieve daily statements from these banks,” he says. For this, KQ selected Citi’s InfoPool, helping treasury make faster, more accurate cash management decisions, and CitiDirect BE^®, enabling multi-banking transaction initiation.

In fact, with KQ having worked with Citi for many years, the evolution of the airline’s treasury into one of the more sophisticated players in the region, has seen the bank play a big part in delivering balance and value-creation across KQ’s ecosystem.

“The requirements of their evolving business tests treasury’s capacity to manage its traditional responsibilities with new technologies and market intermediaries,” notes Geoffrey Gursel, Treasury and Trade Solutions Head for Zambia and Sub-Saharan Africa Sales, Citi. “Our partnership continues to be about implementing products to help manage treasury-related risks and ensuring the traditional areas are as efficient as possible, but it’s also about facilitating KQ’s revenue growth through digitisation.”

For Gursel, the application of technologies such as AI and machine learning allows clients such as KQ to better analyse its data and offer more bespoke products to its customers. With KQ “at a critical moment in taking its next leap forwards”, he says Citi is offering its continuing support.

Having helped tackle payments and collections, Muhoro says that the next stage with Citi required host-to-host connectivity with KQ’s ERP system. This was completed in 2018. Currently, he says, the focus is on finessing the passengers’ online ticket purchasing experience, again in partnership with Citi, enabling customers to pay using mobile wallets such as M-Pesa. A confirmations tool is also set to be implemented, commencing end February 2020, adds Langat. This, he notes, will deploy AI, automating a hitherto entirely manual reconciliations process.

Expectations

The outlook for this ongoing programme of digitisation at KQ is that the airline will benefit from improved efficiencies and cost reductions across all its operations, in treasury and beyond, says Muhoro. But he is also anticipating a stronger control environment to be achieved through real-time risk management, with treasury acquiring increasingly accurate and timely financial data. “And with our customer-centric approach, the customer experience will continue improving too,” he adds.

With KQ set to continue meeting passenger expectations, Gursel comments that “it’s our increasing aim at Citi to help our clients become their industry first-choice by providing data-driven insights to essentially help them better connect them with their end-consumers”.