Treasury Practice

The strategic treasurer’s roadmap

Published: Mar 2018

With the world moving at great speed, it can be hard for treasury professionals to keep up with all the changes, let alone be certain which direction to move in. The Journeys to Treasury initiative aims to support financial professionals by guiding them through the labyrinth of treasury and helping them find a clear path forward.

Jan Dirk Van Beusekom, BNP Paribas

Jan Dirk van Beusekom

Head of Strategic Marketing, Cash Management

BNP Paribas

“The treasury profession is going through a period of significant change,” says Jan Dirk van Beusekom, Head of Strategic Marketing, Cash Management at BNP Paribas. “Treasurers today are less operationally focused and more strategically attuned.”

Concurrently, the world around corporate treasury is changing. Technological evolution, regulatory change and geopolitical instability drive these changes – all of which is making the world more complex. It is therefore no surprise that treasurers are sometimes a little overwhelmed by all the changes they have to manage.

It is in response to this that BNP Paribas, together with SAP, PwC, and the European Association of Corporate Treasurers, have developed their Journeys to Treasury (JTT) initiative, which was first launched in 2016. Designed to act as a roadmap for the profession, JTT takes a deep dive into the areas that really matter for corporate treasury professionals, providing unique insights and guidance into three key themes: data analytics, cyber-security and regulatory change.

Building insights from data

A key question posed by JTT is whether big data should be a focus for corporate treasurers. “The answer is, of course, yes,” says van Beusekom. “However, what is clear is that many treasurers are unsure of how to turn the bits and bytes that sit within their systems into actionable insights. As a result, a lot of their time is spent theorising about the potential of big data, rather than moving ahead with big data focused projects.”

Where big data is concerned, JTT suggests that an antidote to this barrier is for treasurers to stop focusing on the theoretical matters of the topic. Instead, the report suggests that treasurers can begin thinking about the areas that could be improved through greater insights delivered through data. “Cash flow forecasting, for example, is an obvious area for many treasury teams that could be enhanced through better data analysis,” says van Beusekom. “It therefore makes sense for treasury teams to begin highlighting the data sources required to achieve better cash flow forecasting.”

Once treasury has identified the data sources required to drive improvement, the next step is to obtain the tools required to crunch the numbers and deliver the insights. The good news for treasury teams, notes the report, is that the cost of much of this technology has come down dramatically and in some cases, can be obtained for free, making it more accessible to corporations of all shapes and sizes.

Often overlooked is the fact that harnessing and analysing big data can do more than just provide treasury with actionable intelligence. “The effective use of data also gives treasury the chance to make its work less repetitive,” notes van Beusekom. “Indeed, by using robotic process automation – where a computer programme takes actions based on pre-defined events informed by the data that exists within the system – treasury can automate many previously manual processes. There are already examples of corporates doing this in areas such as daily liquidity investments and FX hedging. This will not only free up more time for them to look after their strategic responsibilities, it will also likely deliver better results than if the same processes were conducted by a human.”

Key point to remember:

The question is not when and how you plan to use data analytics, but rather what is stopping you from doing so already?

Managing 21st century risks

Despite the immense opportunities that technology and access to data have created for treasury departments, these developments have also brought a host of new risks that treasurers must manage. Indeed, a major concern is cybercrime, the scourge of the 21st century. No business can escape this topic, and treasury is right at the heart of managing the risks.

“All departments within the organisation have a role to play in securing its financial information,” says van Beusekom. “However, given that the treasury department is the custodian of the company’s cash, its role in understanding and preventing cybercrime is especially important.”

JTT dives into this space in some detail, noting some shocking statistics about cybercrime — a recent PwC report, for instance, said that 79% of companies suffered direct financial losses because of a breach, with 20% of them reporting a loss of over EUR1m. JTT also provides some interesting insights into the level of preparedness within companies, perhaps worryingly noting that many security teams operate without the advanced skill set needed to combat the growing sophistication of attackers.

The most important point for van Beusekom, however, is that a company is only as strong as its weakest link: namely its staff. “One of the best lines of defence for any organisation is education,” he says. “Everyone within the company needs to be aware of the threats that it faces, how to recognise these and what to do if they believe there is an incident. As a bank, we take this very seriously and engage with our clients to ensure that everyone within the organisation is fully aware of the risks.”

For treasury more specifically, van Beusekom highlights the importance of building a robust incident plan that locks down the systems to prevent damage occurring if there is a breach. “it is also wise to put in place a disaster recovery plan, so the business can continue to function should the worst happen,” he adds.

Key point to remember:

Individual staff are increasingly being targeted and continue to be an organisation’s weakest link.

Payments in focus

As part of BNP Paribas’ drive to share knowledge with the corporate community, for the last two years the bank has also supported the World Payments Report, produced by Capgemini.
“The World Payments Report is the industry reference point for global non-cash transaction market data,” says van Beusekom. “Historically, it has chiefly served the financial industry by identifying trends and opportunities in transaction banking. However, since our involvement began two years ago we have pivoted the report towards the corporate community, which is thirsty for knowledge about all the changes happening in the payment space, and what these changes mean for them.”

For van Beusekom, the key finding from the World Payments Report is that corporate adoption of digital payment methods is pushing up the growth of wholesale non-cash transactions. Yet whilst adoption is strong, the report says that corporates are not leveraging all the benefits of the digital transformation to provide new propositions to their clients.

Despite the innovation happening across the payments space, corporates are still being let down by certain inefficiencies. Van Beusekom highlights a lack of standardisation of messaging and data capture as just one example of this.

“The continued focus on the payment ecosystem from regulators, banks, corporates and fintechs means that there are lots more developments to come,” he says. “This will hopefully drive out these inefficiencies and create a payments ecosystem that facilities business in the 21st century.”

Ready for regulation?

Managing regulatory change is par for the course in corporate treasury. However, in the decade that has passed since the global financial crisis, the volume of regulatory change that treasurers have had to manage has been immense. This continues today, and the JTT working group has unsurprisingly found that understanding, managing and staying ahead of regulatory change is top of mind for nearly all treasury teams.

The report goes into detail about many of the current regulations affecting treasurers, including FBAR, PSD2, BEPS and GDPR. But most importantly, it talks about how treasury departments can build an efficient and resilient function. “This will allow treasurers to comply with regulation, deal with disruption, proactively address upcoming change and take advantage of strategic opportunities,” says van Beusekom.

Indeed, van Beusekom encourages the treasury community to engage with regulators so that they can help shape regulation, either directly or through an organisation like the EACT. He also advises that treasurers ask their banking partners to provide regular education sessions about existing and incoming regulation to boost knowledge within their companies.

From a practical perspective, treasurers should ensure that their governance structures support a new approach to regulatory risk. This includes drafting plans to deal with potentially disruptive market events, as well as implementing a robust compliance programme that includes other stakeholders in the business. Treasurers should also consider appointing a compliance professional to sit within the treasury department and centralise knowledge.

Finally, van Beusekom says that treasury may wish to look towards technology to help manage regulatory change. He says that it is important to organise significant regulatory data in a sensible manner to establish a single source of truth. With this in place, analytical tools can then be used to help with items such as scenario planning and feeding data to the regulators.

Key point to remember:

Knowledge sharing and awareness creation is important when it comes to building a resilient organisation. Networking within and outside of the organisation is key, and should be actively promoted.

An open invitation to participate

Whilst van Beusekom implores treasurers to read the report, what he wants more is for treasurers to be actively involved in the JTT initiative. “This is not an isolated report,” he says. “It reflects the thoughts of some of the smartest minds in the industry who are helping the treasury community make sense of the complex and transforming environment that exists today. Most importantly, it is an open invitation for the corporate treasury community to be involved in the initiative this year and shape a clear path forward.”

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