While the impact of the pandemic on people and businesses is not to be minimised, it’s fair to say that COVID-19 has proved to be a major driving force behind innovation for many corporations. Businesses are operating in a very different environment today than they were a year ago, and while this has certainly brought new risks, it has also provided an impetus for rethinking processes, reviewing relationships and adopting new technology.
Different companies have faced different challenges in recent months, and those that have been in survival mode may have had little capacity to focus on other priorities. But many others have been able to pivot their businesses rapidly – the situation has acted as a catalyst for adopting new approaches and new solutions much quicker than they could have previously imagined. Flight to digital and the digitisation of business is a focus for us in delivering automation and efficiency to corporates.
Where treasury is concerned, cash flow forecasting is one longstanding challenge that has been compounded by the use of unwieldly spreadsheets, inconsistent parameters and inefficient processes. In the current market, having visibility over future cash flows is more important than ever, and many corporates are actively seeking sophisticated solutions that will help them automate the forecasting process and better harness growth opportunities.
Also of interest is the role application programming interfaces (APIs) can play in treasury, both as a means of enhancing treasury operations but also enhancing their own customers’ journey. Whilst not applicable for all corporates of course, APIs are demonstrating the art of the possible and serve to further open our collective minds on what the optimal connectivity solution should be. Some technological solutions seem to have been tailor made for the situation we currently find ourselves in. For example, HSBC has a solution called Beneficiary Self-Management, principally designed to replace cheques, which enables corporates to send payments without the need to gather and store beneficiary bank details, thus reducing manual processes and having a positive impact on efficiency, risk management, the environment and customer experience.
Nevertheless, not all banks are approaching technology in the same way. While some prefer to go it alone, others are choosing to partner with fintechs in order to deliver enhanced capabilities and offer more value. While fintechs may be strong in technology terms, they tend to lack the scale needed to serve corporate clients effectively – whereas banks have the scale, but not necessarily the technological capabilities. So this type of partnership is very important and can help to build a faster, simpler customer experience. – especially if the bank provides the ongoing servicing.
Of course, there are also many new challenges to consider in the current landscape. For corporates, the arrival of widespread working from home meant effectively executing business continuity plans and ensuring working from home processes were suitable in light of new cybersecurity risks. In the office, it’s easy to consult the person next to you if you have a question about a payment, or if an email doesn’t look right. But when people are working from home, they are less likely to ask questions, so the risks are all the greater. This has been reflected by the considerable interest we’ve seen from corporate clients in our cyber-crime education initiatives.
At the human level, meanwhile, mental health and wellbeing is another area of concern. In the remote working environment, it can be less obvious if someone is having a bad day or a bad week. Understanding the stresses people may be experiencing should be an important concern for corporates as this impacts decision making.
Alongside these challenges, the ESG agenda continues to be an important topic. For many organisations, removing paper via automation and integration continues to be an important goal as is electronic signatures. Where the social element of ESG is concerned, an important focus is the work we are doing with the ACT around qualifications. And on the governance side, we continue to ensure we are providing our corporate clients with fair outcomes.
Against this backdrop, an important question for both corporates and banks is how to take all the good things we’ve learnt during the COVID-19 crisis and keep those in mind as we move forward. I recently asked a group of treasurers, ‘Do you plan to go back to the office when we find our way out of this?’ And the majority replied: ‘No.’ It was encouraging to hear this, because of the opportunities that can arise when people are not bound by being in an office.
Coming back to technology, a lot of corporates that were previously hesitant about adopting new technologies such as virtual accounts and cash flow forecasting solutions have now completely changed their approach. Many are now embracing these technologies, rather than waiting for availability in technology resources and budget (or until something breaks!). I hope the treasury population doesn’t lose this willingness or pace of change, and that we can keep working in partnership on capabilities that will help Treasurers operate more effectively.
In this climate, choosing the right partner is more important than ever – and for many, the current landscape may represent something of a pivotal moment. Many businesses have experienced tremendous difficulties during recent months, and will be considering whether their banks have supported them effectively through this time.
Moving forward, treasurers will not only be looking at banks’ geographical footprints, and whether they offer the products and services corporates need to function in those markets, but also at how banks can help their businesses grow in the future. There is a difference between banks that bring ideas and solutions to their corporate clients, and those that wait for their clients to ask for them. In the current climate, banks that do not proactively offer ideas to their clients are less likely to be seen as the most suitable partner.
When it comes to reviewing their banking relationships, treasurers will also be asking which banks stepped up to help them during this difficult time, and which are best placed to help them prepare for the challenges to come – whether that means navigating another lockdown scenario, or positioning the business for growth. HSBC’s stated purpose is to “be where the growth is”, and as treasurers work to balance risk and growth in the coming months, we will continue to connect customers to opportunities that can help them thrive.
David Brook is managing director, corporate coverage, commercial banking HSBC UK
