Despite broadly high enthusiasm about their potential, treasury and finance executives are failing to incorporate technologies such as blockchain, artificial intelligence (AI) and robotic process automation into their functions, according to recent research.
The Association for Financial Professionals’ (AFP) 2018 AFP Technology Survey – carried out in partnership with treasury software solutions provider BELLIN – notes that only 6% of firms currently utilise blockchain or distributed ledger technology, while 79% have no plans to introduce it within their infrastructures. Meanwhile, just 11% are making use of AI tools – yet 70% have no plans to do so. Many respondents, however, believe that these technologies will have a positive impact on efficiency – even if only to some extent.
AFP president and CEO Jim Kaitz said: “The gap between enthusiasm for emerging technologies and implementation is very troubling. These technologies are disrupting every organisation – especially the finance function. If treasury and finance do not embrace these emerging technologies and implement them to help make their organisations more successful, they risk being left behind by innovators inside and outside their organisations.”
BELLIN founder and CEO Martin Bellin added: “Embracing new technology can be daunting, but it is the only way forward. The world of treasury and finance has a unique opportunity to not just keep pace with new trends, but to be a driving force behind them.”
Treasurers must tighten up their strategic oversight of risk management, cash management and working capital if they are to fully meet CFOs’ expectations, a new report has warned.
The study, 3 Key Areas Where CFOs Say Treasurers Need to be More Strategic was based upon a survey of more than 150 senior financial executives across multiple industries in North America. It found that, while 40% of respondents currently consider their treasury operations better than average, a majority of 45% ranked them as merely average. Just 8.1% consider their treasury functions ‘best in class’.
The report stemmed from joint research between cloud treasury solutions provider Kyriba and media group CFO Publishing. The latter’s director of research Christopher Schmidt said: “The results are surprising because treasurers typically set very high standards for themselves and the treasury function. To me, this is a sign that many treasury functions face organisational and technological impediments that are preventing them from delivering the highest value.”
Commenting on the findings, Impact Venture Capital general partner Eric Ball – an experienced CFO who also served as senior vice president and treasurer at Oracle – said: “One challenge for treasurers is that a large part of their activities and focus are transaction oriented, and so the CFO may not feel like they are getting a lot of strategic insight from treasury. Better data visualisation and reporting of key treasury metrics is one initiative that can help the CFO better understand the value of treasury in a time-efficient manner, and also enable that CFO to make faster global business decisions.”
Download the report from here.
A special test bed for trialling novel products and services in the green finance market could form a key part of the new Global Financial Innovation Network (GFIN), a consultation has proposed. The idea surfaced in a 15 October discussion paper from the Financial Conduct Authority (FCA), entitled Climate Change and Green Finance, in which the regulator says that it is “keen to further enable innovative models” in ethical investing. With that in mind, it suggests, the GFIN could be used to stimulate a range of new developments in the field.
“Green finance,” the paper notes, “is relevant to each of the GFIN’s three proposed functions. For example, an innovative firm looking to develop and test a green product or service may want to test market demand and feedback as part of a cross-border test. Alternatively, regulators with an interest in green finance could use the GFIN to share experience, latest trends and possible barriers to innovative firms entering the market.
“Finally, where relevant, regulators may collaborate on joint pieces of work involving green finance, such as policy research or setting a challenge problem for industry to solve.”
FCA officials unveiled the GFIN in August, announcing that the regulator had teamed up with 11 similar organisations around the world to create what amounts to a ‘global sandbox’ for financial innovations. Announcing the wide-ranging, new consultation, FCA chief executive Andrew Bailey said: “Climate change presents a disruptive and potentially irreversible threat to the planet. The impact of climate change on financial markets is uncertain, but legal frameworks – at a global, European and UK level – have already begun to adapt to reflect a move to a low carbon economy.
“The FCA can play a key role in providing more structure and protection… for green finance products and ensuring that the market develops in an orderly and fair way, which meets users’ needs.”
Read the full discussion paper here.
An industry first for trade finance has stemmed from joint work between HSBC India and ING Bank Brussels. In a recent initiative, the banks coordinated a pioneering link between leading blockchain platform Corda and the Bolero cloud service to issue and manage an electronic Bill of Lading (eBL).
The action facilitated a digital transfer of the title of goods between Indian conglomerate Reliance Industries and petrochemicals firm Tricorn Energy. ING issued a letter of credit on Tricorn’s behalf, with HSBC advising Reliance. As a result of the Corda-Bolero integration, the process was accessible to all parties on a centralised system, rather than requiring multiple, isolated digital systems stationed around the world.
Ajay Sharma – HSBC’s head of global trade and receivables finance for the Asia-Pacific region – said that the use of blockchain has “a transformative impact” on trade finance transactions, enabling greater transparency and enhanced security, in addition to making it simpler and faster. Sharma noted: “The overall efficiency it brings… ensures cost-effectiveness, quicker turnaround and potentially unlocks liquidity for businesses… We believe that the collaborative approach [we have] adopted to develop this technology has the potential to transform conventional trade finance.”
Reliance Industries joint CFO Srikanth Venkatachari added: “We are excited to partner with HSBC on digitisation of trade finance… The use of blockchain offers significant potential to reduce the timelines involved in exchange of export documentation from the extant seven to 10 days to less than a day. When adopted at scale, it helps in significant optimisation of working capital. Further, use of blockchain in trade finance enhances transparency, security and synergy across all the parties and stakeholders involved.”
Payments network EURO1 has begun a two-year migration to the globally recognised ISO 20022 quality benchmark, it has emerged. The start of the process was heralded in an announcement from EURO1 operator EBA Clearing, which has partnered with payments infrastructure SWIFT to coordinate the migration.
The work programme has been scheduled for completion by November 2021, in line with a deadline set for the parallel migration of real-time gross settlement platform TARGET2 – owned and managed by regional monetary authority Eurosystem. The project has been implemented in response to EURO1 participants’ need for a continuous, strong alignment between the pan-European large-value payment network and the TARGET2 platform, to guarantee full, intra-day switchability between the two systems.
EBA Clearing CEO Hays Littlejohn said: “The migration of large-value euro payments to the ISO 20022 standard is a major exercise for payment service providers across Europe. Our goal is to make this changeover as smooth and seamless as possible for our EURO1 participants by fully aligning with the migration plans and timetable of TARGET2.
“We are pleased to evolve EURO1… and to count on the support of SWIFT, our long-standing technology partner, in readying our flagship system for the future.”