As organisations attempt to navigate the post-pandemic era and modernize their treasury operation, the role of the treasurer will need to evolve to become that of a chief liquidity officer, according to participants at the ACT Middle East conference.
“Liquidity is becoming more strategic and will only gain more importance in the coming years. Companies are going to allocate more people to manage liquidity within the organisation,” said John Vincent, regional presales manager EMEA Emerging at Kyriba.
Cashflow visibility and enterprise-wide liquidity have always been the core aspects of treasury, but the unique challenges of the pandemic have put the spotlight on companies’ visibility to accurately measure, forecast and facilitate liquidity.
Amer Chebaro, general manager at TMS provider company Kyriba noted that during the pandemic, treasurers were relied upon by everyone from the CFO to the COO and CEO to provide information on the resources they had to get the “ship onto land”.
“It was up to the treasurer to find that right formula and balance for everyone to survive and hit land,” she said. “Treasurers who had a liquidity management system in place used it very effectively. Those who didn’t realised after six months – when they started getting their bearing and orientation after the initial shock – that they needed one.”
For online payment solutions provider PayU, which has over 150 bank relations across the globe, a simple undertaking like cash visibility is no easy task. The fintech firm is implementing Kyriba's Enterprise Liquidity Management Platform with the goal of moving to automation, improving visibility, and unifying data for intelligent decision making.
“You can have the most sophisticated treasury-management system (TMS) but if you can’t deliver extracted data from the right places in the right way, you aren’t going to be able to answer those questions your CFO has of you and then build on top of that to do more forward-thinking aspects of scenario planning,” said Andre Olivier, group treasury manager at PayU.
Managing and leveraging the ever-increasing levels of data is still a challenge for organisations. Oussama Ihsane, solutions consultant at Treasury Intelligence Solutions, which has more than 200 corporate customers, noted that usually, manual processes are involved to source data from various systems before combining that with external and management systems. “The trick is to efficiently source your data without delay in real time”, he said.
Irwin Medford, director at PwC Middle East explained that timing was key: he told delegates that close to 50 percent of respondents in PwC's 2021 Global Treasury Survey indicated that part of their treasury vision was to have access to connected data in near real-time. What has driven this is the pandemic, with people working remotely and needing access to real-time data, he said.
Another panel discussion considered the future of customer engagement, with panellists including Raja Al Mazrouei, executive vice president at DIFC Fintech Hive, Siddharth Bhandari, founder & CEO at NewBridge Fintech Solutions, and Pavan Gupte, partner at Iron Pillar, a technology focused venture capital fund.
Al Mazrouei noted the UAE recently launched two fully digital banks, Zand and Wio, which were regulated between 2021 and 2022. These banks have a completely different approach to serving customers compared to Emirates NBD and Mashreq’s digital banks–Liv and Neo, respectively–which are traditional banks launching a digital customer experience.
“You have legacy institutions that play an important role and are trying to perform and transform, then you have institutions that are born in the cloud who don’t need to transform. The customer at the end of the day will go to the most efficient service provider with the lowest fees,” said Al Mazrouei.
For Bhandari, change is accelerating, with the concept of “bank” heading towards redundancy in the future. He noted that banks have to evolve into ‘platform banking’ where they bring in fintechs and create an open architecture platform to offer the best service at the best cost. “Bank will become more of a custodian and a lender with services that are very much open architecture,” he said.
Another panel focused on treasury management systems and how they can support automation in treasury in conjunction with fintechs. In this area, Anis Rahal, director of strategy and market development for treasury at Bottomline TreasuryXpress said he believed that open banking will completely change the treasury landscape.
He said that the new generation of treasurers want to move faster with the implementation of TMS, but that the process takes time because of the need to deal with different parties, including banks, communication protocols, and enterprise resource planning (ERP) providers.
“Treasury APIs are completely removing these issues and accelerating implementation drastically, and this is the automation we need to operate in the TMS industry. If you can automate the role of each party, instead of 12 months you can do it in one month,” he said.
In the future, Rahal expects TMS providers to have an API for every feature that can be automatically added to SAP and the other ERP systems. He believes that eventually, there won’t be a TMS anymore but rather, a single system covering both accounting and treasury.
With the Middle East leading the way on the development of digital assets and cryptocurrencies, panellists at the crypto session agreed that while the rush to digital currency and payments has been astonishing, mass adoption would be impossible until there are clear regulations.
Speaking on bitcoin, Philip Middleton, chairman of the Digital Monetary Institute and deputy chairman of OMFIF, said that the digital currency is more of an asset than a payment instrument. Until people are paid in bitcoin and pay their taxes in bitcoin, it will continue to be a speculative asset, he said.
Talal Tabbaa, chief executive officer at CoinMENA noted that Tesla taking a $1.5 billion stake in bitcoin was a great sign to show that the market has sufficient liquidity and appetite. Moreover, the Central Bank of Bahrain has regulated crypto exchanges such as CoinMENA. There are also custodians today that allow investors to have insured deposits of bitcoins.
“Crypto markets are subject to manipulation because of how shallow the markets are, but as new participants enter and as developments like Grayscale Bitcoin Trust trading with a good $30-40 billion of assets under management continue, we will see great institutional products coming out, and that will dampen the volatility over time,” he said.
The conference concluded with a consensus that mindsets must change, and that corporate treasurers need to remain open-minded, whether towards new approaches such as open banking and cloud based TMS, or new technologies such as cryptocurrency.
Heba Hashem is a business, finance and leadership journalist based in Dubai
