The past year has seen major advances which, although only beginning to bud, are likely to have long-running ramifications for corporate treasury and cash management as they blossom and mature.
One such development is the advent of the blockchain as a driver of new financial infrastructure. More than 40 global financial institutions, including all the biggest cash management banks, have joined the R3 consortium—the start-up behind the most comprehensive financial infrastructure blockchain program—in developing solutions. The group ran its first test in January: Eleven banks participated in a test of programmable, self-executing contracts. The distributed-ledger-based solution behind the contracts comes from Ethereum Network.
The blockchain is a continuously growing database that can’t be tampered with or revised and keeps a public ledger of transactions. Bitcoin is the best-known application so far. The ways blockchain could redefine financial interactions are endless: Although currently concentrated in financial markets and bank-to-bank interactions, it has obvious potential to change bank-to-corporate and corporate-to-corporate financial interactions in areas as diverse as corporate finance, cash management and trade finance.
Another development that could have long-ranging effects for corporates is how big banks are rethinking innovation. Although they will always be the tortoises at a party of hares when it comes to technological innovation—and they should be, given the need for rock-solid security and stability in banking systems—a number of banks are now starting to consciously change their culture and structures to encourage new thinking and ideas.
The most obvious developments are the advent of hackathons—intense computer programming brainstorming sessions—and innovation centers. Many banks have announced new labs, centers, projects and events that provide opportunities for employees and outsiders to showcase original concepts and help the banks in problem-solving. Many of these new initiatives are primarily geared to the retail side, but some of the most groundbreaking developments in corporate banking began as retail solutions. Some of our winners allocate resources specifically to corporate fintech development.
Global Finance editors—with input from industry analysts, corporate executives, technology experts and our corporate readers—used a variety of criteria in selecting leaders in treasury and cash management across more than 100 categories. Factors considered include profitability, market share and reach, customer service, competitive pricing, product innovation and the extent to which treasury and cash management providers successfully differentiated themselves from their competitors. We also polled corporate readers and factored in the results.