Treasurers say they still lack visibility into global operations. But a new breed of banking solution is improving the view.

Author: John Goff
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Chief executive officers and finance executives don’t always speak the same language. One example: During earnings calls, CEOs at multinational corporations like to talk a lot about “global vision”—generally, the ability to see opportunities in far-flung markets. When finance executives talk about the subject, they tend to mean something very different. To these managers, “global vision” refers to the ability to see across the day-to-day financial operations and back-office functions that support a company’s business units. 

For treasurers, the view is often obstructed. One reason: Centralizing key treasury operations under one roof remains elusive despite years of effort. Much of the trouble, says Melissa Cameron, principal and global treasury practice leader, Deloitte & Touche, stems from acquisitions. “A company’s treasury system will have good scope, and then the company goes and buys somebody else. The prioritizing then is on things like making sure the supply chain works, not gaining incremental visibility into bank accounts.”

Moreover, treasury software at scores of companies still doesn’t interface with enterprise resource planning (ERP) systems. And as Nick Castellina, research director of consultancy Aberdeen Group, points out, applications that combine several functions into one program—treasury tasks and risk management, for example—are still the exception, not the norm.

This absence of robust, overarching software—and fully centralized operations—explains in large part why 40% of treasurers in a Deloitte & Touche study said they still lack visibility into global operations.

Getting the full picture may not be that far off, however. The top banks in the world—along with leading software vendors—are rolling out innovative products and services that help clients automate scores of tasks that once required manual remediation. These fintech (financial technology) innovations are providing corporate treasurers with an aerial, often real-time view of, among other things, cash balances, hedging positions and forex risks. “The focus now is not just on improving process,” says Peter Frank, principal, corporate treasury solutions, at PwC. “It’s also on automating the interfaces with banks.”


The gains from such links are substantial. Take Citi’s CitiConnect ERP Integrator. The technology links a corporate client’s ERP software with Citi. Once set up, the system enables the client to retrieve required payment details in a predetermined format that can immediately be accepted for processing. The Citi system does not require a major fix to a company’s internal programs. According to Citi, the most recent implementation took less than a month to complete. In comparison, electronic data interchange projects can drag on for a year or so.

Eliminating the human element offers other benefits as well. CargoDocs BPO+, a trade finance solution developed by UK-based essDocs, is an automated and paperless system for processing bank payment obligations—effectively, electronic letters of credit—transactions. It pulls data from original electronic documents and is linked to global transaction messaging provider SWIFT’s Trade Services Utility for BPO. What’s more, involved parties receive email notifications on key actions and any discrepancies, thus providing treasurers with up-to-the-minute status reports. Executives at essDocs say a BPO transaction using the firm’s software can be completed in a single day, and mismatches can be handled immediately—versus up to 10 days in a typical electronic letter of credit.

In April an iron ore trade involving BHP Billiton, recipient bank Westpac, obligor bank ANZ and Cargill was completed via the essDocs application. The transaction marked the first use of a bank payment obligation where data flowed through all four participants with zero data reentry.


Despite the obvious pluses of helping clients streamline their transaction processing, many banks have been tardy in overhauling their existing treasury products. But financial services companies are facing an unexpected challenge these days. Technology giants like Google and Apple are moving into the payments sector, and they’re threatening to rewrite the rules of engagement (see sidebar, p 16). “Banks’ core product is now digital,” notes Dan O’Malley, chief digital officer at Boston-based Eastern Bank. “Cash is digital. Our business models have to become digital, too.”

One bank in Germany is taking that model to a whole other level. Munich-based Fidor Bank announced in November that it is launching a marketplace that deals solely in digital currencies such as bitcoin. The innovative system features a blockchain—a public ledger for cryptocurrency transactions. Fidor uses the technology to transfer client funds between countries and to make inter- and-intra-bank payments between branches and other financial institutions—without the use of SWIFT.

Given that it’s a digital currency, bitcoin payments are faster and have fewer fees attached than do payments using a credit card or online systems. And bitcoin greatly reduces risks from foreign exchange fluctuations (although not from bitcoin fluctuations) and inflation—and provides a full audit trail of transactions. Retailers could be the big beneficiaries of a cryptocurrency trading platform.

Fidor’s bitcoin banking product faces regulatory hurdles in the US, however. Bitcoin is already subject to anti-money-laundering laws, and the Federal Reserve Board has quietly indicated it may draft a policy governing cryptocurrencies.


But compliance headaches are nothing new to corporate financial executives. In a PwC survey of treasurers at global corporations, 70% of the respondents said new or changing regulations are the biggest challenge to their financial systems.

Certainly, the bid to unify software systems gets more complicated when regulations vary substantially from country to country. In addition, stringent banking regulations like the Volcker Rule and Basel III make it that much more difficult for treasurers to move money. “The changes in banking rules are creating a lot of turmoil over things like the availability of cash,” says PwC’s Frank.

New rules are also, however, driving innovation, especially in emerging markets. In Turkey, Akbank launched an e-invoice platform after officials there imposed restrictions requiring banks to check and collect original invoices from suppliers before processing an invoice for a discount transaction. The rule hamstrung suppliers—who needed financing—and corporate buyers seeking end-to-end automated supply-finance systems. The e-invoice platform, which fulfills the rule governing discount options for suppliers, enables clients to generate, send, receive and archive electronic invoices that meet industry standards.


The average annual treasury budget of a large global company currently stands at $4 million. “There’s been decades of underinvestment in treasury,” notes Frank. Small budgets lead to large headaches for treasurers. The good news is that advances in technology are lowering the prices of treasury systems. Cloud computing, in particular, minimizes the costs of implementation and slashes a company’s ongoing maintenance costs—a real attraction for smaller businesses. It also gives companies access to best-in-class applications.

Perversely, the raft of banking rules could ultimately prove to be a boon to treasurers and financial executives—at least on the budget front. “To fulfill regulatory requirements,” says Edison Andrade, senior consultant, global treasury, corporate finance and capital markets, at Treasury Dynamics, “companies will look more and more to new technology.” The need to stay compliant could push up corporate financial tech budgets, allowing finance departments to invest in new platforms to improve integration and visibility.

Perhaps the gap between the vision of the CEO and the CFO will then start to shrink.


Banks vs. The Space Invaders

  • With IT giants like Apple and Google pushing into the mobile payments busi- ness, financial services companies are going on the offensive. How? By acting like venture capitalists. (Click To Read more)


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