FINTECH: BANKS NEED TO PLAY CATCH-UP

Keeping up with corporates’ increasingly sophisticated demands for more streamlined and well-integrated solutions is proving challenging.

Technology is central to the modern treasurer’s toolkit. “When it comes to good risk management—whether that is regulatory, operational or market-related—technology is at the core of our discussions with clients,” says Chris Jameson, head of corporate sales, Western Europe, at Bank of America Merrill Lynch. “It is an undisputed fact that technology facilitates greater visibility for treasury across business units and geographies, which is particularly important in light of regulatory risk and market uncertainty.”

Where banking systems are concerned, there are plenty of areas where treasurers would like to see further developments. In research published last December, research and advisory firm Aite Group identified 10 key banking demands from corporate clients, including advanced analytics, greater mobility, better risk management and tighter integration between bank and corporate systems.

The report points out that, as well as fulfilling the needs of corporate treasurers, banks are increasingly having to factor in other members of the organization—including procurement, operations, marketing and IT—and that failing to meet all these parties’ demands can result in the loss of competitive advantage.

Where data is concerned, the report says, different corporate executives have requirements that go beyond the raw “data dumps” banks largely provide. “Banks are good at setting up multiple channels and accumulating data, but they are not very good at aggregating or analyzing the data they acquire over all those channels,” comments David O’Connell, senior analyst at Aite Group. George Dessing, senior vice president, treasury and risk, for information services and publishing company Wolters Kluwer, agrees that the use of information is one area in which banks could improve. “If you take a step back, what we really want is to have the right information, which is something more than just transferring money from A to B,” he comments. Dessing says that Wolters Kluwer has a legal analytics tool, Datacert/TyMetrix, which analyzes $60 billion worth of law-firm invoices. “We asked our clients whether we could use the data which is already flowing through the systems, and they said yes,” he explains. “Before we knew it, we had a great amount of information and analytics which we used to show clients how they could further improve efficiency within their own legal departments.”

While some treasurers are looking for better analytics, others are more concerned about minimizing the complexity of bank-to-corporate connectivity. “If you have to deal with dozens of bank groups on a global level, even if all such solutions are great, they are very different from one another,” says Steffen Diel, senior vice president, head of global treasury, at enterprise software vendor SAP. “A unified channel to the banks to execute transactions or to gain transparency, for example via SWIFT, would be very helpful.”

Diel says transparency could be improved with the creation of a bank core system whereby companies could view liquidity on all group accounts at the relevant bank or get an overview of derivative positions, including mark-to-market valuations. He adds, “The lack of such an integrated system is why annual confirmations by the banks for outstanding business with the corporate (which are required by auditors for the annual audit process) can sometimes take a long time to provide.”