Central & Eastern Europe Winners: Managing Through Volatility

As economic fundamentals deteriorated in the region—in 2016, GDP growth fell to 2.9% from 2015’s 3.6%, says Focus Economics—and the political will for economic reforms ebbed, companies were retrenching and banks were refocusing their assets in key markets in the region.

With some western banks retreating from Eastern European markets in recent years, corporate treasurers have had to focus on efficiency gains to ensure liquidity and access to working capital.

At the same time, treasurers in CEE are struggling with some of the same issues that their global counterparts are facing—including the need to define and manage risks involving the rapid pace of technological advances and to learn how best to make use of those advances.

To manage liquidity more effectively, corporate executives need to access higher volumes of data to unlock cash, says Dick Oskam, global head of transaction services sales at ING, which won Best Bank for Payments and Collections in CEE in this year’s awards. “Some of the areas that can most benefit from data analytics are liquidity and cash management, trade finance and risk management,” he explains. Oskam notes that data engineers are using the latest statistical models, machine learning, text analysis and other advanced techniques to study large amounts of data and explore applications.

“There are a myriad of opportunities and applications for data analysis,” says Oskam. “The challenge lies in unlocking the right data and getting the information you need from huge data pools. We are working hard to make data accessible for new analytical techniques—and together with our clients, starting to explore use cases to unlock value with data engineering.”

Oskam says two major issues that concern corporate treasury executives in the region are cybersecurity and data analytics. “There is no doubting the scale of [the cybersecurity] challenge and the importance of industry collaboration. It’s of concern for ING, for our clients, and in our personal lives.” Oskam says that recent cyberattacks have shown that investment and wholesale banks are much bigger targets than retail banks, as they handle larger-value transactions.

“Increased accessibility to knowledge on how to breach cyberdefenses is fueling the volume of attacks,” says Oskam. “At the same time, exploits such as zero-day vulnerabilities, malware on mobile [devices] and botnets using connected devices continue to cause significant damage.”

Corporate treasurers in the region are keenly aware not just of cyber risks, but also of the business and macro risks that they face—from rising instability in Ukraine and Russia to the trade impact of Brexit. In fact, some analysts have suggested that economies in CEE could feel the greatest effect from Brexit. Analysts at Focus Economics note regarding Brexit: “Waves of contagion are expected to hit CEE through trade, investment and financial challenges. Lower confidence will impact investment and trade will suffer due to the expected slowdown in the eurozone.”

And through it all, treasurers in the region continue to focus on managing cash, understanding the impact of regulatory change and ensuring the availability of both long and short-term liquidity. 

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