2022 – the year of the strategic treasurer______

Ed Lopez, Chief Revenue Officer

As 2021 draws to a close, Ed Lopez, Chief Revenue Officer at Calastone, shares a final round of insights from a rounded mix of treasurers and treasury professionals.

What a difference a year makes. Although 2021 began amid uncertainty and trepidation, it proved to be a year of change and innovation – and that change is certainly reflected in the world of treasury management where technology, real-time data and new working patterns are elevating treasuries into a strategic function.

At the beginning of this year we spoke with François Masquelier, Chairman of the Association of Corporate Treasurers of Luxembourg (ATEL). He reminded us of something that every treasury leader, aiming to build the best technology platform, needs to bear in mind: it costs money.

You have to make the business case,” said François. “You have to explain why you should invest. And one big source of resistance here is the users themselves. Treasurers are typically very cautious and very conservative – it comes with the job.”

We also had an interesting perspective on the practical challenges of implementing treasury technology when I spoke to Ingmar Bergmann, currently treasurer for SK Capital Parnters and former Group Treasury Manager at Ventient Energy. What was the biggest challenge he faced when implementing a single new treasury management system (TMS) for the group? Ingmar explained that every department will have its own ideas of what a TMS should do: “The real challenge lies in the company’s own understanding of what they are getting and what it will do.”

For Patrick Kunz – Treasury Leader for Booking.com, the Netherlands-headquartered online travel portal, and Pecunia – Treasury and Finance, a treasury consultancy – the volatility of the past year has already shown many corporations the value of better treasury technology. Patrick explained that with the right technology in place, treasury can make a valuable contribution to strategy – not least because of its privileged access to critical data.

It is treasury that sees the cash position first, so then the question is how does that inform the long-term financial strategy of the company,” he said. “What I have learnt is that you really need good-quality information from everywhere in the company.”

But even in companies with established TMS systems, there is room for improvement. Most treasurers would agree there is a need for more sophisticated technology in areas such as liquidity management and cash-pooling, automation of investment processes right through to settlement, foreign exchange operations and the need to build a real-time picture of risk. I asked François Masquelier if this was the moment for a total transformation?

“The reality is that when you look at the way that treasury systems actually operate you will find something that looks like a kind of Lego building, with all sorts of solutions piled one on another, with old-fashioned spreadsheets being used to fill the gaps,” he said. “A lot of companies have focused on core business digitization and forgotten finance. But now companies are becoming more ready to consider modernising the whole finance function. Treasury is the perfect digital lab for this.”

However the global treasury environment is not a uniform space. The challenges look very different if you are a treasurer working in Africa compared with those in Europe or the US. In mid-year we asked Vasu Reddy, a treasury expert and former Divisional Treasurer with GE Capital, who has long experience of large company treasury operations in Sub-Saharan Africa, to give his perspectives on treasury and technology in emerging economies. It turned out that one of his top tips for running efficient treasury operations was very relevant to all treasurers.

“Stay close to your banking partners!” he said. “As a treasurer, banks are your most vital information network. The banks have contacts with regulators, they are tuned into currency markets and they have the best political connections. That’s why I always set up regular bi-monthly calls with my main banking partners, talking to economists and dealmakers who have the full regional perspective.”

That brings us to one of the great topics of the moment, which is integration with partners. This was an issue that came up in a roundtable discussion with Jeannot Jonas, Assistant Treasurer at building controls group Carrier. Jeannot pointed out that much depends on how many bank relationships the treasury needs to support and how big the workload of integration is going to be.

“In our case, we have a lot of bank relationships, probably more than we really want,” he said. “That’s why large companies like Carrier are likely to prefer a bank-agnostic platform. That way, if you change your relationship with your banks, you don’t have to give up the platform.”

So what can we look forward to in 2022 and beyond? We always ask our Q&A guests for their predictions for the future, and our 2021 discussions certainly provided some ideas. For Patrick Kunz, one of the promises of future technology is that we improve at seeing the future itself, with new AI technologies being used to predict markets better. For Jeannot Jonas, the potential of cryptocurrencies and blockchain technology offer future possibilities, especially in the relatively slow-moving bond market.

For Roger Comins, of GTreasury, the big issue is usability – he sees treasury technology moving to a more consumer-like experience with functionality driven by a single click. Calastone’s own James Griffin, Head of Americas, expects embedding ESG metrics in treasury technology to become more of a priority.

But for the biggest picture of the treasury future, I have to agree with François Masquelier: the focus will be on getting rid of repetitive, high-volume and low-value tasks, reducing risks and costs – and making treasury more strategic.

As our journey into 2022 becomes evermore immediate, I wish you all the best for the New Year and your efforts in digitalising and digitising your businesses.

Ed Lopez, President, Global Money Market Services

Money Market Services in person...…with François Masquelier, Simply Treasury, ATEL, EACT
Money Market Services In Person……With Jeannot Jonas, Assistant Treasurer, Carrier Global Corporation
Money Market Services In Person……With Patrick Kunz, Treasury Management, Booking.Com

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