Most of major banks are starting to think about a robo-advice model for companies that are not ready to invest in a treasury department, says Ian Rand, CEO of business banking at Barclays, in an exclusive interview.
Barclays is “thinking very hard” about robo-treasurers, as open banking and voice-activated technology is expected to enable the service for smaller businesses, says Ian Rand, business banking CEO at Barclays.
Smaller businesses have historically shown little appetite for the sophisticated financial management seen in multimillion pound corporates, according to Rand, but open banking will make it easier and cheaper to do so.
“You will start to see pseudo-treasury activity, if not an actual treasury body”, becoming active much earlier on in a company’s development, Rand tells The Global Treasurer in an exclusive interview.
Middle market companies could employ a robo-treasurer without having to have to pay for a treasury department.
“We are clearly thinking very hard about how this space will work”
Robo-treasurers will be used to ensure SMEs are practising optimal money management, Rand explains. “We are clearly thinking very hard about how this space will work,” he says.
“You could almost compare treasurers with wealth managers. You only need a wealth manager when your assets got to the point where it’s hard for you to track them. You would need enough disposable assets to make it worth paying somebody to manage them,” Rand explains.
“Robo-advice really is about delivering wealth management style advice lower down the wealth chain at a price point that is commensurate with the size of assets that are being deployed.
“Most of the banks are starting to think about a robo-advice model,” he adds.
“I think it is a really interesting model to think about in the corporate business space. At what point do you need a robo-treasurer?” he asks.
Open banking and voice technology are enablers
“It will start in the personal space and then I think we will start to see it come over into ‘SME land’, but not for a few years at least,” predicts Rand (pictured).
Voice technology is what will open this up to the masses, according to Rand.
“Think of what the iPad did for digital engagement for folks who are less tech-savvy,” he says, arguing that many grandparents found it much easier to use email on an iPad rather than a computer.
“If you change the interface technology sufficiently, it fundamentally changes the way that technology is being used”
“What you’re actually seeing there is that a change of interface technology changes the ability to access the same tools that have always existed. The tools have not changed. E-mail is still exactly the same as it was before. If you change the interface technology sufficiently, it fundamentally changes the way that technology is being used,” Rand says.
He predicts that in a few years’ time, a business owner could receive voice automated updates from asking Amazon’s Alexa on how their business performing.
If Alexa was tied into the company’s current account and accounting package, it could not only with details on available funds but also sweep money into another account paying a higher rate using an API, for example.
“The next generation after that will be all on voice,” says Rand.
“Frankly not everyone has got it right when it comes to building frameworks for corporate banking that allows retail-style services to be bolted on for clients”
Amazon has opened up its ‘Alexa’ technology so that developers can build functions on to the Alexa framework using an API.
Barclays recently announced their personal banking app was compatible with Siri. “Clearly once you’ve got the ability to do that, everything else will then follow it very quickly,” comments Rand.
The industry should expect corporates to demand retail banking services applied to corporate banking, Rand believes.
Treasurers are no longer settling for “monolithic corporate treasury banking platforms designed to be used by the FDA and the four people in accounts,” says Rand. They expect to be able to approve payments on their phone while on holiday.
“That is retail banking technology that is now being demanded by a corporate treasury. That principle, we think, is going to apply across the board,” says Rand.
“Frankly not everyone has got it right when it comes to building frameworks for corporate banking that allows retail-style services to be bolted on for clients,” he warns.