“Disruption is real and the causes are manifold,” explains The Economist Intelligence Unit, and, “more than 55% of treasuries say that their company is changing operational models as a result of sector disruption.”
Technology developments in crypto, payments, APIs, PSD2 and AI are having a knock-on effect in treasury departments. While some teams may feel unprepared, events have shaped new opportunities in the sector. Harnessing the possibility of creating new business opportunities, real-time aggregation of payments and integration of APIs have the potential to spur advances in treasury departments.
SWIFT now, Pay Later
Launched this year, payments stalwart and industry veteran SWIFT has rolled out an API standard, Pay Later, to enable online merchants to drawdown on consumer loans from the point of purchase. Using its extensive payment network and connections with the majority of worldwide banks, SWIFT is able influence the shape and form of APIs on its platform – crucially, banks and their customers become ever-more reliant on each other through the instantaneous approval of consumer debt products.
“The API will enable banks to maintain the vital lending relationship, whilst driving growth of the global digital economy. Citi believes that the introduction of this interface will provide the basis for future innovations in platform banking,” says Tony McLaughlin, Managing Director, Treasury and Trade Solutions at Citibank.
Formally called Transactional Finance Application Programming Interface, the API standards also open the door for fintechs to compete in SWIFT’s secure messaging and payment instruction universe.
In addition to Pay Later, SWIFT has also signed 14 major banks to help pilot a pre-validation service to speed up end-to-end same-day global payments. While SWIFT does operate a gpi or global payments innovation scheme to reduce the number of errors in beneficiary bank details, the API empowers banks with the ability to quickly amend payment instructions to meet same-day deadlines.
The existing gpi ecosystem has already captured 50% of payment volumes, and the new integrated API has the potential to be rolled out across the entire network. Key banks signing up to the pilot include BBVA, Deutsche Bank, Citi and Bank of China.
Kyriba forges new partnership with WorldFirst and acquires currency app FiREapps
Flexing reach and balance sheet power, Kyriba, the cloud-based treasury management system announced a new partnership with WorldFirst to streamline payments and the acquisition of the currency management app FiREapps.
“This integration with WorldFirst gives our clients a world-class option to simplify their FX transactions and expands our market opportunity in payments,” said Jean-Luc Robert, Chairman & CEO of Kyriba.
Responding to Kyriba’s own customer surveys, the company noted that foreign exchange fees charged by banks were frustratingly opaque. Participants also cited more favourable FX rates, reduction in banking fees, transparency and traceability as key motivators in switching treasury platforms.
The new partnership underscores the broadened cash and risk management offering that Kyriba specialises in. Equally by toeing into the payments space, Kyriba can offer treasury managers more functionality across international payments.
Just announced, Kyriba has acquired cloud-based currency management app FiREapps. The app helps customers mitigate currency risk by monitoring exposures related to posting, clearing, MTM and/or balance sheet adjustments.
Of the acquisition, Jean-Luc Robert says, “FiREapps deepens our commitment to helping senior financial executives be more agile and efficient in managing all types of risk, including FX exposures.”
For treasurers on Kyriba’s platform, the acquisition and partnership helps prevent currency losses by reducing FX risks and streamlines hedging activities, while making payments more seamlessly.
Blockchain practitioners stick together
Going formal, Ripple, EMURGO/Cardano, Fetch.AI and NEM have come together to form an association, Block Chain for Europe The lobby group aims to promote blockchain technology and digital ledgers across the EU.
Elsewhere in the blockchain universe, cryptocurrency treasury management system Formosa Financial has announced an upcoming partnership with CoolBitX. Formosa, specialising in providing custody, brokerage and risk management services connecting blockchain innovators to traditional banks, exchanges and institutional market participants. By partnering with CoolBitX, Formosa will be able to offer e-wallet services, tapping into the smart phone on-demand trading and settlement.
Once considered niche, blockchain technology has exploded onto the scene – cryptocurrency prices have mesmerised volatility investors while treasury professionals have demonstrated a keenness to incorporate more secure P2P payment structures. By coming together and normalising digital ledger technology across Europe, blockchain companies stand to gain credibility but may hasten regulation.
Big data offers better forecasting for treasury managers
Quantzig, the data analytics service has advanced the use of big data in finance. For treasury capital managers in the finance industry, three main advantages come to the fore:
Bringing Open Banking to treasurers
While banks have been preoccupied with making contingency plans to manage the impending ‘doom’ of Brexit, Open Banking has been quietly reforming the sector. Only coming into force last year, PSD2 standards have the potential to revolutionise the payments sector by opening up the market to new entrants.
For treasurers, PSD2 has the potential to empower the function.
“The good news for treasurers is that several new innovations are coming together to transform their landscape. New technology and tools enabled by the UK’s Competition and Markets Authority Open Banking remedy are equipping the modern treasury to establish greater control and ownership of their cash flows on a real-time basis,” says Lance Kawaguchi, Managing Director and Global Head of Corporates for HSBC.
In the UK, the CMA tasked nine banks to raise funds and organise the Open Banking Implementation Entity (OBIE) – the organisation charged with creating the ecosystem for new third-party service providers.
New third-party service providers include:
Contemplating further automation, Treasuries toy with AI
Expectations of corporate treasurers have never been higher. The baseline has moved from cash and FX management to expertise in operational efficiency, strategic corporate decision making, reporting, regulations and technology.
While most treasury departments recognise the advances which AI can make in their field, the promise is still a dream.
“For us, it may be too early to implement block chain and AI in a big way. We will continue to evaluate and see what makes sense for us, continue to talk to these companies to check on their progress and, as appropriate, build a business case for
spending on new technology,” says Priti Kartik, Treasurer at Logitech.
Other treasurers take a different view. AI has the ability to change treasury services all together. Led by bulge-bracket US banks, AI pilot programmes are being launched which could help bring in more revenue through product recommendations.
“Based on your behaviour each time, it will start to learn what you ask for,” says Jason Tiede, Innovation Head for Treasury Services. The new system may prompt clients by suggesting, “Looks like you have sent 100 US dollar wires to Singapore. Do you know you could send a foreign-exchange ACH payment instead?” building on further sales adds Tiede.
By harnessing the predictive technology of AI, JP Morgan’s treasury services may be able to deliver more volumes in a low-margin environment.
While AI has been taken up quickly by customer service functions and IT, the complex role of treasury has yet to find a competent computerised mind to take over the decision-making process. However, AI does have the potential to infiltrate by providing tailored fraud detection services; natural learning programmes can send payment advice to clients; automated big data may soon be able to identify external risks; and voice recognition may improve security and operational processes.
UK-based AccessPay attracts global investment
AccessPay, the Manchester-based fintech, attracted £9 million in investment, including US-based investors Baringea, True Ventures and Route 66. The successful fundraise underscores one of the largest-ever investments into a fintech in Northern England. Founded in 2012, AccessPay’s platform enables treasury managers to integrate back-office systems with state-of-play technology. The platform makes use of open-banking APIs, secure messaging and direct links with lenders to empower customers to optimise operations and improve cash management.
Corporate treasury managers often operate separately from back-office, technology, and settlement teams. These siloed operations can sometimes result in wrong payments, increased risk exposure and disjointed daily business operations. AccessPay is part of the problem-solving process.
“Connecting these services through our platform, removes these issues and enables the change finance and treasury teams are looking for,” says AccessPay’s CEO Anish Kapoor.
AccessPay, an authorised open-banking provider, is both a third-party Account Information (AISP) and Payment Initiation (PISP) Service Providers and is able to combine enhanced customer account and payment services.