BankingOpen BankingAsian treasuries moving into the fintech era

Asian treasuries moving into the fintech era

Fintech is forming dynamic partnerships to create finance solutions which eliminate inefficiencies for corporate treasurers

The role of treasurers continues to evolve and become more strategic in nature, according to a new Asset Benchmark Research Data report.

Nearly half of treasurers and CFOs questioned in Asia expect to see their treasury center become more strategic in nature in the next three years. Treasurers see their role as providing the CFO with more forward-looking information and producing business intelligence instead of the traditional role of reporting, managing finances and transactional flows.

The report suggests that the application of fintech will be central to the broadening of the treasurer’s role. The global rise in financial regulation and international expansion of financial operations are driving treasury departments in banks to remodel and integrate their activities using fintech. This shift is mostly affecting automation and straight-through-processing (STP) in front-to-back office operations, the tools to facilitate regulatory compliance and real-time access to the system anytime and anywhere.

Controlling risk and enhancing efficiencies

Treasurers can quickly interpret and act on sophisticated financial analyses with fintech like machine learning and robotic process automation (RPA). AI-powered solutions can help in making each of these processes more efficient and profitable.

Using fintech to solve a particular pain point, rather than randomly applying a buzzword technology, is an approach treasurers are adopting.

Eddie Mak, Group Treasurer at Kerry Logistics told The Asset: “We are trying to make use of more technology within our treasury operations to supplement the workflow. I think we are at three out five when it comes to technology. We are in the middle because we have acquired a lot of companies. System integration needs to be accomplished first before you can actually unify your treasury operations. If the technology concept can help to control risk and enhance efficiencies then the management will buy into it.”

Overdue payment risks

Asia is seeing an increase in third-party providers such as payment companies looking to work more closely with banks to offer better solutions to treasurers and CFOs. Overdue payment risks appear to be continuing to increase across the board and despite the optimistic forecast, companies in Asia continue to have difficulties getting paid.

For instance in China, LianLian Pay has slowly established itself as the go-to provider for Chinese merchants to carry out cross-border collections. The payments company is supported by several banks around the world that help transfer money back to the local bank accounts of their merchant clients.

Li Na, Head of Strategic and Banking Partnership at LianLian Pay said, “We plan to spend around 3 billion renminbi to service the 1 million cross-border Chinese merchants. We help these Chinese sellers get their money back from the overseas e-marketplaces to their Chinese bank accounts.”

Helping merchants with their collections and reconsolidation is something that AsiaPay is also doing amid an increased collaborative environment as they believe that the drive from consumers to go cashless will play a positive role in their business.

Joseph Chan, Founder and CEO of AsiaPay questioned: “There is no doubt that the technology is here today. It’s just whether there’s a rationale for the merchant to process a digital transaction. Is there a justification for the effort or manpower for reconciling the cash and taking on payment risk if that cash is lost?

“Second is the user payment experience when interacting with the merchant and third is how best to upgrade all the frontend systems to interact with the backend systems.”

Open banking evolution

Open Banking in the UK, an initiative driven by the Competition and Markets Authority (CMA) aimed at improving competition and services in the banking sector for retail and small business customers.

Figures published by Open Banking Limited (the company set up by the CMA to deliver Open Banking) in December showed that there were 64 new companies registered as Open Banking Third Party Providers. 12 of these were already operating with live customers, while 32 account providers (mostly banks) had signed up to offer API-access to their services; this was quite eye-opening because only ninw account providers were obliged to open up by the CMA.

Open Banking requires that banks build APIs (application programming interfaced) to make information available to third parties. Banks will have to adopt a ‘Silicon Valley’ mindset, providing new products and services continuously and fast, something which fintech companies do regularly.

Vincent Marchand, Head of Cash Management fintech lab at BNP Paribas said: “In Europe with this open banking evolution, banks are now forced to expose their data to third-party providers. We are now discussing with a few big names to offer a solution like a request to pay.”

Delivery models and connectivity options are also changing radically, offering treasury management systems (TMS) as SaaS (Software as a Service) and connectivity through managed APIs. Moving into the fintech era, treasury departments therefore need to re-evaluate their operational models.

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