2020 has been an unprecedented year and corporates have been forced to adapt as the pandemic shocked the global economy.
With 2021 just around the corner, The Global Treasurer spoke to Andrew Bateman, group president, capital market solutions – buy-side at FIS as he reflected on what he’s learned in 2020, what a vaccine rollout could mean for the market, the big technology trends in 2021 and how Brexit is going to affect corporates.
What are the lessons you’ll be taking from 2020 into 2021?
I think everyone has realised that there needs to be greater resilience in the business model. One of the biggest themes I’ve been hearing since March was the need to upgrade technology so that it’s more cloud-based. It just makes it easier for the employee base to access and use those systems when they’re remote.
There has also been a more general move towards outsourcing. I cover the buy-side of the business, so I get quite a broad view across that customer base of some of the different challenges. In most cases outsourcing business process as a service (or Bpaas), pushing off some operations onto a third party who is maybe more resilient to be able to run parts of the non-customer facing, non-core parts of the business has been another key takeaway.
As we’ve learned about how we deliver to our customers, the themes people have taken away from this year are how do we get the leverage out of the technology, how do we make sure we have the right technology and then, can we pass that off to our partners to run some of these operations for us.
How will a vaccine change your plans as a company?
Given the size of the organisation that we are, we have a lot of insights with government bodies and we get a lot of input from them. So, we’ve tracked this at an executive level by understanding the therapeutics coming out, how it’s being treated and then obviously, what the implications are of a vaccine.
We have to realise this is not something that is going to happen quickly. Back in March and April, we all thought it would hopefully be over in a couple of months and we’ll be back to normal again but obviously as it goes on, you realise that is not going to be the case. But the way they have been able to accelerate and get these vaccines out is a huge help.
It’s going to get us back to normal quicker, clearly. If we can have these vaccines out soon, by the back-end of next year, by 2022 we’re getting back to some level of normalcy. But it is going to take time.
The other thing for me is what it means for the larger economy. If we can get a bit more back to normal, if we can get confidence in the economy, if we can get vaccines then that’s going to be the biggest help in keeping us out of a severe recession.
What are the key trends you’re expecting to see in 2021?
The trends have been there for a while, I think we’ve seen trends towards open banking, APIs, real-time payments, the move to software as a service (Saas) and cloud-based technologies, but these are trends that have been out there.
What has happened though, is you’ve seen an acceleration of some of those changes. Whereas before, people could wait longer to look at their technology stack, or have they got the right parts of their business in-house versus outsourced, are they using the new technology or are they going to wait and see. All of that has just been accelerated by a year or two.
For example, managed services and outsourcing, I would say that we’ve accelerated that by a couple of years. Customers will make decisions to move, they recognise they need to get that resiliency in place.
Payments and APIs becomes particularly interesting because that requires investment in core systems. I think there’s an opportunity for more network of networks to become available. That’s probably the most exciting thing, all of these individual payment networks that you have, I can see those being interconnected and thus, to take advantage of that you’re going to have to have the right systems in place that can plug into those APIs.
What technology in treasury will make a big splash this year?
We’ve definitely seen almost all projects move to some sort of SaaS vendor. There are very few corporates now taking technology in-house, that’s become the de facto. It used to be 60-70 percent and we used to hope that it might get to 80 percent by the end of next year. But I would say it’s an exception now for people not to have a SaaS-based, cloud-based solution for any of their payments or treasury activity.
And then, through the fact that we now have better gateways, we will see more APIs into some of these real-time payment networks. That’s a really interesting thing because a lot of that behaviour is driven by the end-customer. I think that’s probably the area that I see as most exciting for the corporate world.
What effect will Brexit have in 2021?
We’ve been very engaged in monitoring the situation, and obviously it’s been very fluid. Everything that we’ve had to do from a business perspective is preparing for how we continue to run and operate our business and service our customers if there isn’t a deal.
And then if there is a deal, what potentially needs to be in place if things change. If you prepare for the worst, making sure that we’re able to still service customers, that we have resourcing that’s in the right locations, that we would be able to service Europe if visa restrictions and other things come up.
It’s still a bit of an unknown what the longer-term impact will be for many firms. Clearly, when you look at the logistics it could be chaotic in the near-term, but for financial services those trends typically take longer to materialise. Are we going to see more banks moving to continental Europe? Are we going to see a change of flows there? Is there going to be a divergence of regulatory rules between the two? These are things that will take time to manifest themselves, but we will be trying to stay on top, and to be ready.