Treasury: creating futures

Treasury: creating futures

In a time of exponential developing technology, ever changing regulation and global integration, the corporate treasury function is changing too. So, what will the future bring us in corporate treasury? This question formed the red line during the Treasury & Risk Seminar that we organized on 30 March in Amsterdam.

The large windowed wall of Muziekgebouw aan het IJ, the seminar location, offered the attendants a view of the Dutch capital’s port activities. The seminar had a similar symbolic aim: offering a broad window to the future of treasury.

Sander van Tol, partner at Zanders, opened the afternoon session by welcoming all attendees and showing the latest trends in the constantly changing ‘treasury-universe’. Sander divided these changes into four areas of impact: technology, regulation, economy and markets. (Please note that you can read more about these trends in the Spring edition of Zanders Magazine and on our website.) “In this changing universe treasurers aim to make progress towards having a more advising and strategic role in the company”, Van Tol said, before he introduced the first external speaker.

Treasury in Africa

Murat Balta, treasury manager at Heineken International, took the stage to share his thoughts on the treasury challenges in frontier markets. At Heineken, Balta is responsible for all treasury matters, such as optimal capital structuring, FX management and bank relationships, in more than twenty countries across the Africa and Middle East region. Heineken is active in over 70 countries with at least 250 brands and developing countries generate 59% of its profits.

In fact, Heineken imported its first beer in Africa in 1900. It has now operations in 23 African countries, with over thirty plants in Nigeria, Egypt, South Africa, Ethiopia, Rwanda and Ivory Coast. “We have invested €2.5 billion in Africa since 2010”, said Balta.

He then showed and issued the main treasury challenges for Heineken in Africa: macroeconomic challenges, Dutch disease, financial institutions, talent acquisition, regulatory environment and currency. For the currency challenges, Balta offered some examples about regulation issues in countries like Egypt, Algeria and Nigeria.

Balta finally gave the attendees insight in some cash management issues, like counterparty risk, the presence of preferred banks and IT capabilities in Africa.

Cost-efficient

After this dive into the African corporate world of treasury, a panel discussion started about the future of the treasury function within the theme ‘Treasury as a strategic partner; an expanding remit’. Three corporate specialists shared their views on the stage: Willem Scheepers, manager corporate finance and treasury Asia & Africa at Unilever; Eric Vastenhoud, treasury manager EAME at IFF; and Michiel van der Harst, director financial planning & analysis at ASML.

Sander van Tol led the discussion and his first request to the panel was to look at the current treasury developments. “Regulation has increased the burden. There are many things we can’t predict, so we need to be smart”, said Scheepers. “The treasury function has increased, so there is a lack of time for new treasury developments”, according to Vastenhoud. “With a certain capacity it’s a challenge for a Treasury to be cost-efficient”, Van der Harst added.

“Treasury is very much cost-driven, cost is always key.”

The panel members agreed that treasury can’t operate on its own and is there for the business, becoming more and more integrated in organizations. The use oftechnology, especially FinTech, will play a very important role in its future development. This conclusion was at the same time an introduction to the next speaker on this seminar.

Fundamental for transformation

Natalie Willems-Rosman, head of payables, receivables and transactional FX at Bank of America Merrill Lynch, told the attendees about the myths, misconceptions and reality of FinTech and innovation. According to Willems-Rosman, innovation is being driven by 3 global megatrends: demographic shifts (“The rise of millennials is shaping the future of financial services”), globalization (“Global population growth will offer new business opportunities and increase in global trade”) and new technologies (“Rise and rapid adoption of new technologies is changing client interactions”).

“Technology innovation has been fundamental to financial services industry transformation”, she stated by showing all important technological developments in the financial world on a timeline, then touching on a couple of these. Total investment in private Fintech companies increased more than ten times in the last five years, to USD 19 billion in 2015. “Quite remarkable is that corporates represent only 3% of FinTech investments, compared to 73% for consumers and 24% for financial institutions”, WillemsRosman explained. In the meantime, the scale of options is thriving. Important systemic changes, like blockchain, can improve corporates’ partnerships and processes. “Everybody has their own personal truth, but with a blockchain you can have one centralized ledger and everyone can see all transactions and check the data.” 

“We need to take our services to the next level, to understand our clients better”

Artificial intelligence influences efficiency too: “As a bank, that’s something we believe in. We need to take our services to the next level, to understand our clients better, to understand our problems better and to be ready for the future.”

Self-reflection

The last speaker of this seminar was Zanders’ Thomas Davison, who’s dynamic presentation started by giving his view on the future of treasury technology. “We see technology coming from the operational side, to tackle regulation issues through automation, organization and centralization.” He foresees an ‘outside-in’ approach to treasury management, in which Treasury plans for external events (rather than reacts) worldwide and technology simulates scenarios from the corporate’s headquarter. Then he gave some interesting insights in a recent treasury system poll, the results of the Reval Global Treasury Benchmarking Survey.

“The finance industry appears to be the least technology adept; they’re still ‘Excel junkies’”

Treasury technology plays an important role in forecasting and liquidity planning, and in regulation issues like IFRS9. “And when it comes to automation, size does not matter; we all agree that manual processes hold us back – but what do we do about it?

We need self-reflection.” Therefore Davison asked the attendees to close their eyes, take a deep breath and think of the presentations they heard today. “Ask yourself the question: what is the most important to me, to my organization? Regulation, automation, technology or some other idea? Make the case and hold yourself accountable.”