Currency markets impacted by a number of factors as we open a new decade

| 9-1-2020 | treasuryXL | XE |

The markets have been exposed to some real turmoil. In the wake of the tensions in the Middle East, we have seen a general decline of stocks and move toward typical risk on plays – treasuries are up overall, gold is trending higher and so is oil. Very generally there are a number of themes affecting the major crosses.

Let’s get up to speed and examine these broadly:

GBP:

On one hand, there have been an increase of investment monetary inflows based on economic data. Add to this a general sentiment of rate hikes from the Bank of England still being on the table and a very likely sense of uncertainty or even fear from European exporters with the ECB under a great deal of pressure to stabilise/raise inflation (and be inventive in doing so) and Italy dragging the boat down somewhat there is every opportunity for the trade items to play out in a buoyed GBP. There are a few ‘watch out’ aspects, though. These may include things like monetary policy having been kept on hold due to Brexit (and there could be a case to see the Conservatives attempt to waylay Bank of England’s efforts to raise rates) and the possibility that investors have priced a recession into investment outlook. When reviewing 17 institutional banks’ forecasts for 2020, the consensus is for a rate to the Dollar of 1.3400.

USD:

Again, a tale with two sides to the coin. The Federal Reserve has added liquidity to the repurchase market (short version of this mini-crisis is: that the amount of available cash in this market dropped exactly as the demand for borrowing jumped which made interest rates look outlandish – the added liquidity settles this and resumes a better velocity of money, or speed of funds flowing through the economy). There are still some divisions remaining in terms of the Fed’s outlook for rates, meaning that stabilising and stopping rate cuts isn’t technically off the table. The uncertainty in the Middle East in the clash between the States and Iran means that investors have flocked to the safe-haven currency of the Dollar and add to this some very real concerns about the strength of the global economy and growth forecasts, meaning that safe haven movement could have longer to garner flight to the Dollar all could point to a near to medium term robust USD. Temper this view with some very conflicting US economic data, muted inflation price pressures and China getting rid of bonds – which would force the States to increase its balance sheet.

EUR:

The EUR has had a short-term increase in currency strength versus the GBP, but this is largely from uncertainties of how trade will be arranged in finalising Brexit. There are widespread concerns that, if a deal may not be organised in the timeframe allotted, the UK could default to trading with the EU on World Trade Organisation terms, which are far less favourable than a direct agreement. As earlier mentioned, though, the EU has significant issues brewing in the form of inflation control via the ECB and from a very poor economic performance by Italy in the last 8-12 months in particular. There are green shoots of good news, though, with preliminary German consumer inflation figures looking far better than expected – a significant contribution to solving their issues given Germany’s size and relative impact on the bloc. All things said and done, against the context of uncertainty from geo-political risks and fiscal/trade uncertainties as well, the EUR could well be the net loser in the coming weeks.

Elsewhere in the world, the cost of the bush fires in Australia are touted at being ~$2bn AUD and climbing, but of course, the cost of people’s lives and the lives and environment for their unique and rich wildlife ecosystem will be immeasurable. Our hearts go out to the people of Australia and the brave service people fighting the disaster.

GBPEUR: 1.1800

GBPUSD: 1.3198

EURUSD: 1.1183

The figures are based on the live mid-market rate, correct as of 08:30 GMT on 07/01/2020, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates we quote for money transfer can be selected via the page on our website ‘Live Money Transfer rates’.

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

How to save time and money with International Payments

| 2-1-2020 | treasuryXL | XE |

Do you often need to make global transactions? Deciding when to make an international payment and at what rate can be critical. You constantly need to check the markets for the best rates and hope for a great opportunity. But what if you don’t have time to sit and wait? XE can help and take care of it. With a range of solutions to help you access competitive rates with greater control.

Spot Transfer

Need to make a payment right away? Lock your rate for immediate and quick transfers.

With XE you can buy currency at the live exchange rate. If you are looking to purchase currency and make a payment right away, then a spot contract could be perfect for you.

Get started

 

 

Market Orders

Flexible with your transfer time? Pick a rate, transfer automatically when the market hits your desired rate.

Get started

 

 

 

 

Forward Contracts

Secure a rate for future transfers. Transfer any time at your secured rate within 3 years.

Get started

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

Recap of the SCF Forum and Awards event 2019

| 23-12-2019 | by treasuryXL |

On the 28th November 2019, treasuryXL attended the SCF forum Europe 2019 in Amsterdam – an annual event. Here is our review of the day.

So, what is Supply Chain Finance (SCF)?

It is a series of processes, both financial and technological, designed to improve business efficiency and reduce financing costs by providing bespoke short-term funding solutions for both buyers and sellers, with a view to improving and enhancing working capital and liquidity for both buyers and suppliers.

There are three parties involved – buyers, suppliers and financial providers. Traditionally, banks acted as the provider of funding but, with the advent of fintech other non-bank firms are also offering solutions.

The ultimate purpose of SCF is to improve the cashflows for both buyers and suppliers.

Participants included banks, fintech, academia, together with companies that use SCF solutions such as DFDS, Airbus and Jumbo supermarkets.

The forum started off outlining the major themes surrounding SCF that needed to be considered:

  • Data collection and analysis
  • Education
  • Financial Flows
  • Procurement
  • Logistics – the missing link
  • Inclusiveness
  • Sustainability

Time was given to highlighting the awareness needed to form a true collaboration with all participants – intra firm, inter firm as well as the supply chain itself. No one department can successfully implement SCF on their own – it requires the input from a wide range of departments.

Rabobank gave a talk about trade and its impact on poverty. Between 1900 and 1950 Europe and the USA moved ahead, economically, from the Far East and Africa. Since the financial crisis of 2008 the middle ground of Europe and the USA has been squeezed and whilst poverty has decreased worldwide, the levels of inequality between income and wealth had risen back to the levels of the 1920’s.

Whilst trade tariffs are on their way down, trade barriers have been rising.

Politically the near future is likely to bring about new confrontations on world trade:

  • USA – China
  • Brexit
  • Capital controls to counter tariffs
  • Restrictions on foreign ownership

DFDS – case study

DFDS are a Danish shipping and logistics company, focusing also on ferries and door-to-door solutions. From an environmental view they have big concerns about the impact of logistics on world climate. Their aim for the future is to be smarter, cheaper and to have less impact on the environment. On the logistics side they must be more cost efficient as they operate in a market with small margins and large competitors.

As data has grown exponentially, they have embarked on an extensive SCF programme that has seen their return on invested capital improve from 5% in 2012 to 19% in 2017.

Major challenges are still to be faced – especially because of Brexit as 45% of their business goes through the UK. Hauliers in the UK are especially worried. This sector of the industry is best suited to younger truck drivers (there is a 73% satisfaction rating amongst drivers between 18-24 year olds), but problems are evident in the lack of female drivers and an average age for drivers of 50 years old and rising all the time.

DFDS strives to help hauliers via SCF by paying early with discounts. This had led to both an improvement in working capital fo DFDS as well as hauliers – one was able to purchase 10 extra trucks by being paid early.

Jumbo – case study

Jumbo is the second largest supermarket chain in the Netherlands with a 21.6% market share. Their growth in turnover has been impressive – from EUR 120m in 1996 to EUR 8.5bn in 2019. There is a strong impetus to manage the needs of both the suppliers and the company. Whilst Jumbo has grown rapidly a lot of their small suppliers had trouble keeping pace especially with the terms and conditions that existed before the implementation of SCF solutions. As and when Jumbo grows, their suppliers need to follow and 80% of their suppliers are defined as SME (Small and Medium Enterprises).

Jumbo has implemented a variety of different solutions to meet the needs of their suppliers, such as reverse factoring, dynamic discounting etc. It was important for Jumbo that the suppliers got on board with the programme – they have more than 1000 small suppliers. There was a 63% pickup in the first few months.

Moodys – word of warning

One of the main instruments used in SCF is reverse factoring, which differs markedly from traditional factoring. Reverse factoring is initiated by the ordering party – the buyer. As they are normally the larger party to an agreement their credit standing is of a higher order than the supplier – hence their interest costs are lower than for the supplier. With reverse factoring suppliers get paid early and buyers can delay payment to the factor (financial counterparty). However, the liability rests with the buyer.

Whilst it is increasing in popularity as a source of financing it can lead to a weakening of liquidity. Rating agencies are grappling with the legal consequences and lack of disclosure of reverse factoring. Now there is no legal requirement to disclose how much reverse factoring is on the books. This can lead to an incorrect picture of the financial health of a company. Companies that embraced Reverse Factoring but eventually suffered as result include Carillion, Abengoa and Distribuidora International de Alimentacion.

Big Data and AI

With the advent of ever more computing power it has become possible to analyse increasing amounts of data. This will lead to big changes in SCF through the use of Artificial Intelligence such as:

  • Traditional SCF
  • Fintech solutions
  • AI powered SCF solutions
  • Blockchain and Internet of Things

However, whilst embracing technology solutions we must not lose sight of old axioms such as “garbage in is garbage out”. It will be necessary to truly understand the flow of data, the variables and the output. Modern history has plenty of examples of large sources of data and experts, leading to losses and mistakes as well as profits and rewards.

Conclusions

  • A truly collaborative arrangement both internally and externally
  • Greater understanding of the business drivers
  • Improved early payment for suppliers
  • Chance to delay payments for buyers
  • Mutual transfer of knowledge and requirements for both parties
  • Improved relationships
  • Need to onboard all relevant departments

The opening quote at the forum was “Bridging physical and financial supply chains”. The one area that I, personally, felt was missing was the impact on the circular economy. Whilst there was talk on sustainability and global climate, I wished to hear more about how to increase the effective use of assets – trucks going to clients full and then returning empty, etc.

Maybe that can be a “hot item” for next year’s forum.

 

 

 

Lionel Pavey

Cash Management and Treasury Specialist

 

Possible Amendments to the Withdrawal Bill see Pound Fall Sharply

| 19-12-2019 | treasuryXL | XE |

Boris Johnson will bring his Brexit bill before a new intake of MPs this week without some of concessions he made before the election. The Withdrawal Agreement Bill – the key legislation that will pave the way for the UK to leave the European Union on 31 January 2020 – is expected to come before the Commons on Friday.

Under Johnson’s plan Britain is to leave the EU on 31 January once the bill passes, at which point the transition phase with the EU kicks in. During this period, the UK is expected to leave the customs union and single market and enter new negotiated arrangements, but will follow most EU law like other member states. However, it will not have voting rights like other member states.

News on the morning of the 17th has suggested that the Brexit bill is thought to have been rewritten since the one that was backed at the second reading by the previous Parliament. The Conservatives now  have a majority of 80 which means that Johnson is unlikely to bring forward concessions to his Brexit bill that he suggested he would consider at the time. Those include clause 30, allowing MPs to vote on an extension to the transition period beyond 2020 if a free trade deal was not struck in time.

With the new legislation looking to legally prevent delaying a departure beyond 2020 there is a risk that leaving with no deal is back on the table. This new amendment has seen the Pound drop over 1% against the dollar and the Euro. We are now back to the levels we were trading at before the election, with GBPUSD down from 1.35 on Friday to 1.3190 and GBPEUR down to 1.1846 from 1.20+ last week.

It is a fairly data heavy day today with UK average earnings, ILO employment data and Mark Carney speaking which could continue to see volatility in the Pound.

GBPUSD– 1.3190

GBPEUR– 1.1857

EURUSD– 1.1134

The figures are based on the live mid-market rate, correct as of 09:00 GMT on 17/12//2019, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates XE quotes for money transfer can be selected via the page on XE’s website ‘Live Money Transfer rates’.

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

treasuryXL announces partnership with XE.com

| 12-12-2019 | treasuryXL | XE |

treasuryXL announces partnership with XE.com, The World’s Trusted Currency Authority and provider of currency data, FX Risk Management and Technology solutions for businesses

VENLO, The Netherlands, DECEMBER 12, 2019 – treasuryXL, the community platform for everyone who is active in the world of treasury, today announced the premium partnership with the world’s most trusted currency authority XE.com.

XE.com is the first major currency specialist to work with treasuryXL. As a marketplace, treasuryXL will offer XE.com market commentary and insight to her audience. Offering a continuous flow of relevant treasury content, making treasury knowledge available, results in treasuryXL being the obvious go-to platform for its’ audience. The partnership kicks off with the new ‘Treasury Topic’ environment where XE.com will have a prominent role in the FX, risk management, payments and FinTech environment.

XE.com is the world’s most popular foreign exchange website, and a leading global destination for foreign exchange rate tools and data. XE Business Solutions support companies across the world with robust responses to unpredictable currency markets; whether they rely on XE for information about currency markets, seek support when managing their FX risk, or trust them with business-critical international payments.

treasuryXL and XE.com strive for a fruitful partnership where its’ audience are top of mind making sure that (potential) clients are always up to date with the latest global currency news and benefit from a comprehensive range of currency services and products. XE Business Solutions and currency expertise provide companies with robust responses to unpredictable currency markets, so that bottom line is protected by currency risk and not impacted by it.

About treasuryXL

treasuryXL started in 2016 as a community platform for everyone who is active in the world of treasury. Their extensive and highly qualified network consists out of experienced and aspiring treasurers. treasuryXL keeps their network updated with daily news, events and the latest treasury vacancies.

treasuryXL brings the treasury function to a higher level, both for the inner circle: corporate treasurers, bankers & consultants, as well as others that might benefit: CFO’s, business owners, other people from the CFO Team and educators.

treasuryXL offers:

  • professionals the chance to publish their expertise, opinions, success stories, distribute these and stimulate dialogue.
  • a labour market platform by creating an overview of vacancies, events and treasury education.
  • a variety of consultancy services in collaboration with qualified treasurers.
  • a broad network of highly valued partners and experts.

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

Big tech vs Fintech vs Banks – in international payments

| 09-07-2019 | by Patrick Kunz |

This title makes it sounds like it’s a fight. To be honest: it is! The market for international payments is huge and its lucrative. In a McKinsey report the 2018 market size for payment revenues was close to 2 Billion. Not strange everybody wants a slice of that.

Fintech & Banks

Traditionally the market for international payments was dominated by banks. Recent years and technological advancements has shown that banks are slow to adapt to new technology and market requirements. In some cases it still takes days to transfer money from Europe to Asia, while an email, FB message or picture can be send in seconds. Fintech has tried to fill the gap with innovative tech solutions that solve these problems. Often these companies are lean and mean and adapt to market changes much quicker than the big stable banks. They provide cloud solutions, link to every bank possible and make you more bank independent. Lately we have seen consolidation in the fintech market where players are merging, growing or being taken over by banks. Some banks have started their own fintech. But often fintech only solved a part of the problem and is build on the existing (bank) infrastructure. Banks are also working on innovation: instant payments, swift GPI and PSD2 api’s are helping the customer paying faster and easier. These initiatives are great but have taken years to be implemented.

Bigtech

Then there is a third group of players: big tech. These are the google, facebook and alixpress of our world. These are traditionally IT companies who have a big client base but these companies where not involved in payments (yet). Their edge is size, market access and fast adoption. What happens if they enter the market for payments? Are they likely to win? Look at Alipay, massively successful in China but growing immensely outside Asia to. Why ? because it is easy to use, innovative, low cost and probably most importantly connected with an existing service of the bigtech (alixpress – shopping). The company provides the full customer journey: shopping for product and paying the goods in the most easy way without moving away from the website. Not only via desktop but also via mobile. On the go they make it possible to pay by scanning a QR code, in a grocery store or in a cab. Who needs cash OR a debit card, you only need your mobile phone and an app! Why was this successful? Because the existing customer base was already there they just vertically integrated into the customer journey; easier for the customer and therefore extra revenue for Ali. But also more power for Ali.

Stablecoin Libra

Looking at Facebook and their Stablecoin Libra. Digital currency, unregulated, not based on the traditional banking/payment infrastructure. There are big and significant differences with Bitcoin but the idea is the same: sending and receiving money worldwide in an instant as digital currency. There should be no speculation on the Libra-Rate as the rate of exchange is based on a basket of currencies (EUR, USD, JPY etc). Similar to the old tech Special Drawing Rights from the IMF. So what makes libra different to bitcoin and the other coins? I am not going into the technical differences as that is beyond my scope and would bore you. The main difference is the easy of adoption. New to bitcoin and want to use it: you have to open a wallet, trading account and learn have to transfer the BTC to somebody and the receivers also needs a wallet; a barrier for most. Using Libra will be much easier as it is just an extension of the services of Facebook. Libra potentially has 2,4 billion users (the number of facebook accounts). This is a big competitive advantage. Compared with smart marketing (facebook knows that) and combining it with existing products there is a big potential. Sending money to your facebook friends in Australia or Japan? No problem: in-an-instant via Libra. Besides facebook it is also supported by other big players like Visa, Spotify, Paypall, Mastercard, Vodafone. Is there a future without Libra ? And how many facebook users are there without an bank account. There are 2,4 billion facebook users and 1,7 billion people without a bank account in this world. The reach is already huge so there is low barrier for adoption.

The Battle

Does this mean bigtech will be ‘winning’? In my opinion hard to say. That battle is being fought the coming years. Don’t forgot the power and influence of regulator and governments. Digital payments are unregulated and unknown and could influence the power of governments and the whole banking infrastructure of money regulation, central bank money creation and some even fear de-stabilization of the monetary system as a whole. Regulators could stop/limit the quick steps forward by bigtech.

The coming years will be exiting to see the technological advancements in the battle for payment revenue. The winner will be the consumer; easy of paying will increase further and more importantly the speed will increase. Paying how we want and within a blink of an eye, and this worldwide, will be the new standard within several years.

 

Patrick Kunz

Treasury, Finance & Risk Consultant/ Owner Pecunia Treasury & Finance BV

 

Alternatives to banks – Is Fintech the answer?

| 14-12-2017 | treasuryXL |

With the steady rise of Fintech within the finance industry some people are already calling for the demise of banks as the historical financial partner of choice for corporates. Certainly, Fintech is showing itself to be very dynamic, offering many new products and solutions, and being a lot swifter than the banks. Banks seem to have grown too big and complacent, are being weighed down by new rules and regulations, are less prominent in the field of funding for corporates, and possibly have lost their focus on what used to be core businesses. But let us examine the relationship between bank and client.

The roles of a bank

Banks are, first and foremost, used so that clients can obtain and use financial services. Opening and maintaining accounts enable money to be received and paid – in this way the day-to-day financial operations of the client can be performed. Furthermore, banks offer additional services that compliment the needs of a client – business credit cards for key staff, sales services such as processing of credit card payments for goods, payroll services, online banking, loans and lines of credit.

What does a client want from a bank?

One of the main priorities is that there is an established history and a good working relationship – that the bank understands the client’s needs. A key indicator of a good relationship would be the ability and the willingness of the bank to provide funding to the client. If the bank wished the client to bank and deposit their money with them, then they should be prepared to extend credit where possible – if it meets the criteria of the bank. Running any business means there will be times when liquidity is scarce and a bank that refuses to extend credit runs the risk of losing the client. Other criteria can include the cost of banking services, support given, quality of delivery, credit rating and the overall efficiency of the services.

Fintech solutions

Fintech can provide genuine alternatives to existing banking services as they can compete with modern products – like giant ocean-going tankers, banks are large and very slow to turn around. Most bank services are still paper intensive and require many authorized signatures. By digitizing services, Fintech can reduce the transaction costs and the time taken to authorize a service. Fintech orientated lending services (like B2B) are entirely online and can be quickly approved. Through lending platforms, the risk can be spread out among many lenders.

Can the banks respond?

Banks have at their disposal very large existing customer bases and a wealth of proprietary data relating to the behaviour and patterns of their clients. This is a large untapped potential that does not need to be found or bought. If banks can utilize this data whilst offering a Fintech type of online service that is quicker and more efficient there is a possibility to fight back. The main option for banks would be to examine the Fintech companies and buy the ones that have the best products to compliment the requirements of the bank’s customers. As Fintech works in a different manner to traditional banking, this would require banks to develop internal incubators to discover new products and services that could be offered to customers. Alternatively, banks could look to design and implement their own solutions, but they appear to be behind the speed and knowledge of Fintech and might never be able to catch up.

One last word of advice

Realistically, Fintech offers attractive alternative solutions to banks. However, the power of the personal relationship should never be underestimated. We build relations slowly and by results – the cheapest offering does not get all the business. Having an account manager at a bank can be highly beneficial for a client – one point of contact, good understanding, a history. When things go wrong, you pick up the phone and call the account manager and he/she sorts out your problems. With Fintech, this could mean phoning numerous different companies to achieve the same result that can be obtained with just one account manager at a bank.

Choice is personal, but preference is normally determined by experience.

Guide to Treasury Technlogy by ACT & AFP

| 1-5-2017| treasuryXL | ACT | AFP |

ACT and AFP have published a Guide to Treasury Technology sponsored by Bloomberg, which might be interesting for you.
Managing treasury tasks has become more complex due to globalization of markets and increasing uncertainty in business since the first AFP edition appeared in 2011. Since then treasurers faced multiple challenges to exercise control of treasury activities, especially group activities.

Managing treasury has become more complex during the years in the face of global change and increasingly uncertain markets. Treasury practitioners face magnified challenges, as they try to gain more visibility and exercise more control over group activities. Treasury technology developed quickly to help them to operate more efficiently and answer compliance requests with ever more stringent regulation. Automate processes was one of the biggest challenges. Technology can help treasury play a more strategic role, automate routines and be compliant with regulatory environment.

Joint AFP/ACT publication, sponsored by Bloomberg

This guide is the first joint AFP/ACT publication and aims to help practitioners to identify a cost-efficient solution.

The first chapter starts with a detailed introduction of the development of treasury technology, expectations towards this technology and how the evolution of the Corporate Treasurer took place. This chapter illustrates how the technology available to treasurers has developed over the last 15 years. A brief explanation of how dedicated treasury technology was first developed is followed by details of how a series of factors have moulded the treasury technology market into the one we see today. Three points are highlighted: that the treasury technology market has matured, tremendous improvements in the quality of connectivity and what the changes brought with them for Corporate Treasurers.

Why review technology?

In Chapter 2 the drivers for reviewing the technology and a case study are presented.
With the rapid changes in available technology, the increased opportunity for treasury centralization and the need for treasurers to be able to demonstrate control over activities, treasurers were reviewing how best to deploy technology in order to help them perform their various roles effectively. Given the different environments in which companies operate, the potential benefits from the deployment of a new technology solution can vary significantly. This chapter outlines some of the key drivers that are encouraging treasury practitioners to review their use of technology.

Purpose of technology

Chapter 3 deals with the purpose of technology and identifies the core roles of the treasury department. Also how treasury structure can affect the use of technology. When assessing a deployment of technology, treasurers need to determine their requirements of the technology. This chapter includes a series of questions to help treasurers clarify their existing operations and also identify how structures and processes might change with the adoption of new technology. A case study shows how a company uses a certain technology to improve process quality.

Technology solutions

Chapter 4 presents treasury technology solutions.
A wide range of technology solutions is available to support treasurers. Treasury management systems are able to support the majority of the work of most treasury departments. However, it is also possible to develop a technology solution that supports treasury departments, including those with complex operations, without adopting a treasury management system. This can be achieved by developing in-house solutions or by using tools offered by banks and other vendors. A range of potential solutions available to support treasurers is presented in this chapter.

Evaluation and building a business case

Chapter 5 is about the evaluation process and how building a business case can help to evaluate which technology fits best. How to build a business case and then how to develop a requirements definition is explained in detail. The requirements definition is a critical part of the process: it helps to set the scope for the project and is the core document in the selection process. The process of developing the requirements definition also helps to build support for, and awareness of, the project throughout the rest of the organization.

Selection, implementation and maintaining the solution

Chapter 6, 7 deal with the selection and implementation process, while chapter 9 tells you more about maintaining the solution over time.

Trends

Chapter 10, the final chapter describes some of the current trends in treasury technology and lines out how they might impact treasurers over the coming years. Some of the key areas of development in technology and also some of the market changes which might require a technological response are presented.

In the appendix of the guide you will find information on how to develop a request for proposal (RFP) , a checking list for this RFP and a very detailed country reports list.

Source: © Association for Financial Professionals, ACT (Administration) Limited and WWCP Limited (except articles by Bloomberg LP), 2016, ISBN 978 1 899518 47 0 book 978 1 899518 48 7 CD ROM, for the articles  Bloomberg LP, 2016 | TMI

Our conclusion

A very detailed, valuable guide for all who want to learn more about treasury technology, want to find out more on how to select the best technology solution that meets the specific requirements of their company and what to focus on during the purchase and implementation process. You can find the guide on tmi, after registering for free.

 

What’s FinTech and how does it change the financial world?

| 22-2-2017 | Arnoud Doornbos |

FinTech is a term that is becoming popular in the financial world. Only one third of the financial experts know what this means  and understands  what consequences it has for their business. How this innovation is currently changing the ecosystem of money, is still relatively unknown.

FinTech is a contraction of the words financial and technology. In other words: it covers all innovative financial products and services that simplify and accelerates the way we handle money. For traditional banks FinTech is still an uncomfortable concept. Why? Because a large portion of the revolutionary financial concepts are derived from technology driven start-ups. These start-ups change the traditional ecosystem. This is enormously important in a country like the Netherlands where the majority of firms is financed by banks and personal finances of the people are predominantly held by financial institutions  which find it often difficult to modernize.

The emergence of ICT in the financial sector may also have different consequences. Those FinTech companies that focus on a single product or service can erode the business model of banks. At the same time the same technology also offers opportunities for traditional players to improve their service and reduce costs. Also, traditional players have a competitive advantage over new entrants based on their knowledge of regulations and access to information from relationship banking (also called soft information).

FinTech companies have greatly changed the rules of the sector. Today we can pay via our mobile phone, quickly apply for online credit and invest online with one click. The list of innovative ideas is endless and an enrichment for everyone.

FinTech VC investments

The explosive growth of the financial technology industry continued in 2016.

  • 2016 has seen 839 deals globally attracting $15.2bn of investment
  • Global investment is up 27% to Q3 2016 vs the same period in  2015 and has surpassed the 2015 total of $14.9bn
  • Global deal size is slightly ahead of 2015 Q3 levels, with the average increasing from $14.3m to $18.1m, partially attributable to large Chinese investments such as Alipay

 


Source: Pitchbook Innovate/Finance

Most money was invested in start-ups. Projections show that the amount of investment will continue to rise.

The power of this technology-driven financial services lies in the fact that it is fast, efficient, transparent and mobile. You can use these services as long as you have Internet access. Of course, this strongly contrasts with the discontent which experienced customers from traditional banks.

Looking ahead — the FinTech industry could experience even greater growth moving into the coming year. The future remains positive from an investment perspective. We may expect an uptick after relative slow growth in the second half of 2016 due to political risks such as the Brexit and the US elections which fueled great uncertainty across all emerging sectors. Along with increased attention, the industry could see a large number of fresh launches and FinTech could make its way into an even stronger growth pattern in 2017 as investors have become more certain about industry prospects.

The possibilities for FinTech in Netherlands

In the Netherlands, there is also a strong rise of FinTech companies. Companies like Paypal are rapidly gaining market share. The biggest and best-known Dutch company FinTech Adyen. This company was recently valued at more than € 2.3 billion.

The FinTech Top 100 announced in 2016 that there are eight Dutch FinTech startups are part of the leading European companies in the financial technology. The financial infrastructure and the international focus play an important role. In addition, capital and expertise is also necessary for innovation, two factors Netherlands as a European Member State meets. The Netherlands also rise in 2016 from the 5th to the 4th place in the ranking of most competitive economies in the world.

The infographic shows that, perhaps inspired by Adyen, payment providers constitute a large share of the pie. Also data startups and alternative financing (crowdfunding example) are well represented in the Netherlands.

Dutch FinTech awards 2017

FinTech startups are disrupting the financial sector. Innovative companies are eager to please millions of frustrated banking customers. Investors are fascinated by the phenomenal profits made by banks struggling with outdated technology. Today, more and more money is being invested in FinTech. The Uber of the banking sector has not yet emerged, but this is only a matter of time. On April 21 the Dutch FinTech Awards 2017 will be held in Utrecht at the Rabobank Headquarter. The panel of judges of this years event consists of seasoned investors, academics, marketeers, entrepreneurs with an extensive track record in finance and/ or technology.  (http://www.fintech.nl).  The author of this article is one of the judges

Future

What we see in practice is that components of banking products and services are being redeveloped by the FinTech Industry.
These FinTech solutions are smarter, faster and better.
As a result we now see that different FinTech companies will work together. The individual Fintech products often turn out to be complementary to each other.
FinTech companies now recognize that collaboration with other FinTech companies leads to high growth and a better product range.

The Uber of the banking sector

 

The Uber of the banking sector has not yet emerged, but this is only a matter of time.

 

 

Arnoud Doornbos

Associate Partner

 

 

 

 

Innovation in Treasury Management: Vallstein’s walletsizing

31-05-2016 | Huub Wevers from Vallstein

On april 13th of this year the Fintech innovation awards took place. Vallstein won the innovation award in treasury management with their Walletsizing® system. We asked Huub Wevers from Vallstein to give us an update on this new system. What’s new about it and who will benefit from using Walletsizing®?

Congratulations on winning the award, can you tell us more about WalletSizing?

WalletSizing® is a system in the cloud focused on giving full transparency to corporates on their spending and profitability for banks. All their banks globally, regardless of the number of banks and the type of products, varying from Fx, Cash Management, bonds, lending or asset management. We take in all data a corporate has available on the products and invoices from the bank in an innovative easy way for the corporate where they do not need to do much with the data. We translate, map and upload it into the system after which the corporate has all insight in their banking landscape and can do easy analysis with all the features the system offers.

What distinguishes WalletSizing® from its competitors?

Firstly, WalletSizing® looks at the entire bank relationship, across all product areas, not just transaction services or credit, but everything that is being used from all banks that maintain a relationship with the client concerned. Secondly, we take an explicit view through the eyes of the bank on the relationship, taking all relevant Basel III /IV regulation into account. This kind of transparency is absolutely essential to identify the real room to negotiate and ensure terms and conditions that are truly fair for both sides of the table. Thirdly: technology. We provide analysis for clients maintaining multiple bank relationships across a multitude of countries with many different banking products, which is impossible to build and let alone maintain in spreadsheets.

ROS Calculation 2

 

Who will benefit from using this system?

CFO’s and Treasurers will benefit by having full transparency in the bank relationships and as a result they will have more meaningful bank reviews, RFP’s and Negotiations. Depending on the objectives a corporate has, it will allow them to be fair in their distribution of business towards banks, limit the number of banks used globally or keep banks costs in line with market practice as will be indicated by the system’s benchmarking capabilities. Where cost saving was an objective, corporates saved 26% on their bank costs on average, across the entire relationship, all products.

Vallstein won the Fintech innovation Award 2016, what is innovative about your system?

We take away the need for extensive data gathering, translating and analysis by taking this responsibility upon us and we create full transparency using all data and the latest Basel III rules in a matter of days. Comparing banks like for like. Next to this we have extended the functionalities last year by having a edition focused on Bank Fee Analysis as well. The system verifies automatically after upload of new invoices if the prices paid are as agreed earlier with the banks. A simple and somewhat more operational step.

Can you give some examples of companies and employees that are using Walletsizing®?

Examples of Companies that are currently using WalletSizing® are SaudiAramco, Salzgitter, Vimpelcom and many more. Typically, the Treasury Control department works with the system on a day to day basis and depending who is having the bank reviews the Treasurer or CFO will be using the reporting.

 

Picture_HWHuub Wevers is responsible for Corporate Solutions at Vallstein, the leading Bank Relationship Management specialist. Before joining Vallstein he has had eighteen years of experience in Banking at ABN AMRO and RBS, notably Transaction Banking. His responsibilities included Product Management, Account Management, Implementation and Operations, whereby his last role was the leadership of all Service & Operations in EMEA for RBS. At Vallstein Huub is responsible for building out the software solutions that Vallstein offers for corporates. Solutions that automate bank relationship management in order to assess the profitability that a corporate has for their banks, using all banking products and Basel III.