How does liquidity forecasting accelerate growth: Cashforce @ DACT Treasury Fair

| 17-11-2017 | treasuryXL | Cashforce |

DACTThe DACT (Dutch association of Corporate Treasurers) will be holding their annual Treasury Fair in Noordwijk at the Hotel van Orange on 23rd and 24th November 2017 – the most important annual treasury event in the Netherlands. Discover treasury best practices, learn about the latest trends and exchange experiences. It will contain 9 practical workshops throughout the day on topics including,  trade finance, supply chain finance, liquidity forecasting, cyber security and the Blockchain. There are more than 50 exhibitors present at the Trade Fair including Cashforce – a partner of treasuryXL, who are also presenting a Workshop.

Company Profile

Cashforce is an innovative Cash & Treasury Management System, focused on automation and integration. As a ‘next-generation’ Cash management solution, Cashforce helps finance/treasury departments save time and money by offering accurate cash flow forecasting, flexible treasury reporting & automation.Cashforce is unique in its category, because it allows users to drill down to the transaction level details and the system integrates seamlessly with ERP systems & banking systems. In addition, an intelligent simulation engine enables companies to consider multiple cash flow scenarios and measure their impact. As a result, finance / treasury departments can be turned into business catalysts for cash generation opportunities throughout the company.

Workshop

Cashforce will be co-presenting a Workshop at 13:45, entitled How does Liquidity forecasting accelerate growth and what’s the role of the treasurer

The 2017 Global Treasury Benchmark Survey from PwC shows that companies worldwide hold a staggering $ 1.1 trillion (!) of excess liquidity in their business operations. These hidden liquidities can be tracked by an accurate and automated cash management and forecasting process. These can then be used to lower the company’s working capital or to realise additional growth.

Setting up an automated cash management & forecasting process has at last been made possible as a result of technological progress. Currently, 87% of treasurers still use manual spreadsheets. However, this process can be organised much more efficiently.

To demonstrate how this can be achieved, this workshop sets out the challenges of accurate cash flow forecasting, supported by a case study presented by the Interfood Group.

With $ 1.4 billion in annual revenue, Interfood is one of the leading global dairy traders and suppliers. Through 15 global offices worldwide, Interfood distributes over 800,000 MT of dairy products a year. Together with Cashforce, Interfood has set up an automated cash forecasting process. The case will be presented by Vincent Almering (Finance Director Interfood B.V.). Vincent has led the project from start to finish and acts as the key lynchpin for the different users (Traders / Treasury / Finance / CFO). Vincent will share the challenges and benefits of cash flow forecasting as well as his experiences. Finally, there will be a discussion on the main lessons learned, aimed at treasurers who are looking for a solution for an automated and accurate cash forecasting process.

Speakers: Vincent Almering, Financial Director Interfood B.V. – Nicolas Christiaen, CEO Cashforce. Moderator: Martijn Duijnstee, Manager Business Development Cashforce NL

Language: Dutch

If you are at the Treasury Fair, please take your time to visit their stand and mention treasuryXL.

We wish Cashforce success at the DACT Treasury Fair!!

If you want to find out more about Cashforce and their services and products please refer to their company profile on treasuryXL.

Tipco at the DACT Treasury Fair

| 15-11-2017 | treasuryXL | TIPCO Treasury Technology GmbH |

The DACT (Dutch association of Corporate Treasurers) will be holding their annual Treasury Fair in Noordwijk at the Hotel van Orange on 23rd and 24th November 2017 – the most important annual treasury event in the Netherlands. Discover treasury best practices, learn about the latest trends and exchange experiences. It will contain 9 practical workshops spread out throughout the day on topics including, among others, trade finance, supply chain finance, liquidity forecasting, cyber security and the Blockchain. There are more than 50 exhibitors present at the Trade Fair including Tipco Treasury & Technology GmbH- a partner of treasuryXL.

Company Profile

Treasury Reporting at the push of a button! TIPCO is the leading expert for treasury reporting in Germany, Switzerland and Austria. We develop customised solutions for our clients that are fast, flexible and easy to use. Our software TIP is a web-based application containing a diverse range of modules to support everyday reporting needs: Banking Account Administration, Financial Status, Liquidity Planning, Risk Management, Bank Fee Controlling, Compliance & Reporting and our Survey Tool.

With these modules, our clients can overcome problems created by heterogeneous system landscapes and find an easy way to communicate with their subsidiaries. Furthermore TIP is able to use existing data and avoids manual data input where it is not necessary. Huge amounts of data can be interpreted in seconds and reports are available by the push of a button. As a spin-off of the Austrian treasury consulting firm Schwabe, Ley & Greiner TIPCO unites treasury expertise with business intelligence competence.

Due to this unique combination, we are able to realise our projects with a holistic view and to the complete satisfaction of our clients.

If you are at the Treasury Fair, please take your time to visit their stand and mention treasuryXL.

This is Tipco’s own message via LinkedIn announcing their participation.

We wish Tipco success at the DACT Treasury Fair!!

If you want to find out more about TIPCO and their services and products please refer to their company profile on treasuryXL.

How does a FX spot transaction work?

| 14-11-2017 | treasuryXL |

Every day we enter into transactions in our own domestic market. Goods are priced in our own currency and we settle purchases in our own currency. Here in the Netherlands that means everything is priced and settled in Euro’s. It is a clear and concise system – of course we might argue about the price of goods, but that is another matter. Now consider what happens when we sell our goods to a counterparty domiciled in a different country – we shall assume from the United States. We would prefer to invoice in EUR as this is our domestic currency, whilst our counterparty would prefer to settle in USD. This makes sense as in both instances neither of us would be exposed to fluctuations in the exchange rate between the EUR and USD.

There are 3 basic choices to trade with a foreign based counterparty:

  • Price in our currency, but run the risk that they will not trade with us
  • Price in their currency, win the trade but do nothing about the risk
  • Price in their currency, but adjust our price for the perceived FX risk and sell their currency for our currency as soon as the deal is closed

As we are keen to expand our export markets we agree to charging the buyer in USD, but what price should we charge in USD? By accepting payment in USD we are now assuming a foreign exchange risk as the value of the USD could fall in relationship to the EUR before we have sold the USD for EUR. If the fall was large it could take away all our profit from the original transaction, possibly even leading to a loss on the order.

We must therefore enter into a transaction to sell USD and to receive EUR to book our profit and to neutralize the FX risk. This leads us into the world of Foreign Exchange (FX) trading.

In FX trading quotations are always shown for a pair of currencies such as EUR/USD – but what does this mean?

  • The first currency – EUR – is called the base currency
  • The second currency – USD – is called the quoted currency
  • The spot rate is shown as 1.1595
  • This means that every unit of the base currency is equal to 1.1595 units of the quoted currency

If our order was for EUR 100.000,00 then the USD equivalent would be USD 115.950,00

In this example it is the USD price that fluctuates as it is the quoted currency, but this does not mean that fluctuations are only caused by changes in the value of USD. The value can also fluctuate because of changes in the value of EUR – even though this is the base currency.

Most major currency pairs are quoted to 4 decimal places – with the 3rd and 4th places being called “pips”. Pips are the expression traders use to describe their profit or their market spread.

If we traded EUR 1 million into USD, we would have an equivalent of USD 1.159.500,00

The value of 1 “pip” would be USD 100,00

When we approach a bank for a quotation in spot EUR/USD, the bank quotes a 2-way price such as 1.1592/97

The lower price – 1.1592 – represents the bank’s bid price. This is the price at which the bank buys EUR and sells USD.

The higher price – 1.1597 – represents the bank’s offer price. This is the price that at which the bank sells EUR and buys USD.

If the bank quoted this price into the market and one clients hit the bid at 1.1592 and another took the offer at 1.1597, both in EUR 1 million, then the bank would book a profit of USD 500,00 – or a profit of 5 pips on EUR 1 million.

FX is one of the largest markets in the world – daily turnover exceeds USD 5 trillion per day. That means 5 followed by 12 zeros – every working day.

With such a large daily turnover, prices are constantly changing. The market consists of price makers (who make the prices), price takers (who take the prices), intermediaries like brokers who assist the market by transmitting the prices and placing orders, and clients who place orders at specific levels. Prices are only valid for a few seconds before they change either because the market has traded on the quoted price or a new order replaces the existing price.

When you trade on the quoted price then you have entered into a binding contract with the counterparty. Settlement is normally 2 working days after the trade date. If you sell USD then you must ensure your counterparty receives the agreed USD amount on their account in 2 working days, and you receive the agreed EUR amount on your account in 2 working days.

Trade settlement is very important and means that you must have a complete operational procedure in placing to effect settlement, establish positions, agree counterparties, have trading limits etc.

Traditionally spot FX trades were done with banks. Now trades can also be transacted via electronic exchanges, electronic brokers etc. It is always important to know who your counterparty is – it could be that your internal operational control prohibits you from trading with specific counterparties.

Most major currencies can be traded against each other without restrictions such as exchange control. Therefore, currency pairings can be found everywhere such as USD/JPY and EUR/GBP and ZAR/CHF.

Spot FX transactions are not traded on listed exchanges; these trades occur “over the counter” with a clearly identifiable counterparty.

 

Lionel Pavey

 

 

Lionel Pavey

Cash Management and Treasury Specialist

 

Accenture and blockchain: the accent on security issues

| 13-11-2017 | Carlo de Meijer |

My last blog was about IBM, triggered by a Juniper Research putting the company as the number one in the blockchain technology competition. One of the comments on this blog was that it looked like an IBM press release. But that is far beyond what is meant. I just looked at what the tech company was doing in the blockchain arena and why it could be adopted as the main blockchain model when blockchain adoption could become mainstream. In a previous blog I already talked about Microsoft’s CoCo platform, the number two in the Juniper Research asking myself if that could become a game changer (see my Blog: Microsoft CoCo Framework: blockchain game changer, August 29, 2017). Today I will go into some more detail in the blockchain activities of Accenture, number three according to the Juniper survey.

Accenture: where do they stand?

Looking at the various blockchain alliances or consortiums, of the top three in the Juniper Research, Accenture is the most broadly focused one. Being a member of both the Ethereum Enterprise Alliance and the Hyperledger Project as well as entered into alliance with Ripple and Digital Asset. Early this year Accenture also joined the Chamber of Digital Commerce (CDC), the world’s leading blockchain trade association. The CDC, aimed to “help educate, promote and accelerate the adoption of blockchain-enabled technologies” , is also the founder of the Smart Contracts Alliance, the Blockchain Alliance, the Global Blockchain Forum amongst others.

Compared to IBM (Hyperledger Project and Digital Asset) and Microsoft (Ethereum Enterprise Alliance and Ripple) that are more outspoken in their vision, the overall goal of Accenture is to leverage DLT innovations of all sorts to make the technology viable for enterprise IT use.

“Accenture strives to be at the forefront of blockchain innovation and its practical, real world application. We provide our clients with a complete view of the blockchain-based technology landscape and its potential business implications. Our global team of experts works with each client to help build smart strategies around effective use-cases, investment and implementation.”Accenture website

“Accenture is committed to supporting these efforts by leveraging our expertise across the company – from regulation to innovation – to make blockchain a reality for our clients.” David Treat, managing director of Accenture’s financial services industry blockchain

Accenture: focus on security issues

Accenture is especially focusing on security issues. These will be critical to the widespread adoption of blockchain technology. In February this year Accenture launched its new blockchain security hardware solution and recently the company has secured a patent related to its work on Editable Blockchain technology as of late September 2017.

Blockchain Hardware solution

Last February Accenture launched its new blockchain security hardware solution. In partnership with Thales e-Security and its hardware security modules (HSMs), Accenture has developed a Hyperledger Fabric-based patent-pending solution…..

Read the full article of our expert Carlo de Meijer on LinkedIn

 

Carlo de Meijer

Economist and researcher

 

The size and shape of your treasury team

| 09-11-2017 | Pieter de Kiewit |

Treasury TeamLast week I received a call from one of my clients. Over the last years, I found several members for their team. Given the transition they are in, they were looking for benchmark information to shape their treasury team and make it future proof. This has kept me thinking and I started gathering information in order to give a proper answer. As to be expected, there is no standard template resulting in an easy answer. Even for more evolved job types like sales or accounting this is a hard question, corporate treasury is too young and small for sound statistics.

To make my analysis workable, I decided to measure the size of the team in a straightforward headcount. When talking about shape, I would like to work with the main functional areas: cash management, risk management, corporate finance and support. Of course this is an oversimplification. I think the following variables are the most relevant.

To start with the obvious: size matters. Size in revenue, number of employees, number of countries active in, number of currencies used, number of payments are all related to size of the treasury team. Not 100%. Senior management requesting detailed and up-to-date information requires a bigger team. We see this especially with organizations in turbulent situations, internally or in dynamic markets. Treasury teams that recently started, do not yet have a focus on efficiency and tend to be bigger. The willingness to invest in modern IT solutions on one hand creates a bigger team: key users and treasury IT managers, on the other hand it replaces staff doing manual work.  Finally improving aspects like segregation of duties and back-up typically create a bigger team.

Moving forward to the shape of the treasury team or perhaps the size of the various functional areas, I observe that the industry and company status have their impact. Typically, companies with a dynamic balance sheet, due to distress or growth (autonomous or take overs) need a bigger corporate finance function. A longer balance sheet in a capital intense industry requires a bigger team. In this area I also see an increase in project and customer finance teams contributing in the structuring of business deals.

Companies with diverse and dynamic payment flows need bigger cash management teams. Especially corporates with an ambition towards strong centralization require extra central staff. They need stronger software support, communicate a lot with subsidiaries and have to understand the business. If achieved, central cash management can be managed by few.

I observe a decrease of number of staff working in FX and interest risk management. Corporates are more risk averse, markets are transparent and ICT enables STP processes. In parallel other types of risk increase the workload: counter party, commodities, insurance, etcetera. Big data and business modeling is having its impact.

This blog does not have the ambition to be comprehensive, the above could be more thorough. Furthermore I could elaborate on aspects like control, IT and especially back office and settlements. Should they even be in your treasury team? I think the topic deserves further attention and could be researched by more than one graduate student.

What are your thoughts? What obvious aspect should be included? I look forward to your reactions,

Pieter de Kiewit

 

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

 

Is uw organisatie klaar voor MiFID II? – E-learning uitgelicht

| 08-11-2017 | Financial Training Hub |

Na de vorming van de euro is het toezicht op financiële instellingen en markten geïnternationaliseerd. Hierbij is het logisch om een ‘level playing field’ binnen de eurozone te realiseren om reguleringsarbitrage te voorkomen.
De vorming van een level playing field voor het prudentieel toezicht op financiële instellingen vindt plaats via de Bazelse akkoorden en Solvency regelgeving. Prudentieel toezicht heeft als doel om financiële instellingen gezond te houden en faillissement te voorkomen door bedrijfseconomische oorzaken. Naast prudentieel toezicht is er ook gedragstoezicht dat is gericht op de bescherming van beleggers, bijvoorbeeld bij de handel in financiële producten op de beurs. Dit gedragstoezicht is sinds 2007 vastgelegd in Europese regelgeving via de Markets in Financial Instruments Directive (MiFID).

De politiek heeft sinds begin jaren ’80 de regulering van het financieel stelsel gebaseerd op het principe van vrije marktwerking. Op basis van dit principe kregen financiële instellingen steeds meer ruimte om hun activiteiten te ontplooien onder de veronderstelling dat markten voldoende zelfregulerend vermogen hebben om het nemen van onverantwoorde risico’s te voorkomen. Tijdens deze periode globaliseerde de financiële sector snel, nam de groei van de kredietverlening en derivatenhandel sterk toe en ontstonden er zeer grote too-big-to-fail systeembanken. Too-big-to-fail betekent dat faillissement van een dergelijke systeembank het totale financiële systeem destabiliseert met mogelijk ernstige negatieve economische gevolgen zoals gebeurde na de beurscrash van 1929. Tegelijkertijd groeide de licht gereguleerde schaduwbanksector in hoog tempo. Financiële instellingen binnen deze sector, zoals hedge funds, kunnen meer risico’s nemen om hogere rendementen na te streven.

Uit een groot aantal calamiteiten is gebleken dat toezichthouders niet meer adequaat konden ingrijpen bij de toenemende vrije marktwerking en dat zelfregulering onvoldoende plaats vond. Er zijn bijvoorbeeld een groot aantal nieuwe financiële producten ontwikkeld en verkocht die veel klanten in problemen hebben gebracht. Voorbeelden van deze producten in Nederland zijn: aandelenlease, woekerpolissen, tophypotheken en MKB renteswaps. Daarnaast manipuleerden handelaren op de financiële markten rente- en valutabenchmarks om voordeel te behalen: Libor (rente) en W/M Reuters (valuta). Uiteindelijk bleek tijdens de kredietcrisis van september 2008 na het faillissement van Lehmann Brothers, dat systeembanken bedrijfseconomisch fragiel waren geworden door het nemen van grote risico’s om hoog rendement te kunnen behalen. Hierdoor hebben overheden en centrale banken ongekende interventies moeten uitvoeren om een ineenstorting van het financiële stelsel te voorkomen.

Door deze kredietcrisis is het politieke klimaat gekeerd en is op basis van strengere regelgeving het toezicht geïntensiveerd. Naast introductie van strengere regels voor prudentieel toezicht, wordt ook het gedragstoezicht aangepast met de invoering van de Europese MiFID II per 3 januari 2018. MiFID II geeft de Autoriteit Financiële Markten (AFM) aanzienlijk meer bevoegdheid om te interveniëren en sancties op te leggen, vooral op het terrein van corporate governance, product governance en product intervention.

Vanwege de omvang en complexiteit is de impact van MiFID II binnen de financiële sector voor veel instellingen nog onduidelijk. Deze instellingen doen er verstandig aan om hoge prioriteit te geven om MiFID II-compliant te worden om interventies of sancties van de toezichthouder te voorkomen.

E-learning: MiFID II / MiFIR

Deze e-learning introduceert deelnemers in het Europese financiële toezicht en de in 2018 ingaande MiFID II richtlijn. Na deze introductie biedt deze e-learning deelnemers gedetailleerde kennis over twee belangrijke onderdelen van MiFID II: product governance & intervention en corporate governance.

Deze e-learningmodule is geschikt voor alle medewerkers binnen de financiële sector en andere geïnteresseerden. De e-learning bestaat uit 3 sessies met ruim 45 sheets met begeleidende tekst. Bij elke sessie is er een uitgebreide quiz bestaande uit meerkeuzevragen.

Over deze module

Deze module is gecreëerd door Financial Training Hub en wordt op het platform van Financial Training Hub aangeboden. Na afronding van deze e-learning heeft u voldoende kennis om bij de Financial Training Hub op diverse onderwerpen een meer specifieke traditionele training te volgen op aanvraag.

Korting

Deze online training bestaat uit 3 sessies. Elke sessie bestaat uit een presentatie met aanvullende tekst (notes) en een bijbehorende quiz. Deze training kost EUR 70.

Ontvang via treasuryXL korting op deze e-learning en/of de e-learning Banken en Financiële markten in vogelvlucht.
Stuur een mail naar [email protected] voor meer informatie. 

 

PSD2 – new opportunities but an issue of trust

| 07-11-2017 | Lionel Pavey |

PSD2PSD2 (Payment Services Directive) is an extension on the existing PSD within the EU. The objective is to increase competition in the payments industry, whilst increasing access from non-bank firms. This should lead to standard payment formats, infrastructure and technical standards – at first glance an improvement for consumers. However, there appears to be a particular threat to privacy and the threat of third parties gaining excessive access to personal data.

What are the objectives of PSD2?

  • Standardising, integrating and improving payment efficiency across EU states
  • Harmonise pricing and improve security of payment processing across the EU
  • Providing better consumer protection
  • Encouraging innovation and reducing costs
  • Create a level playing field and enable new entrant payment service providers
  • Incorporate emerging payment methods such as mobile payments
  • Bring new and emerging payment services under regulatory control

For the fintech industry this is a welcome development – they are focused on providing alternative platforms for standard bank products.

 What changes will take place because of PSD2?

  • Third party Access to Accounts (XS2A) – E-commerce companies can take online or mobile payment directly from a consumer’s bank account without going directly through PCI intermediaries (Payment Card Industry); this process will be known as Trusted Third Party (TTP) Account Access.
  • The ability of API’s to take payment – The ability of an Application Programming Interface (API) enabling payment by directly connecting the merchant and the bank
  • The ability to consolidate account information in a single portal – An API enables a new type of financial services company – an Account Information Service Provider or AISP – which aggregates account information to let consumers with multiple banks view all bank details in one portal

A Dutch television programme that informs on consumer issues (AVRO/TROS RADAR) recently broadcast a report on the potential dangers of PSD2 with regard to issues around personal privacy. By granting access to TTPs they are able to access your bank account and retrieve all the data from the last 90 days. This will enable them to provide consumers with a better overview on products and services. However, it also means that they gain a valuable insight into how much you earn, how you spend your money and which companies you transact with. In theory they could offer you alternatives which are cheaper and more tailored to your individual requirements.

But to be able to do all this, they will also need access to your verification methods – in other words they will need to know your PIN numbers. We have always been told, especially by the banks, that this information is strictly confidential and should never be given out. There is also the possibility that they could offer you a special discount that can only be obtained if you give away your personal access codes.

This opens up the payments market to potential fraud – how do we know our personal data will be protected; how will the companies guarantee that the data is only used for a specific product or service; who can ensure that our data is not sold to data mining companies; how can we be sure that our personal data is erased if we decide to opt out in the future?

Commercial banks are subject to numerous directives to ensure they conform to all legislation regarding banking and data protection. How can we get the same guarantee from a fintech solutions provider who might be tempted to increase its revenue by selling data?

However advanced our technology becomes, finance is an industry that has always relied on trust. Banks can only thrive if customers trust them with their money. We assume that if we deposit money into a bank, the bank acknowledges our position as a debtor and will repay us when we demand it. We expect them to exercise a duty of confidentiality and not disclose information about us. When that trust is broken, confidence in the bank is lost and this can quickly escalate to a run on the bank as mistrust leads to customers wanting their money back.

Do we feel the same level of trust for non-bank parties who gain access to our bank data?

 

Lionel Pavey

Cash Management and Treasury Specialist

 

Banken en Financiële Markten in Vogelvlucht – E-learning uitgelicht

| 02-11-2017 | Financial Training Hub |

Zonder banken en financiële markten zou onze huidige economie en welvaart niet mogelijk zijn. En of u het nu leuk vindt of niet, banken waren en zijn onmisbaar voor onze moderne maatschappij. Iedereen doet, al dan niet bewust, dagelijks zaken met of via banken. Sinds de jaren ’80 heeft er een ongekende schaalvergroting plaatsgevonden in de financiële sector. Door deze schaalvergroting hebben banken zich ontwikkeld tot gigantische financiële supermarkten die een zeer uitgebreid aantal financiële diensten en producten aanbieden. Banken zijn tegenwoordig IT-bedrijven waar een grote groep specialisten werkt met beperkte financiële vakkennis.

Een groot deel van deze specialisten en de meeste bankklanten weten niet wat banken doen en waarom ze een sleutelrol spelen in onze economie. Wat is de invloed van banken op ons dagelijks leven en waarom zijn ze zo belangrijk? En: hoe is het mogelijk geweest dat banken een ongekende crisis op financiële markten en onze economie hebben veroorzaakt? Wat gebeurt er op financiële markten en waarom? Welke rol speelt de Europese Centrale Bank en waarom staat de huidige rente zo laag?

Met het volgen van deze gemakkelijk toegankelijke e-learning maakt u een vogelvlucht over de financiële wereld waardoor u algemene kennis en inzicht verkrijgt over diverse onderwerpen waaronder: monetair beleid, betalingsverkeer, banksoorten en activiteiten, kenmerken van financiële producten, prijzen en prijsvorming, benchmarks, motivatie en organisatie van handel, financiële risico’s, toezicht en compliance.

Deze e-learning bestaat uit vijf sessies

  • Kernactiviteiten van Banken
  • Dienstverlening en Banksoorten
  • Activiteiten op de financiële markten
  • Motivatie en uitvoering van handel
  • Banken, operationeel risico en compliance

Elke sessie bestaat uit een presentatie met uitgebreide begeleidende teksten en een quiz met ruim 20 meerkeuze vragen. Een aantal presentaties bevat korte videofragmenten.

Studieduur

De geschatte tijdsduur voor het doorlopen van iedere sessie plus het maken van de quiz is  2 – 2,5 uur. Het doorlopen van de volledige e-learning-module zal ongeveer 10-15 uur kosten.

Doelgroep

Deze e-learningmodule is geschikt voor alle medewerkers binnen de financiële sector en andere geïnteresseerden.

Over deze module

Deze module is gecreëerd door Financial Training Hub en wordt op het platform van Financial Training Hub aangeboden. Na afronding van deze e-learning heeft u voldoende kennis om bij de Financial Training Hub op diverse onderwerpen een meer specifieke traditionele training te volgen op aanvraag.

Korting

Deze online training bestaat uit 5 sessies. Elke sessie bestaat uit een presentatie met aanvullende tekst (notes) en een bijbehorende quiz. Deze training kost EUR 89.

Ontvang via treasuryXL korting op deze e-learning en/of de e-learning MiFID II/ MiFIR.
Stuur een mail naar [email protected] voor meer informatie. 

 

Trading places – is big tech the real threat to banks?

| 01-11-2017 | Lionel Pavey |

 

Reading yesterday’s article about Fintech banks reminded me that, in the last few weeks, I had seen articles in the news about the growing interest in providing banking services by so-called Bigtech companies. Bigtech is defined as established “platform” players such as Amazon, Google, Alibaba and Paypal. These companies are already providing finance to small businesses – Amazon has already lent USD 3 billion to online merchants.


Whereas Fintech startups are trying to find funding for their ideas, they do not have a large supply of capital to truly offer large scale lending facilities. They are well suited to participate in peer-to-peer lending initiatives and can certainly show established banks how to do things in a new way, but they do not have the true scale to compete against banks. Bigtech companies, with their vast cash reserves and huge databases, present a very serious problem for existing banks.

Bigtech already collect and analyse data from all their clients. This gives them a unique insight in how to review and redesign the processes for banking, allowing for faster services, reduced costs and reaching a critical mass for trading on an electronic platform.

According to research from consultants McKinsey & Company “Seventy-three percent of U.S. millennials say they would be more excited about a new offering in financial services from Google, Amazon, Paypal or Square than from their bank — and one in three believe they will not need a bank at all”. Platform companies therefore appear to have a very strong and loyal relationship with their customers.

Japan’s largest online retail marketplace – Rakuten Ichiba – offer their customers:

  • Loyalty points and e-money usable at hundreds of thousands of stores, virtual and real.
  • Credit cards issuance to tens of millions of members.
  • Financial products and services that range from mortgages to securities brokerage.
  • Run one of Japan’s largest online travel portals.
  • Instant-messaging app, Viber, which has some 800 million users worldwide.

This is a very comprehensive list of what are, basically, supporting services to their main function as a marketplace. Banks offer traditional services with little or no additional services.

Where can Bigtech make a difference in the current banking model?

All online marketplaces bring both buyers and sellers together. Most sellers are companies that can be classed as SME (Small and medium-sized enterprises). In the current market SME’s are experiencing difficulties arranging finance. A survey conducted by the Asian Development Bank (ADB) concluded that there is a gap in trade finance – based on bank rejections on applications for trade finance – of about USD 1.5 trillion. SME’s make up around 75 per cent of that total. Furthermore, 60 per cent of companies that responded, stated that rejection led to losing trade. Realistically, if 10 per cent of those rejections had been financed, that would lead to an increase of 1 per cent in staffing levels for SME’s worldwide.

Trade finance is a special form of banking. It provides finance for a relatively short time – the average tenor is less than 180 days. It is a crucial form of finance as shipping goods around the world places a great strain on working capital – all the costs are upfront and the goods are only paid for after receipt. Any form of lending entails risks and for trade finance a good source of information can be obtained at the International Chamber of Commerce (ICC). This organisation is responsible for the business conduct codes for international trade. They analysed data between 2007-2014 with an exposure of USD 7.6 trillion. Defaults for short-term finance for import/export stood at 0.06%.

Providing trade finance is complimentary to online marketplaces and certainly an area where Bigtech firms can increase their presence in the financial industry. With all their data, they are better equipped than a bank to analyse the financial health of an export company. They can see how many orders have taken place, their geographical distribution, their trade value etc. They are also able to offer finance to buyers – their data is also available to Bigtech fims.

Bigtech companies have the means to take on banks; they have the data; knowledge of the marketplace; work completely in an online environment; are open 24/7 and are better known and regarded by young people. The opportunities are there – the question is how much of the supply chain do they want to influence?

When I first started in banking I worked in import and export departments. It provided a good insight into how an economy really works. I was raised on the South coast of England and, as a child, regularly played around the local commercial harbour. I still recall the smell of fresh timber and casks of Sherry and Port. The harbour was the gateway to the world; it was where adventures started. I still live on the coast – some things never change.

 

 

Lionel Pavey

Cash Management and Treasury Specialist

 

Uitgelicht: ECB strenger voor fintechbanken

| 31-10-2017 | Peter Schuitmaker |

 

Recentelijk lazen we een artikel over de verhoogde toezicht dat de ECB wil toepassen op Fintech-partijen die bancaire diensten aanbieden. (bron: FD ) De ECB schrijft in zijn eerder uitgebrachte gids Guide to assessments of fintech credit institution licence applications dat fintechs zorgen voor unieke risico’s in het financiële systeem. De ECB zegt “Fintechbanken moeten aan dezelfde standaarden voldoen als andere banken.” treasuryXL vroeg een van onze experts, Peter Schuitmaker, om zijn mening:

Is er een fintechzeepbel?

Peter Schuitmaker – Registered Advisor for Business Transfer and Succession

Door de opkomst van ICT, met name de mobiele platforms (telefoons en tablets) en de gebruikte software (apps) is de bancaire dienstverlening ook in een innovatieve stroomversnelling gegaan. Waar traditionele banken de nieuwe ICT gebruiken om hun diensten te vereenvoudigen en te verbeteren, deels ook om operationele kosten te drukken, zijn een groot aantal fintech bedrijven die juist -denkend vanuit de ICT technologie- producten en diensten aanbieden. Het zijn vaak niche producten of een producten met een beperkte functionaliteit die juist wel aansluit bij een zekere doelgroep.

De ECB heeft dat geconstateerd en wil op die fintech dienstverlening enige grip krijgen. Dat lijkt vrijwel onbegonnen werk, omdat het aanbod, zowel de functionaliteit als de onderliggende ICT, zeer divers is. Hoe dan ook, geen richtlijnen waarbinnen fintech bedrijven zich op de markt mogen begeven en ontwikkelen, lijkt ook geen optie. Vandaar deze eerste voorzichtige poging “Guide to assessement of fintech credit institutions”. De motivatie is nobel: men wel gelijke monniken, gelijke kappen. Maar hoe zaken zich zullen ontwikkelen en binnen welke termijn aanvullende of nieuwe richtlijnen nodig is laat zich lastig voorspellen. Maar erg optimistisch daarover ben ik niet!

 

Peter Schuitmaker

Registered Advisor for Business Transfer and Succession