Reflections from Day 2&3 at the EuroFinance conference 2018 - at last....
Entering the conference on Day 2, we were met by signs with «no press» outside the main presentation hall; Alibaba and Amazon were entering the stage for a panel debate, and the press was clearly not welcome. I hope I won’t get in trouble for blogging…
It was refreshing to listen to Randy Ou, Vice President Group Treasurer of Alibaba, who urged us not to fall in love with technology – but to focus on solutions that solved your particular challenge. He also emphasized the importance of not chasing the perfect at all time, but to accept that 80% is often good enough.
Mr Ou was also talking about the importance of “getting into the business” in order to find the right solutions. In Alibaba, the treasury is working with new technology and engineers, and their finance people are gaining more technology skills and vice versa; the techies are starting to understand finance, enabling more relevant innovations. He even brought one of his IT consultants along to the EuroFinance, in order to leverage relevant expertise.
Amazon is often showcased as a “best practice” example when it comes to efficient cash conversion cycle (ccc) as they have an envious negative ccc, much thanks to their particular business model, but also their vendor management. However, when it comes to aggregating all relevant data for treasury decisions, Kurt Zumwalt (Treasurer in Amazon) advised that this could be difficult and still requires humans to make qualitative input to meaningful forecasts. He was one of many treasurers who claimed that cash flow forecasting is not easily automated and still requires manual intervention and a treasurer’s knowledge and experience.
Moving over to the next panel debate discussing PSD2 and Open banking, a poll via sli.do reminded us (bankers) that PSD2 and Open Banking in itself is not all that exciting for the corporate group treasurer.
55% of the audience responded that PSD2 was not relevant and 28 % that they were in an explorative phase. Only 17% responded that they were preparing for PSD2, and I suspect it was the banks and fintechs behind this percentage. Evaluating this poll in light of the previous panel debate with Alibaba and Amazon, I found the results supporting their point of not falling in love with the technology (or directive, as the case may be), but to find the solution that solves your problem.
Albert Holema from Endemol Shine Group, told of their decision to implement a TMS system with Swift connectivity last year, and has since won two Treasury awards for their innovative transformation solution (Global Finance and Adam Smith reward). Swift Mulitbanking was good enough for them.
PSD2 is likely to lead to a secular shift, rather than disruption, from batch to real time payment. The main benefits may be reaped in M&A situations and for selective sectors such as eCommerce and Real Estate.
On the conference final day, the audience was still asking the same questions that have been asked for many years; can we fix old problems like “true” payment standards and KYC? The #1 question a treasurer asks every morning is fairly simple; how much money do I have, and how much do I need? But the answer to that is still not easily obtained, despite all new technology and innovations over the past few years. According to Carole Berndt, TransitionHub UK, it boils down to payment standards. Due to the complexity in old mainframe systems, the development of one true standard is proving hard to achieve. However, her clear advice to the banks was; get the standards right!
After a couple of weeks back in the office since the Eurofinance, I believe Carole’s advice in many ways summaries my overall impression of this year’s EuroFinance; we are moving from hype to realism. There are so many exciting innovations being launched within the cash & treasury sphere, so many pain points that have been removed in the value chain of the treasury, but the remaining challenges are yet to be resolved; KYC and true payment standards.
Let’s see what can be resolved over the next 12 months until we meet again in Copenhagen 2019. As Howard Tullman, last speaker at the conference, said; the rate of change will never be so slow as today….