Post on 01-Aug-2020
François Masquelier
March 19th, 2015 - London
Payments International - Conference
What Is At The Top Of The Agenda For Corporate Treasurers?
Treasury Transformation
• On-going TRANSFORMATION of treasury
• Treasury function has entered a new era of its developments… Treasury V.4.0
• We can talk about DISRUPTIVE innovations…
• Many changes (e.g. e-payments, new financial regulations, IT technology evolution, new IFRS accounting standards, market volatility, low and even negative IR, ERM, focus on IC’s, further centralization, BI reporting, etc…)
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Treasury Transformation... Evolution or Revolution?
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Treasury enters into a new version
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A more strategic role for treasurers
An evolving role:
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Drivers of this evolution
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Treasury Evolution… or Revolution?
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Changing Regulatory Environment…
• Abrupt changes in REGULATORY ENVIRONMENT with new rules delivered concurrently and not always well-coordinated
• Inherently COMPLEX taming the « regulatory wolf »
• Calls for fundamental system changes without impacting « business as usual » activities
• However COSTS of compliance > BENEFITS that could be generated
• Some consequences of financial regulations are not yet identified although they could fundamentally impact some industries
• Never ending story (« Groundhog day »)
• However, technology is evolving extremely fast too… Technology can help being compliant and producing newly required reports and disclosures
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Can Reg’s be disruptive?
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Regulations or… DEregulation?
• REG’s = 2nd highest risk (according to the Economist Survey 2008)
• EU regulations remain a building without architect and clear plans
• Juxtaposition of rules without assessment of potential consequences for “real economy” and lack of harmonization across the world
• The “real economy” is always assimilated to FC’s meaning no exemptions
• Making distinction between “bad luck” and “mismanagement” remains a difficult task for regulators
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PRO’s and CON’s of Regulations
+ Better discipline - Admin burden/red tape
+ Stronger banks - More costs
+ Less systemic risks - Complexity
+ Counterparty risk - Liquidity risk increased
+ Revisit of processes - Banks niches approach
+ Improved IC’s - Cost of hedging
+ Easier « sale » of IT projects - Time consuming
+ Special focus on treasury - Tough to « sell » projects
+ Enhancement of GT role - Negative ROI
+ Rationalization of banks - IT systems not ready/XL
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The « real economy » supports regulations but not over-regulation
Questionnaire from EU Parliament – Public Consultation on how to enhance financial services legislation (April 2014)
• EACT favors regulations for a stable financial system but… better calibrated
• Financial Regulations have direct or indirect impacts on Corp’s (end-users always pay for it)
• EACT recommends (Sept 2014 letter):
1. Sustained dialogue with NFC’s
2. NFC’s are different from FC’s exceptions required in some cases
3. Better pre-assessments of impacts in order not to be a brake on economy
4. Better staffing of ESMA
5. To be consulted prior to regulate
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Key Issues for Treasurers
• Regulations or… « REGUVOLUTION »? (e.g. EMIR2, SEPA, B3/ CRD IV, BEPS,
MiFID2, Bank Separation, Capital Market Union, CRA, …) how to ride the wave
to stay afloat?
• Treasury transformation with evolving role
• IT evolution to be integrated (e.g. e-, new IT tech, BI, dash boarding, TiRMS…)
• Centralization, Payment factories (COBO/POBO), SWIFT connectivity and eBAM
• Enhancement of Internal Controls
• Current economic environment with high market volatility and low to negative IR
• How to improve cash visibility, CFF and Financial Supply Chain? Paradoxical…
• Banking disintermediation is continuing… Fintech’s new competitors of banks?
• Political issues having financial impacts (e.g. Russia/Ukraine, Iran, commodity
prices, Grexit and €, EU stability pact, environmental questions, fragility of
emerged and emerging countries, etc…)
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What keeps treasurers awake at night?
Source survey from GTNews and JPM 2014
• #1 Optimize cash-flow globally
• #2 Improve treasury productivity
• #3 Keeping up with technology
• #4 Keeping up with regulatory changes
• #5 Protecting my company from fraud
It can be summarized with the 3 R’s principle: Risk – Returns - Regulations
Treasury is increasingly a round-the-clock role and you never know when the next regulatory change, market movement or M&A transaction will disturb your sleep. Even if you do sleep like a baby, remember that babies often wake up every two hours screaming!
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What are Treasury Priorities for coming years?
• Moving towards integrated Financial Risk Management model to better « fight » market turmoil and high volatility, as well as to better monitor correlation factors
• Frameworks to create value (TVA) and to measure performances (i.e. KPI’s and KRI’s)
• Alignment of People, Processes and Technology in support of evolving needs of the corporate growth (rationalization, efficiency, productivity)
• Keeping up with on-going over-regulation wave. Need for adapting processes to be compliant
• Managing increasing treasury impact of emerging markets, which requires more attention than ever
• Closer integration between treasury and businesses (e.g. hedging, financial supply chain, WorkCap optimization, services to alternative-payments, etc..)
• Further centralization, standardization and automation of treasury hubs
• Ultimate IT goals remain full STP processing and enhancement of Internal Controls to mitigate risks of fraud
• How to best use “Big Data” in treasury ?
• Dialogue in order to better align Know Your Company (KYC) and Know Your Bank (KYB) and to better define evolving Bank Relationship Management Strategies to be applied
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Conclusion
« The success lies in the rapid responses to changing situations »
(Sun Tzu -« The art of war »)
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Follow me on Twitter, myTreasury and ATEL LinkedIn group
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Twitter myTreasurer
ATEL Group
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Thank you for your attention!
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François Masquelier, Twitter:
Chairman of ATEL @FrancoiMasquel
@ : president@atel.lu Blog:
: + 352 42142 4875 http://mytreasurerwordpress.com
www.atel.lu