Macro, micro and technology influencers continue to reshape the business environment, creating challenge and opportunity in equal measure. What are the tipping points that may fundamentally change how treasury exists in the future? And how should you act accordingly?
This was the key question on the minds of the global treasury community as they gathered in Vienna last week at EuroFinance's 25th International Cash & Treasury Management conference.
Below are the key take-homes from one of the most popular sessions where a panel of 12 experts delved deeper into the issues. What are you doing to prepare?
The end of Europe?
Long before Brexit, Europe was already changing due to the Euro crisis, the migrant and refugee crisis, increasing debt levels in Greece triggering prolonged recession and Italy’s banking crises. Then Brexit happened sending shock waves throughout the globe. Britain leaving the EU to control its own regulations and laws isn't great news for corporate treasurers who like regulatory homogeneity and stability.
The increasing differential between rich and poor is leading to rising inequalities and dissatisfaction with incumbent political parties and the EU, leading to an attraction to nationalist agendas. Brexit is triggering populist parties in The Netherlands and France to demand their own referendums to leave the EU. Europe as we know it is fundamentally changing and the future of the EU is uncertain.
Reversal of fortune?
The demographic trends of an ageing population in the developed world require individuals to focus on higher levels of saving during a period of interest rate decline and wage stagnation. Growing inequality is driving political dissatisfaction among voters leading to a move away from democracy to inward looking and separate nationalist states. All the progress made by developed countries looks set for stagnation at best or a reversal of growth at worst.
Banking at the tipping point?
There are several main drivers having an impact on banks, digitisation and Blockchain, services and support for cross-border, regulation and FinTech investment. A combination of legacy systems and disruptive innovation will impact all primary banking functions and distributed ledger technology could dramatically reshape finance products and processes. Yet banks have scale that FinTechs do not. Banks will divide into three categories, those that adjust to changes, those that are young enough not to have problems adapting and those which cannot survive the changes and will leave the market.
Technology at tipping point?
There will be a big tipping point in ‘Cloud platform as a service’, which will enable FinTechs to build apps on top of their platforms. This could change the way treasury operates in areas such as supply chain finance. Blockchain has the potential to fundamentally redefine the way information is shared, at a platform and foundation level. It will completely change how we communicate and manage risk.
For more information read our article ‘The tipping points that will change your company’ in the latest edition of Treasury Perspectives