How digital treasuries can drive the digitalisation of the whole business
Whilst the adoption of digital technology will often be driven by the business or the market, there are many cases including the energy giant – EnelX, where treasury has played an active role in shaping these new models.
The energy sector is experiencing digitalization: it must become software-driven in order to establish smart electricity grids and link smart household gadgets. Moreover, smart homes and cities will be critical in lowering carbon emissions and transitioning from fossil fuels to renewable energy.
Enel S.p.A is Italy’s largest manufacturer and distributor of electricity and gas energy and as a result, it is one of the major billers in the country and every other nation where it has an energy retail presence. This ‘captive’ client base, as well as the data linked with it, serve as the foundation for EnelX, the company’s digital platform-based ecosystem.
What’s beyond selling energy?
The initiative was spearheaded by the finance and treasury team, following the realisation that credit collection was a significant cost for an energy corporation like Enel, but extremely profitable for the players already present in the market providing bill payment services to retail and corporate clients.
For instance, speaking at the 2022 EuroFinance International Treasury Management, Matteo Concas, head of global digital banking solutions at Enel X, told delegates that more than 200 million bills are paid by customers of Enel just in Italy, on which a fee ranging from $2 to $2.5 is charged by third-party payment providers on each transaction.
“You can imagine the pot of money that is used by potential disruptors of our relationship with the client.” Concas further explained. This triggered the finance team to use this opportunity to use digital finance as a means to interact with the clients within the energy sector and further use digital platforms in the fields of electric public transport, smart homes and cities, intelligent public lighting and integration of renewables.
While additional revenue generating potential from existing clients (cross-selling) combined with cost savings relative to other players provided an obvious economic opportunity to pursue. For the treasury team, it also meant that they had to interact with this business unit to implement a new cross-border instant payment system in Italy.
This took more than a year to develop and includes an automated reconciliation process which has led to savings from a backoffice point of view, as well as externalisation of services to other companies.
Furthermore, in July 2022, Enel X and Intesa Sanpaolo, through Banca 5, purchased Mooney Group, one of Italy’s largest fintechs, which then acquired the entire financial services business of Enel X (Enel X Pay), creating one of the leading payment companies in Europe.
Going forward, the key aim of the treasury team is to have a global infrastructure as the company moves towards digitally receiving payments, like credit collection. This will enable the firm to engage across countries in different currencies and also incorporate local payment methods across different regions including its current dominant territories like Europe and Latin America.
“Until now, many of our transactions are handled from a country to country basis but with an ever evolving offering in addition to energy sales, we will need a global infrastructure to support that. ” Concas further explained.
The world’s largest and most influential treasury event will return this September in Barcelona. Join more than 2000 senior-level professionals representing over from more than 50 countries to exchange experiences, learn best practices and meet best-in-class financial and technological partners. This year we will explore the theme “Navigating a new world,” empowering treasurers to manage today’s new and complex challenges and optimise treasury for the new economic cycle. Find out more.