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Technology brings new opportunities for efficient cash management in Europe


While the Covid-19 crisis has hindered some technology implementations, it has also provided a catalyst for US companies to harness cash management technology in Europe.

In recent years, many US-based companies have achieved high levels of automation within their European cash management structures. But from a technology point of view, cash management is not necessarily viewed as synonymous with innovation.

Eric Woons, Director of Treasury Operations, Arrow Electronics

“From a technology point of view, transaction banking has always been less advanced than something like FX trading,” comments Eric Woons, the Netherlands-based Director of Treasury Operations at global technology enablement company Arrow Electronics. “In essence, corporates still do cash management the way that they did ten or 15 years ago.”

Nevertheless, Europe has much to offer companies where cash management technology is concerned. For one thing, Europe has seen considerable developments in real-time payments over the last couple of years. While the UK’s Faster Payments scheme is well established, more recent developments include the arrival of SEPA Instant Credit Transfer (SCT Inst) and the TARGET Instant Payment Settlement (TIPS) scheme. As Zac Nesper, SVP & Treasurer of technology company HP Inc, comments, “Real-time payments offer a huge opportunity to manage global cash in a follow-the-sun model that eliminates cutoff time dependencies.”

Interest is also growing in how a wide range of technologies, from artificial intelligence (AI) to robotic process automation (RPA), can be applied to cash management. And following the introduction of PSD2 in 2018, further opportunities lie in the use of APIs to make payments.

“This could become an interesting tool for treasury, reducing the cost and burden of integrating with your bank,” says Martin Runow, Global Head of Payments and Digital at Barclays. “Today, if you add a new bank – even if your treasury management provider has been dealing with that bank with the past – you will still typically be facing weeks or months of implementation and negotiation of contracts and data formats. Whereas if your treasury provider integrates with the bank’s API, you could be going live within days.”

Embracing robotics

William Dakin, VP & Treasurer, Arrow Electronics

As a technology company, Arrow is certainly looking to the future where treasury technology is concerned. “One of the functional branches within the treasury organisation is dedicated to treasury technology,” explains William Dakin, the company’s VP & Treasurer who is based at the Arrow headquarters in Centennial, Colorado. “There are ten staff members in that functional branch who are focused on automation – not only on the TMS and its continued deployment and enrichment, but also on new tools such as RPA that can automate routine treasury tasks.”

For example, Dakin says that if someone wants to run a particular query – such as checking whether every bank statement has been successfully imported into the TMS that day – “you can get a robot to check whether one is missing.” The statement-checking robot is due to be activated shortly – and in the meantime, the team is experimenting with other kinds of scripts, such as pulling certain types of statement from the online banking tool and entering it into the TMS.

First things first

Mandana Sadigh, SVP & Corporate Treasurer, Mattel

While some companies are beginning to adopt technologies like RPA and AI, others are addressing more immediate priorities, such as replacing spreadsheet-based systems with dedicated treasury technology.

Toy company Mattel is currently in the process of implementing a treasury management system, with a view to adopting innovative technology in the future. “I am hopeful that once the system is fully operational on a global basis, we will be able to run statistical modelling and sensitivity analyses using this global system,” explains Mandana Sadigh, SVP & Corporate Treasurer.

Paul Misere, Senior Treasury Director EMEA, Medtronic

Medical device company Medtronic, likewise, is currently implementing a treasury management system: the first phase was completed in January, with the second currently underway. Once this is up and running, the treasury may be in a position to explore adopting additional technologies, says Paul Misere, Senior Treasury Director EMEA, who is based in the Netherlands. “Together with the IT folks, we are assessing whether we foresee an opportunity to further streamline and automate through RPA solutions,” he adds. Medtronic’s treasury is also exploring the benefits of process mining, in which technology mines data in order to identify process efficiencies.

Impact of the Covid-19 crisis

Matthew Sullivan, Assistant Treasurer, Cummins

The Covid-19 pandemic has brought considerable disruption for companies operating in Europe. While some companies have continued to work on planned TMS implementations despite this disruption, others have placed technology projects on pause.

Cummins, which designs, manufactures and distributes engines and generators, had been poised to embark on a virtual bank account structure project before the crisis began. “We were about to run a pilot in the UK, and we were planning to expand that into Europe,” explains Assistant Treasurer Matthew Sullivan. “We spend a lot of time and effort on managing bank accounts, and our hope was that virtual accounts would deliver a more efficient structure.” However, Sullivan says he has not yet decided whether the project will still go ahead in light of the pandemic.

Ferdinand Jahnel, Vice President, Treasurer, Marsh & McLennan

While the crisis may have proved an obstacle to some implementations, difficult conditions can also act as a catalyst when it comes to getting new projects off the ground. “In these extraordinary times people are more alert, and realize that we can’t just keep going on with our old ways – you have to think about better ways of doing things going forward,” says Ferdinand Jahnel, Vice President, Treasurer at global professional services firm Marsh & McLennan, who is currently looking at increasing the adoption of software as a service (SaaS) technologies within treasury. “That’s when you can get the understanding and the buy-in by the organisation.”

Bank-fintech collaboration

Where innovation is concerned, one area of focus in recent years has been the rise of fintechs and the threat that these technology-focused newcomers could present to transaction banks. More recently, however, the conversation has become less about competition between banks and fintechs, and more about collaboration.

“For us, it is no longer a want – it really is that we need our banks to innovate, whether that means investing in their own tools or partnering with fintechs to provide those,” says the treasurer of a US-based computer components manufacturer. “It’s getting easier to move from one cash management bank to another, and if there’s another bank with a better solution, that’s something we are going to take advantage of.”

One consideration is that fintechs are not necessarily synonymous with agility, at least when it comes to collaborating with banks. Cummins’ Sullivan argues that fintechs which are working with multiple banks may be less flexible when it comes to accommodating a particular company’s requirements. “My voice becomes a very distant sound when I’m speaking to a bank that’s speaking to a fintech that’s working across multiple banks,” he says.

And while treasurers may welcome collaboration between banks and fintechs, they are not looking to add to their existing relationships. As Woons concludes: “Collaboration is good if it’s on the understanding that the bank is our trusted partner. As long as banks have arranged that properly with the fintech, that’s great if they can offer things to us that banks cannot offer. But the bank is our primary contact.”