Hong Kong, 28 May 2015 – BNP Paribas and The Boston Consulting Group (BCG) today announced the publication of a joint Corporate Treasury Insights 2015 report. Based on a survey of 500 corporate treasurers and CFOs from multinational organisations, this report reveals two key findings set to change the industry in the coming years: firstly that the role of corporate treasurers has expanded and become more strategic with more of a focus on total balance sheet management since the financial crisis, and secondly that transaction banking partners need to adapt their models to better cater for treasurers’ new needs.
A new remit for corporate treasurers
Against a backdrop of ongoing economic and financial challenges driven by a new regulatory environment, the survey findings highlight the broader range of financial management activities for corporate treasurers.
Chye Kin WEE, Head of Transaction Banking for Asia Pacific at BNP Paribas, said: “What was considered a supporting role before the financial crisis has definitely evolved into a position of significant stature focused on strategy, with the treasury mandate now encompassing a complete oversight of balance sheets. In APAC in particular, over two thirds of treasurers are now involved in trade finance, which is their second most important activity.”
Given the new remit and responsibilities for corporate treasurers, new ways of working have emerged. The three most important ones are as follows:
- Centralisation of activities: over 80% of treasurers globally are moving to a centralised decision making model for their strategic decisions. In APAC, corporate treasurers have also adopted this model to their operational decisions.
- Enhanced efficiency and quality of service: generating cost efficiencies and reducing the complexity of processes, as well as labour-intensive administrative tasks, are top priorities for treasurers in Asia Pacific. Our survey shows that process efficiency is a top-3 priority, second only to risk management and cash visibility.
- Compliance requirements: Corporate treasurers see this as a key challenge for the years ahead, for two reasons. One, they too have to meet new regulatory requirements around Know-Your-Client or Anti-Money Laundering regulation and they see banks as well positioned to help them adapt to their new regulatory environment. Second, they clearly stated that they expect more client-centric processes from banks on compliance and more support with regards to administrative tasks.
Nick Gardiner, Partner in BCG’s Hong Kong office, said: “There is an increasing need for treasurers to make their activities more streamlined and banks need to adapt to this reality with more automated back-end processes, but the survey findings also demonstrate a clear need for support in developing the appropriate treasury infrastructure.”
The need for enhanced relationship management
The wider scope of activities and a more prominent role for corporate treasurers has a direct impact on what they require from their transaction banking partners.
Nick Gardiner, Partner in BCG’s Hong Kong office, continued: “Today, treasurers have high expectations for their transactions banks. In APAC for example, treasurers expect their banks to focus on the quality of the banking relationship or a specific risk perception. As treasurers seek more visibility, more transparence and greater consistency both at a global and local level, there are significant opportunities for banks to align their servicing model, their product offering and their go-to-market approach with treasurers’ expanded responsibilities and renewed expectations.”
Banks must therefore ensure their servicing and relationship models are more client-centric and better integrated, as highlighted in the survey. In particular, they can engage in differentiation strategies by:
- Providing more enhanced digital solutions: Data enrichment and new analytics, around cash-flow forecasting, working-capital efficiency or peer group benchmarking, are identified in the report as examples of important tools to help treasurers simplify reconciliation and improve their treasury operations. Although only 20% of respondents are planning to extend a nascent use of mobile and digital services, this trend is nevertheless set to rise over the next few years to access information, reporting and authorise simple transactions.
- Better addressing the new risk concerns: not only industry market and regulatory risks, but concerns around threats of cyber security and fraud. Over 60% of respondents identified fraud detection as a competitive advantage for a transaction bank offering.
- Offering additional value-add advisory services: Our survey shows that treasurers are highly interested in upgrading their treasury infrastructure, with global cash pooling, payment factories and in-house banks emerging as top priorities. The survey also reveals that a majority of the most structured treasury teams consider paying for additional advisory services on liquidity and bank deposits management.
- Offering a holistic view: The report shows that the fragmentation of single and multi-dealer platforms has given rise to the emergence of non-bank portals and platforms offering a holistic and consolidated, single cash management view. In response, banks need to strengthen existing offerings by improving automation, implementation, scalability and platform service innovation.
The operating landscape has therefore evolved significantly post financial crisis and this report highlights the need for transaction banks to focus on tailored advisory services as well as enhanced efficiency and quality of service in order to support their clients as they adapt to the new environment.
Chye Kin WEE, Head of Transaction Banking for Asia Pacific at BNP Paribas, concluded: “The onus is on transaction banks to better service corporate treasurers in light of their newly expanded and more strategic roles, providing greater global coordination and high process execution quality as well as incorporating a day-to-day problem solving posture across our organisations.”
“BNP Paribas is committed to strengthening our service and support capabilities and to providing our clients with first class solutions, which increase process efficiency, reduce administrative intensity and maintain competitive pricing.”
The report in full can be accessed here: www.corporatetreasuryinsights.com
This report was developed based on a proprietary cross-industry survey of 500 corporate treasurers and CFOs from organizations around the world with consolidated annual revenues of more than $500 million. The survey was conducted by Expand Research (a wholly owned subsidiary of BCG) for BNP Paribas and BCG. The study included interviews with ~50 corporate treasurers and CFOs from multinational organizations, with total revenues of approximately $1 trillion and more than $75 billion in cash and cash equivalents.