Treasury Review 2019 Survey Series in association with Standard Chartered
Q&A with Lisa Robins, Global Head of Transaction Banking, Standard Chartered
By Asset Benchmark Research
The Asset (TA): Has there been a significant shift in the treasury goals of your clients over the past 12 months?
Robins: Interest in digital treasury and enablers, such as new applications and technology, has increased significantly over the past year. However, adapting internal processes to digitisation is a challenge. Readiness across treasuries varies greatly and as a result we are regularly being called in to help bring though leadership and ideas on how to re-engineer to take advantage of new opportunities.
We have helped early movers embrace many new uses for technology in treasury such as RPA, cloud, AI, API and blockchain. Some treasurers are dealing with legacy systems and others prefer to wait and see. Finding the right partners and having a vision to make corporate treasury a true strategic function are key to the evolution of the function.
TA: What is driving this transformation in corporate treasury where CFOs/treasurers are now being asked to play a greater strategic role within their organisations?
Robins: Technology has driven change in the way consumers shop and bank. New, easy-to-use interfaces and business models being brought to market in e-commerce and retail banking have revolutionised the individual customer experience, which has knock-on effect on companies’ cash flow and working capital.
This in turn impacts treasurers: ease of connectivity across the full supply chain – procurement and payments – means the treasurer’s role now goes beyond traditional hunting grounds. They expect to be able to seamlessly manage their payments and supply chain finance needs, they want speed, accuracy, efficiency, especially in cross-border payments.
TA: How prepared are your corporate clients in implementing emerging treasury technology solutions (e.g. API, big data, blockchain)?
Robins: Many of our clients are embarking on a transformation journey by digitising and modernising their treasury function. We are already live with commercial use cases of APIs, DLT and many emerging proofs of concept with data.
APIs and data-driven treasury are areas that are gaining traction and considered as efficient ways to achieve real-time treasury, manage risks and identify opportunities to maximise return on investments.
We use technology that helps our clients. That includes digitisation of the Bank to improve their journey through and with us, and client connectivity through third-party platforms and consortiums. All of this improves the client experience and reduces manual work.
TA: How much is cybersecurity mentioned within a treasury transformation journey and what are clients doing to safeguard themselves from digital fraud?
Robins: As treasury functions become more digital, there is a heightened degree of importance around cyber risks and attacks. Clients are beginning to see this as a differentiator when choosing their banking partners. Banks have a fiduciary duty to keep clients’ data and businesses secure. We are doing this by investing heavily in cutting-edge solutions such as digital security tokens, online fraud management and data-driven transaction surveillance.
TA: Are your clients becoming comfortable using mobile technology to manage their treasury operations? What sorts of mobile solutions have you been offering your clients?
Robins: This is an emerging space in corporate treasury management. While a ‘mobile-first’ approach has become a norm in consumer banking, mobile adoption in corporate and institutional banking is still evolving.
Clients have shown interest for our mobile offerings, especially centred on better visibility of their account management and enhanced cash flow liquidity. With our recent launch of ‘digital token’, we have embedded the features of a physical security token into mobiles and the adoption has been quite encouraging since the launch in September 2019.
We are also refreshing the mobile version of our flagship digital banking platform Straight2Bank NextGen, which will offer aggregated cashflow and working capital dashboards, in addition to regular transaction services such as cash balance views, transaction approval and FX management.
TA: How do you approach fintech partnerships within transaction banking? Can you share some examples of successful fintech collaborations that you have been able to commercialise?
Robins: The rise of fintech solutions is revolutionising the financial services world. We see this as an exciting opportunity to forge strategic partnerships and a vehicle to create innovative products and distribution channels.
We have taken an equity stake in Ripple and are collaborating with Linklogis in China to re-imagine the way the traditional products such as cross-border payments and supply chain financing are offered.
Our innovation, ventures and fintech investments unit, SC Ventures, has partnered and invested with a number of fintechs since being launched. It has also created a Fintech Bridge, a market-first platform to connect community builders such as start-ups, investors and accelerators to the Bank.
Similarly, we are partners with other industry participants such as technology companies SAP Ariba and dltledgers to create new opportunities and solutions for businesses.
TA: Describe how you are leveraging on the bank’s data to help clients setup supply chain finance programs or conduct peer analysis on working capital.
Robins: Standard Chartered has been using data and analytics to better understand our clients’ business. These insights enable us to proactively uncover opportunities to support our clients’ financing needs at different stages of their supply chain cycle, create solutions relevant to clients’ needs such as providing financing earlier into a client’s supply chain to achieve sustainable growth and develop predictive models to assess risk differently.
TA: What’s your advice for China-based corporates looking to setup regional treasury centers (RTC) outside mainland China?
Robins: An RTC location is important as it helps to centralise activities in a business-friendly environment supported by good infrastructure, availability of general banking services, a large labour pool and relevant experts. A location that reduces friction costs and has liberal FX convertibility regulations makes in-country and cross-border funding feasible.
When selecting a location, companies should take into account their current footprint and future expansion plans, as well as their short-term and longer-term objectives. There is also a need for qualitative and quantitative analysis to determine an ideal fit of a location based on a company’s unique requirements. Key qualitative factors include foreign exchange convertibility, ease of cross-border fund movements, human resource availability and the reliability of the technology infrastructure. Qualitative factors can also include the availability of support services such as access to consultants and tax experts and the capabilities of banks in the market. Quantitative factors include tax profile (e.g., corporate, withholding), double tax treaty network, foreign tax credit and thin capitalisation rules, among other factors.
Key considerations for a Chinese corporate to choose a RTC location outside of China: First, is it a business-friendly location, meaning, good financial and technology infrastructure, tax incentives and a large talent pool. Second, is it going to enable this corporate’s business expansion, based on existing footprint and future expansion plans. Third, does it provide a platform to mobilise global liquidity, such as liberal FX convertibility in particular for USD and RMB, for ease of cross-border fund movement. Finally, does it allow Chinese corporates access to international bank borrowing, debt and capital markets – both in public markets such as fixed income (bond) and stock market – as well as private equity co-investment?
We have an extensive advisory function that helps Chinese-based corporates build their blue print, and practical advice on how to implement these structures across liquidity and risk management. Our solutions are built around these requirements, and the number of live RTCs and those under implementation have grown substantially over the past few years.
TA: What will be the most pressing issue facing your clients in 2020? How are you planning to help your clients address those issues?
Robins: Macro headwinds (rate cuts, growth slowdown) continue to impact business as a whole. Uncertainty over trade and shifting supply chains are top concerns for clients in Asia in particular.
The ambition to digitise is also a pressing issue. Many in the treasury world have only been able to tackle one small piece of the problem, without solving for the bigger picture. The challenge with these developments is that they have been disjointed, creating ‘digital islands’ rather than optimising the entire ecosystem.
We are actively working with other participants of the ecosystem such as SAP Ariba and Linklogis, as well as clients and fintechs, to collaborate and co-create solutions which address business needs and help move the industry as a whole.