Many corporate treasurers based in the UK and mainland Europe believe that at least some banking activities will be moved out of London, following the Brexit vote in June.
The finding comes from a global survey of 200 corporate treasurers, which focuses on those at larger corporates and was jointly carried out by Temenos, the Switzerland-based banking and finance software specialist and technology research and advisory firm Ovum.
The survey focuses on current challenges and needs for larger corporates around four key areas – cash and liquidity; forecasting and analytics; risk and compliance; and cost and efficiency.
Key findings include:
- Three quarters of corporates in two regions are interested in blockchain to reduce their trading risks.
- Many of those surveyed from the UK and mainland Europe expect at least some banking activities to move out of the UK post-Brexit
- Almost a third (31%) cite liquidity management as by far the greatest priority over the next 18 months.
- Accurate forecasting and a complete view of cash positions come out as a top priority (16% and 14% respectively).
- Seventeen per cent of respondents name foreign exchange (FX) risk focus as a number one priority.
- Thirty-five per cent of all corporates and 42% of those with more than US$10bn in revenues cite lack of real-time data availability as a significant operational issue
“This survey clearly highlights the challenges faced by treasurers in managing liquidity,” said Darryl Proctor, product director – transaction banking, Temenos. “In addition to economic and FX pressures, the impact of regulation in the banking sector – such as Basel III – has forced changes in strategy.
“At the same time, the retrenchment by some of the largest corporate banking providers from some regions and territories has added to the inherent complexity in managing cash across multiple banking partners.
“Many banks have tried to change the commercial terms around cash balances and notional pooling strategies, making this a more complex issue. The survey highlights that treasurers are facing real challenges and complexities in getting the cash position information they need to manage liquidity, a particular issue where there are multiple bank and other third party relationships in play.
“Corporates want to address this issue over the next 18 months and unless banks are willing to support this requirement, there is a risk of attrition”.
The most interesting outcomes of PSD2 will be derived from companies combining open banking with data from other areas like social media or government, argued Miles Cheetham, Open Banking Ltd.
The architecture of financial markets has changed and we will soon see the end of the last eight years of prosperity, said Stefan Bielmeier, chief economist and head of research at DZ Bank.
Jill Harrison, group treasury manager of Whitbread Plc, spoke to GTNews at the Treasury Leaders Summit about how Whitbread's subsidiary Costa Coffee hedges risks, the major challenges she faces in her treasury department this year and what career advice she would give to young treasurers.
Cash-flow based metrics now feature prominently alongside traditional revenue measures of business performance in the key figures or financial summary pages of any public company.