EuroFinance day 2: AI and robotics, low interest rates and blockchain

Treasurers are being expected to do more work with fewer resources than ever before. It’s little wonder, in that case, that the automation of day-to-day operations was highly discussed on the second day of EuroFinance, the annual treasury event held in Barcelona this week.

George Zarkadakis, digital lead at Willis Towers Watson UK, discussed the impact of automation on treasury in his Thursday morning sessions, ‘Will treasury be free or terminated?’

As treasurers are required to take on more strategic roles at the same time as managing day-to-day operations on leanly staffed teams, Zarkadakis said: “For treasury, there is a shift from specialist to generalist

“AI is less likely to take the jobs of generalists able to interpret deep data and apply it,” he said.

George Zinn, Microsoft’s corporate vice president, echoed these sentiments, saying: “Data requisition will be the next pre-requisite skill for financial professionals”

Dick Oskam, head of transaction services for ING Wholesale Banking, told GTNews: “Treasurers are continually expected to do more with fewer resources.

“I’m constantly impressed with the amount of work they do with the few resources that they have. That is not going to change,” he added.

Oskam also highlighted the importance of using data, but added that consumers sharing data is vital.

Europe’s revised Payment Services Directive (PSD2) is an example of this. “The biggest challenge that governments and banks have is that the general public is not aware of what PSD2 is about,” said Oskam.

“We can say we want to use data as an industry, but if consumers are not willing to share data, then PSD2 is not going to be hugely successful.

“Both governments and banks need to explain what PSD2 is about, what it means to consumers and how the central function of banks (which in my view is trust) is going to be retained,” added Oskham.

 

What Brexit blues?

The event organisers used both robotics and data to survey delegates on their Brexit views and announced the results on Thursday. The survey was conducted by a robot that patrolled the event, befriending and grilling over 400 delegates.

Over half of firms said they failed to see any negative effects from the negotiations on their business, although over a third admitted to adverse commercial setbacks.

A surprisingly high number of corporates also appear unwilling to rein in spending (41%), with 7% even stating they would invest more in the UK.

Asif Chaudhury, managing director of EuroFinance, commented: “One of the key reasons [for corporates being unwilling to rein in spending] is the fact that Britain has established roots as a leading hub for corporate finance,

“However, this is not to say that treasurers are not paying close attention to the possible implications for their companies. One main concern is working out how corporates will continue to operate across borders,” he told GTNews.

Relocation fears also appear to be unfounded, with less than 10% opening new European offices, and a mere 8% defiantly moving jobs from the UK to EU countries.

“While the referendum aftermath has had an unsettling effect, financiers working for major corporates clearly still view Britain as best for business,” said Chaudhury.

“The overriding consensus seems to be that businesses can continue to source financing and services relatively unscathed. But as the negotiations progress, this view needs to be supported by policy makers both in Brussels and Westminster to ensure market stability and continuity.”

When asked what which the most surprising aspect of the results, Chaudhury said: “The fact that so many of the gloom and doom pre-referendum predictions do not appear to be coming true.

“Unlike politicians in Westminster and Brussels, finance and treasury experts are not weighed down by ideology and as a result, are clearly taking a much more pragmatic approach to proceedings,” he added.

Chaudhury also said that delegates responded well to the robot: “Depending on how the negotiations progress in the run-up to next year’s event, the robot may well be in action again.”

Low-interest rates are a top concern

Several of the treasurers that spoke to GTNews throughout the day said that regulation and low-interest rates were their chief concerns, many being based in Continental Europe.

Colin Sharp, senior vice president for Europe, the Middle East and Africa at C2FO, told GTNews: “Cash levels in the low-interest rate environment is a big issue that treasurers are wrestling with right now because they are constrained by their treasury policies with what they can invest in.

“They can’t invest in risky yields but everyone is on their back for a better return.

Interest rates rising next year won’t change this,” said Sharp.

“The low-interest rate environment just puts a spotlight on things. Interested rate movements right now are about 10-30 basis points (bps). Even if it moves by 10bps, treasurers would still be underwater by 30bps in the Eurozone,” he explained.

Connecting blockchain and trade finance

AIG and TradeIX announced the completion of the first blockchain-enabled trade finance transaction for a global logistics company, with financing provided by Standard Chartered at conference on Thursday.

Logistics firm, TradeIX has developed a trade finance platform, TIX, powered by permission-based distributed ledger technology.

Using this ledger, companies can have their invoices placed on the TIX platform, giving real-time visibility to manage customer terms and credit risk.

All details of the invoice and the eligible insured amount are recorded on the distributed ledger.

This invoice finance transaction took place at the end of September and enabled TradeIX to offer its customers extended payment periods whilst maintaining the company’s receivables at current terms.

The invoices are sold to the finance providers and credit insured by AIG.

AIG also provides the benefits of Aronova, its trade finance technology provider, which tests policy invoice eligibility for the insured financiers.

Marilyn Blattner-Hoyle, head of supply chain and trade finance at AIG, said:  “Using blockchain technology to facilitate trade finance transactions makes it easier for companies to benefit from trade finance, allowing more companies better access to working capital and making insurance more available to finance-providers.

“By using this blockchain-enabled platform, clients are able to benefit from the extended ecosystem that trade finance brings, but with a reduction in friction and cost and an improvement in speed and transparency.”

The trade finance programme gives companies access to capital, allowing them to improve payment terms with their suppliers and clients.

At EuroFinance, GTNews interviewed Bank of America Merrill Lynch, ING Bank, Standard Chartered, C2FO, individual treasurers and more. Keep an eye out for our interviews next week.

Read our report on day one at EuroFinance here.

 

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