Key insights from EuroFinance 2018

5 October 2018
Bill Wrest

Our team are fresh back from attending the EuroFinance conference in Geneva last week – Europe’s largest event for corporates and treasurers. 

Gresham@Eurofinance2018

During the conference, I attended a Discovery Lab session with participants from BAML, TransferWise and Ripple. A key message, which seemed to resonate throughout the session, was that for corporates the regulation PSD2 paves the way for API and real-time payments - but what does that mean for treasurers? Are they able to take advantage of real-time payment systems? Do they want to? Perhaps corporates are less concerned with the speed of the payment and more with its cost? 

Corporates want to see certainty of receipt of payment - cost and transparency are equally important.  It is difficult for corporate treasurers to realise the benefits of real-time payments if their banks continue to process payments in a batch-based process. Recognising the need to adjust to this, suppliers of large enterprise accounting systems, such as Oracle and SAP, are developing real-time processes that replace existing batch-based payment file uploads.

There is much debate as to whether Faster Payments in fact meets the needs of a corporate for real-time payments. It is a mature system in the UK, albeit with transaction size limitations, but less mature around the internationally.

Ripple think Faster Payments are the future and commented on “trillions of dollars of trapped cash worldwide”. Instant use cases have not yet evolved and matured within the corporate space to prove the case. BAML took a different slant and commented that corporates want much improved data.

An IBM study showed ninety percent of the world’s digital data was created in the last two years and yet treasurers are still reliant on batch processes by banks and rigid reporting of their data. It was also considered that better use of data would result in increased fraud prevention and improved working capital as quicker data flow enhances the trust relationship between payer and beneficiary, which is also key in trade finance. 

Ripple believe transparency of the payment and its data is vital, with known date of receipt and cost being equally paramount. Also, the ability to track the progress and certainty of settlement/receipt throughout the lifecycle of the payment.

At Gresham, transparency and use of data are keywords for us, and providing our clients with real-time information, file format independence and the ability to track a payment at every stage of its journey is what we do everyday. API’s may well be the gateway to a brave new world, but are only as good as the timeliness and transparency of the data available to enable corporates to make better use of their working capital. The message to corporates was to take advantage of API’s, but in doing so does that change their needs in terms of being able to “pull” data upon request and importantly, in the format they require? A lot needs to change in terms of cash management and reporting before treasurers can reap the benefits of API’s and truly own their data for working capital purposes.