Strange Times of Opportunity
With coronavirus lockdowns of varying severity in place around the globe, we are living in strange times. But that does not mean they must also be unproductive times. The suspension of various activities, such as business travel, frees up time to focus on both new and existing projects. Bill Wrest, Senior Strategist of Cash Management Solutions, explores why, in this environment, corporate treasurers need global visibility and control now more than ever.
When faced with the unexpected, there’s a temptation to default to what is perceived as the "safe" option. When it comes to corporate treasury and bank connectivity projects, this would be to down tools. But for some, the huge advances in remote working in the past few years make that perception outdated, which is why for them the safe option is actually business as usual.
The key difference is that attending a client site to physically install hardware and software (such as dedicated treasury workstations) is no longer needed in a world of cloud computing and robust network connectivity. The technology workforce may be physically dispersed, but that no longer makes it ineffective. It can still progress projects as effectively as if there were no constraints on movement.
Visibility and control: the ever-greater imperative
What cannot be seen by treasury cannot be managed; be that liquidity, risk or anything else. So, while even in normal conditions this makes maximising visibility and control important, in the current environment it becomes absolutely critical. Making the best possible use of corporate liquidity in an uncertain world is clearly a major priority. All of which hardly makes deferring or pausing projects that will improve visibility and control of liquidity/risk the "safe" option.
Apart from being less than safe, deferring projects now of all times would in fact be a huge missed opportunity, because many treasurers and their bankers are suddenly finding themselves with spare bandwidth. As treasurers have become progressively more involved with the business in recent years, they have started to travel far more, visiting business units around the world to provide consultative support. But not right now. By the same token, their bankers are not travelling to client meetings and conferences. Therefore, both parties have more time for planning and actioning projects that will deliver benefits in both the short and long term. While they may be temporally operationally constrained, they can still be strategically productive.
Taking advantage of this opportunity requires agility and experience. Engaging a suitable fintech partner is a strong option for corporate to bank connectivity projects, regardless of the party driving the project. In the current environment, it becomes an even stronger option, because the right fintech will have extensive experience of remote implementations.
This also raises the distinct possibility that, in some cases, the implementation period may actually be shorter than the current lockdown period. If all participants are fully engaged, responsive and not overly numerous, a bank connectivity project can actually be completed in weeks - not months or years. So even before normal working resumes, treasurers could already be making and executing informed optimal decisions about the deployment of liquidity and management of risk.
Not all fintechs are created equal
The term "fintech" is unfortunately not synonymous with "well-capitalised" or "domain expertise". While both are a necessity in normal conditions, their importance has increased considerably now. A fintech partner that closes its doors part way through a project would inflict significant damage by hampering treasury's visibility and control when most needed.
By the same token, while implementation skills are important, simply connecting the plumbing is only part of what is required here. Treasurers and banks won't want to deal with a fintech implements technology at a top-level; they need business domain expertise combined with a suitable technology solution. If the fintech concerned already understands the business and technology aspects of corporate to bank connectivity, backed up by its own proven technology stack, it can also add consultative value to help ensure a successful and timely project. Better still, if it will work on a proof of concept basis, then clients can be sure that they won't be left with half-finished projects with no upside in return for a lot of cost and time.
The bank perspective
Looking at it realistically, corporates are unlikely to be switching banks in the current environment. This means that completely new sales for banks are improbable, which increases the importance of completing deals already in progress. Convincing clients not to put everything on hold is considerably easier if the bank is partnering with a credible fintech that has a proven track record for fast, reliable implementations. Delaying time to revenue (or possibly losing it altogether) is not an attractive alternative.
In the current situation, treasury's traditional role of ensuring that the corporation always has the right cash, in the right place, at the right time, has never been more important. This means that the safest option is to ensure treasury has all the necessary tools to accomplish this. On the flip side, banks looking to preserve all possible sales revenue will also want to ensure this. In both cases, the right fintech partner can be the catalyst that ensures that these strange times also deliver on their implicit opportunities.