May 19, 2016

Toward the Digital Disruption in Cash Management

by Finance Centralization, Industry Trends and Technology, Point-of-View, Cash Management

A facilitator and an enabler. These are the words that Nina Brun, Head of Back Office and Cash Management at NCC, and Tuula Hatakka, Group Treasurer at Altia, would use to describe the treasury function in a few years’ time. We tuned in for the expert panel discussion between Nina Brun, Tuula Hatakka and Jukka Sallinen, Head of Cash Management at OpusCapita, at The Treasury & Cash 2016 event.

“To achieve this, we need to become more visible and to make our potential to support the core business known in the whole organization. The treasury function could play an increasing role also in corporate social responsibility, for instance, by highlighting the topic when discussing with banks,” Nina Brun says.

“If we look at the changes that have happened in the past 5 years, there is less manual work in treasury and more time, not only for providing the services but also for giving a true value-add for the business. In the next 5 years, the treasury will further become a strategic partner to be involved in discussions early on,” Tuula Hatakka says.

Jukka Sallinen says this is an exciting time to be working with corporate treasuries and finance functions. New technologies, such as blockchain and cryptocurrencies, machine learning and artificial intelligence, the revised EU Directive of Payment Services (PSD2) and the extending reach of the SWIFT network, for instance, are rapidly changing the scene.

“The developments in the payments field are opening up new possibilities to build truly global in-house bank and payment factory solutions, and also stirring up the digital disruption in the banking sector as new payment service schemes and providers emerge. Another trend in the cash management area is the dominance of SaaS solutions, as well as the focus in developing end-to-end secure payment processes,” Sallinen states.

Transparency, security, and harmonization on the agenda

“Treasury is traditionally a very centralized function. We currently have cash pools for centralizing liquidity and payments in and out. But we are also thinking ahead: a true payment factory and the impacts that could be gained for instance with payments and receipts on-behalf sound very interesting,” Tuula Hatakka says.

NCC has implemented a payment factory solution, through which all types of payments are handled in a standardized way irrespective of the bank or the country. The solution is provided by OpusCapita.

“NCC comes from a history of mergers and acquisitions. Our shared service center took care of the payments, but with local standards and solutions. The process is much more streamlined now,” Nina Brun says.

What about the next step?

“The next step is virtual accounts and taking advantage of the sophisticated possibilities of in-house banking. In this event, we have seen some truly motivating presentations of in-house banking, but the reality is that most corporates have not yet started this journey. Meanwhile, the EU payment directive will open strategic opportunities or threats for both the banks and corporates. Those who have already taken their first steps with in-house banking, centralization, and harmonization are better prepared for the future,” Jukka Sallinen says.

Sallinen and Marc Josefsson, Head of Sales at OpusCapita, say that centralization through payment factories and in-house banks was on the agenda of many of their conversations with the participants of Treasury & Cash.

“Although the pressure for process efficiency and cost reduction is constant and continuously increasing, the main objectives of the centralization that are repeated in the discussions with the corporate CFOs and Treasury Managers are increasingly things like transparency, security, and harmonization,“ Josefsson says.

“As the operating environment continues to become more global by the day and companies are entering new markets and engaging in new business models, they want to build a solid foundation for their cash and working capital management to be fully prepared for the new challenges ahead as well.”

The Treasury & Cash 2016 event was organized by Talentum in May in Helsinki.

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