Adopting best practices for regional treasury transformation

The Association for Financial Professionals (AFP) has released two whitepapers, “Treasury Transformation: Insights from Asia-Pacific (APAC)” and “Treasury Transformation: Insights from the Middle East and Africa (MEA),” both underwritten by Standard Chartered, to provide a framework for managing any type of treasury transformation project.

In the APAC region, three keys to a successful treasury transformation project include:

• Consulting with experts to navigate nuances in regulations and market practices across borders.
• Considering the most effective use of technology to enhance operational efficiency and empower decision-making.
• Identifying skill gaps early and proactively addressing them.

“Ensuring a successful treasury transformation can be a challenging process, especially across Asia where there may be significant differences in the operating and regulatory environment between each market,” added Ankur Kanwar, Head of Cash Products ASEAN and Global Head of Structured Solutions Development from Standard Chartered. “Drawing on our experience as an international bank equipped with local market knowledge, we hope the paper offers treasurers insights into some of the common factors to keep in mind when embarking on this journey.”

In the MEA region, four best practices for treasury transformation include:

• Align project objectives through internal discussions and collaboration with industry peers and trusted external advisers, including banks.
• Map out new operating procedures, processes and workflows, particularly within the context of technology integration.
• Empower the treasury team by explaining the purpose and vision of the project.
• Use meaningful evaluation to win crucial support for the project.

“While corporates have different reasons for transforming their treasury function, the one consistent takeaway from our clients who have successfully done so is the need to understand and stay focused on the core objectives of the transformation,” added Syed Khurrum Zaeem, Head of Transaction Banking, AME from Standard Chartered. “Working with a partner who has the local know-how and is able to share this knowledge and experience can be extremely valuable, especially when growing the business to new markets.”

The 2023 AFP Treasury Benchmarking Survey on Treasury Transformation was undertaken in September and October 2023. Within the APAC region, the survey garnered responses from practitioners in 11 countries, with the majority working in publicly owned corporations. Within the MEA region, the survey garnered responses from practitioners in 17 countries, with the majority working in privately held corporations.

 

EBA Clearing sets November launch date for OCT Inst on RT1

EBA Clearing has announced the delivery of a One-Leg Out Instant Credit Transfer (OCT Inst) Service in the RT1 System for November 2024. This new cross-border service in RT1 will be developed in line with the OCT Inst Scheme of the European Payments Council (EPC). It will rely on the processing infrastructure, the interfaces and other key components of EBA Clearing’s pan-European instant payment system. The specifications for the service will be made available in April 2024.

Per the EPC’s OCT Inst Scheme, the new service will enable payment service providers (PSPs) operating in the single euro payments area (SEPA) to process incoming and outgoing international credit transfers through RT1. This means that, for the euro leg of their cross-border payments, PSPs can take advantage of a real-time payment infrastructure based on the ISO 20022 standard and operating 24/7. As defined by the EPC scheme, the transactions will also fulfil the transparency and traceability requirements set by the G20 and the Financial Stability Board for international payments.

“We are pleased to develop the RT1 OCT Inst Service at the request of our users, so they can leverage existing building blocks and investments for their cross-border transactions,” said David Renault, Head of SEPA Services at EBA Clearing. “RT1 OCT Inst will provide our users with an easy and convenient way to re-use their instant payment rails for international payments.”

Erwin Kulk, Head of Service Development and Management at EBA Clearing, added: “We believe that RT1 OCT Inst can also serve as an important stepping stone for our Immediate Cross-Border Payments (IXB) initiative, which is aimed at establishing service levels for the full payment journey in the US dollar and euro corridor and, potentially, other currency corridors.”  

Together with The Clearing House and Swift, EBA Clearing has been working on the IXB initiative, which aims to enhance cross-border payments in the euro and US dollar currency corridor and, potentially, additional corridors through the interlinking of and settlement synchronisation between instant payment systems.

 

Mastercard and Worldpay to fight payment fraud globally

Mastercard and Worldpay are partnering to help merchants resolve transaction disputes faster and with fewer chargebacks. A request for a refund triggered when a consumer disputes a transaction on their account, chargebacks are a growing issue: industry-wide chargeback volumes are expected to reach 337 million by 2026, a 42% increase from 2023 levels.

Through the partnership, Worldpay will offer Mastercard’s Ethoca Alerts to its 1 million merchants worldwide. The service provides an early warning system that helps prevent disputes from becoming chargebacks and reduces potential financial losses due to fraud.

In a statement, Mastercard said that Ethoca Alerts works across all payment brands and delivers insights that merchants can use to stop fulfilling goods and services. Merchants do not need to change their existing infrastructure or processes to use Ethoca Alerts. 

The collaboration also aims to improve merchant authorisation rates, enabling more of the US$2.3 trillion total transactions Worldpay processes to be completed successfully thanks to fewer erroneously declined transactions.

 

Simplifying Korea-Japan B2B payments

South Korea’s Hana Bank has signed a partnership deal with Japan’s largest payment processing company, GMO Payment Gateway, to launch a cross-border payment and settlement system for domestic companies expanding into Japan, according to The Korea Herald.

Under the partnership, the pair will collaborate in providing a wide range of services Korean companies from expert consulting for starting businesses and launching franchises in Japan to assistance on transferring e-commerce sales generated in Japan.

The collaboration should allow Korean companies operating in Japan to send money to Korea through Hana Bank’s internet banking without using a Japanese bank.

“As more domestic companies expand overseas, we provide a foundation to meet the needs of Korean firms for integrated global cash management services,” a Hana Bank official commented. “We will continue to expand services that can enhance the global competitiveness of domestic companies.”

In addition to the service, Hana Bank plans to support Korean e-commerce enterprises entering the Japanese market. The bank will use GMO-PG’s network of partners for local consultancy, online platform development, licensing challenges, and logistics.

 

Confluence integrates MSCI ESG Research data

Confluence Technologies is integrating comprehensive MSCI ESG Research data into its investing analytics solution, Style Analytics. This data should help meet the evolving needs of asset managers and fund selectors in an increasingly complex ESG landscape by offering in-depth analysis, comparison, and enhancement of portfolios.

The overlay of MSCI ESG Research data into Style Analytics allows for drill-down capabilities, fund-of-funds capabilities for United Nations SDGs, analytics, and factor analysis on an intuitive user interface. It provides users with actionable data, identifying optimal investment opportunities and monitoring their performance over time.

Style Analytics’ MSCI drill-down module comes at a time of growing interest in sustainability and ESG investing and the resultant need for ESG data and technology.

"In the rapidly evolving investment landscape, asset managers and fund selectors face the complex challenge of making informed decisions that align with their ESG investing objectives,” commented Damian Handzy, Senior Product Manager, Confluence. “With a robust platform for comprehensive ESG data analysis, their ability to compare and enhance portfolios and funds effectively is greatly enhanced.”

 

Dealer revenues from US leveraged loan trading top US$900m

After a notable drop in leveraged loan revenue in 2022, dealers saw a rebound in 2023, with US revenue topping US$900m. That total represents a 16% increase from 2021 and a 29% jump from 2022, according to a study from Coalition Greenwich. Over the past three years, leveraged loan markets have been on the same roller coaster as the rest of the fixed-income market.

“The mostly floating-rate market in leveraged loans was a port in the storm for investors as interest rates rose and drove down bond prices,” says Kevin McPartland, Head of Research at Coalition Greenwich Market Structure & Technology and coauthor of ‘U.S. Leveraged Loan Investors: Volume Expectations and Dealer Relationships’. “But the market still experienced volatility and a decline in issuance in 2022 as it grappled with expectations of a recession that never was.”

Expectations for future leveraged loan trading volumes are divided. Over 43% of research participants anticipate an increase in volume, with hedge funds expressing a more bullish sentiment. Conversely, 21%, primarily asset managers, foresee a decrease. This divergence could be attributed to differing investment strategies and risk appetites between these investor groups.

In the competition among dealers for loan trading volume, the study found that execution quality is paramount. Nearly half (48%) of buy-side leveraged loan trading volume is allocated to dealers based on the execution quality they provide. While execution quality dominates, access to new issues and efficient trading have become crucial considerations.

“As the market landscape continues to evolve and technology becomes a bigger part of the ecosystem, understanding these evolving investor priorities will be critical for dealers seeking to maintain and strengthen their positions,” added McPartland.

 

TreviPay adds self-financing option 

TreviPay has launched a self-financing option and enhanced payment application features to give sellers more control over their trade credit portfolio while leveraging its configurable technology platform. The option to use self-financing (an enterprise uses its capital to fund and support its net terms program), combined with TreviPay’s order-to-cash capabilities and partnerships, is designed to give sellers a wide range of choice and more control over how they fund their business growth. 

Other financing options available are using capital from TreviPay and working with a third-party bank partner through the Financial Partner Gateway, the firm’s suite of APIs for financial institutions. In all cases, options are managed through a single platform, resulting in fewer barriers in the purchasing and financing process as sellers look to gain a greater share of wallets from their best customers.  

TreviPay research shows that general inefficiencies, lack of support and lengthy onboarding are major pain points for B2B buyers, which may lead them to change suppliers or opt out of purchasing. Regardless of funding options, implementing a digitised A/R process automates mundane day-to-day tasks, eliminates manual errors and their associated costs, as well as speeds up customer onboarding.

“B2B buying relationships are complex and require unique commerce services to best meet their needs,” said Dan Zimmerman, Chief Technology Officer of TreviPay. “TreviPay’s flexible net terms programs allow our clients to leverage our technology and automated decisioning engine for managing A/R, while configuring a funding option that works for them. Each program helps streamline business payment processes, increase customer purchasing power and drive growth for our clients.” 

 

Danske Bank heads to the AWS cloud 

Danske Bank has signed a multiyear agreement with Amazon Web Services (AWS). As part of its Forward’ 28 strategy, the bank says it is offering customers new digital solutions, more self-service options, and easy and quick access to daily banking needs while becoming a more efficient bank. Additional investments in digitalisation and cloud technology are one means of achieving this strategic goal. 

Danske Bank will migrate selected infrastructure, applications, and data, including systems for personal, business and institutional customers, to AWS. The collaboration will give the bank access to applications, services and functionality on the cloud and optimise and modernise its applications by applying AWS technologies. The bank will also provide AWS training to over 1,500 employees and embed cloud skills into management courses to accelerate cloud adoption. 

To better serve its customers in an increasingly digital world, Danske Bank launched a company-wide tech transformation focused on greater use of cloud technology, data and AI to speed up the development of innovative customer solutions. By moving to AWS, the bank says it aims to scale these productivity gains across its entire organisation. 

The plans include migrating over 16,600 virtual and physical servers and more than 1,000 applications from the bank’s private cloud to AWS. The bank will leverage AWS’s full range of cloud technologies, including artificial intelligence/machine learning and Generative AI services, to boost internal developer productivity, power conversational interfaces, provide personalised recommendations, and gain insights from customer interactions to continually enhance its customers' digital banking experience.