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Base salaries for US treasurers increased 4.4% in 2023 - Industry roundup: 24 May

Base salaries for US treasurers increased 4.4% in 2023

Treasury and finance professionals in the US realised a 4.4% gain in their base salaries in 2023, down from a 5% increase in 2022, according to the 2024 AFP Compensation and Benefits Survey Report. The 2023 increase matches what was reported for 2021.

Executive- and staff-tier professionals earned an average increase of 4.2%, while management-tier professionals saw the most significant growth of the three job tiers at 4.6%. In determining a financial professional’s potential for promotion, the primary factors cited by respondents were increased job responsibility (78%) and opportunity earned due to company growth (62%).

Slightly over two-thirds (68%) of organisations awarded bonuses to their employees in 2023. Some 89% of organisations awarded cash bonuses, and 41% awarded their employees stock options.

The survey also found that employees cited limited resources (41%) and the volume of work (39%) as the most significant challenges they faced. The top criterion for measuring job performance is meeting pre-determined objectives/goals (71%).

Talent management remains a concern, with 60% of respondents citing recruiting skilled talent within treasury and finance as an issue at their organisation. Other talent management issues include upskilling talent (48%) and retaining talent (41%). 

Flexibility in work schedules is an essential benefit to 85% of survey respondents, and the majority of employers offer their employees a flexible working environment.

“While the treasury and finance profession remains strong, it will continue to grow and evolve over the coming years and so too will the skills necessary for success,” said Jim Kaitz, President and CEO of AFP. “The results from the 2024 AFP Compensation and Benefits Survey Report demonstrate the importance of offering employees a competitive compensation and benefits package as well as focusing on upskilling talent.”

The survey was conducted in February 2024 and received responses from 1,280 treasury and finance professionals located in the US with diverse corporate profiles. The survey collected data on total compensation during the calendar year 2023 and base salaries effective January 1, 2024. Respondents shared their own salary information, and some senior professionals also shared salary details for others on their team, resulting in salary information for 4,930 incumbents in total.

 

European Council gives final green light to the first worldwide rules on AI

The European Council has approved a law aiming to harmonise rules on artificial intelligence, the so-called Artificial Intelligence Act. The flagship legislation follows a ‘risk-based’ approach, which means the higher the risk of causing harm to society, the stricter the rules. It is the first of its kind worldwide and could set a global standard for AI regulation.

The new law aims to foster the development and uptake of safe and trustworthy AI systems across the EU’s single market by private and public actors. At the same time, it aims to ensure respect of fundamental rights of EU citizens and stimulate investment and innovation on artificial intelligence in Europe. The AI act applies only to areas within EU law and provides exemptions such as for systems used exclusively for military and defence as well as for research purposes.

The new law categorises different types of artificial intelligence according to risk. AI systems presenting only limited risk would be subject to very light transparency obligations, while high-risk AI systems would be authorised but subject to a set of requirements and obligations to gain access to the EU market. AI systems such as, for example, cognitive behavioural manipulation and social scoring will be banned from the EU because their risk is deemed unacceptable. The law also prohibits the use of AI for predictive policing based on profiling and systems that use biometric data to categorise people according to specific categories such as race, religion, or sexual orientation. 

The AI act also addresses the use of general-purpose AI (GPAI) models. GPAI models not posing systemic risks will be subject to some limited requirements, for example, with regard to transparency, but those with systemic risks will have to comply with stricter rules. 

To ensure proper enforcement, several governing bodies are being set up:

  • An AI Office within the Commission to enforce the common rules across the EU.
  • A scientific panel of independent experts to support the enforcement activities.
  • An AI Board with member states’ representatives to advise and assist the Commission and member states on consistent and effective application of the AI Act.
  • An advisory forum for stakeholders to provide technical expertise to the AI Board and the Commission. 

The fines for infringements to the AI act are set as a percentage of the offending company’s global annual turnover in the previous financial year or a predetermined amount, whichever is higher. SMEs and start-ups are subject to proportional administrative fines. 

Before a high-risk AI system is deployed by some entities providing public services, the fundamental rights impact will need to be assessed. The regulation also provides for increased transparency regarding the development and use of high-risk AI systems. High-risk AI systems, as well as certain users of a high-risk AI system that are public entities will need to be registered in the EU database for high-risk AI systems, and users of an emotion recognition system will have to inform natural persons when they are being exposed to such a system.

The AI act also aims to provide for an innovation-friendly legal framework and to promote evidence-based regulatory learning. The new law foresees that AI regulatory sandboxes, enabling a controlled environment for the development, testing and validation of innovative AI systems, should also allow for testing of innovative AI systems in real world conditions. 

After being signed by the presidents of the European Parliament and of the Council, the legislative act will be published in the EU’s Official Journal in the coming days and enter into force twenty days after this publication. The new regulation will apply two years after its entry into force, with some exceptions for specific provisions. 

 

CFOs must treat cybersecurity as a business decision

With more executives identifying security as critical for enterprise revenue growth, the CFO needs to be comfortable handling cybersecurity investments that provide defensible performance and outcomes to business stakeholders, according to Gartner, Inc.

“There is no such thing as perfect protection,” said Paul Proctor, Distinguished Vice President Analyst at Gartner. “No matter how much an organisation spends, it can still get hacked the next day, so the real question is: can finance leaders defend the choices they have made on cybersecurity to their key stakeholders?”

Executives must develop a cybersecurity posture they can defend to shareholders, regulators, employees, customers, and partners in the event of an incident. Doing so results in more effective cyber protection. The best way to do this is to treat cybersecurity as a business investment.

This means that CFOs need to determine the business value of cybersecurity using outcome-driven metrics and a business value benchmark. “The emergence of protection level benchmarks is a critical step in the development of a cybersecurity standard of due care,” asserted Proctor.

This enables CFOs to make informed cybersecurity investments that balance the need to protect and run their business while also better managing chief information security officer (CISO) demands for budget.

“Treating cybersecurity in a manner that reconciles measurable levels of protection with the needs of the business, which are called Protection-Level Agreement (PLA) decisions, creates a defensibility of their implementation,” added Proctor. “This kind of defined agreement leads to better cybersecurity investment decisions, better execution and a safer world overall.”

For example, instead of reporting on the number of attacks an organisation receives, executives should report on the number of days to patch critical systems. This has a direct line of sight to the value proposition of patching, which is to limit the number of days a vulnerability is available for hacking. Then, executives can weigh the cost of faster patching against the reduced risks to critical systems, which is a business decision based on a measurable level of protection.

“If an organisation’s PLA is for 30-day patching of critical systems, and those systems get hacked via an unpatched vulnerability after 35 days, that is a control failure: security and IT have failed to deliver on the agreement,” emphasised Proctor. “However, if the same vulnerability is hacked in 25 days, that is as a result of a business risk decision: a concrete, measurable, enforceable assertion of risk-appetite.”

There are two measures of cybersecurity value: operational value delivery and the target level of protection. Both are important to create defensibility for executives. Did they pick defensible targets? Did IT and security deliver their desired level of protection?

“The organisation must make conscious decisions regarding what it will do, and more importantly, what it will not do to protect itself,” concluded Proctor. “Residual risk must be accounted for, and as the business grows, CISOs, CFOs, and other executives must continually reassess how much risk is appropriate.”

 

Cross-boundary e-CNY pilot in Hong Kong expands scope

The Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBoC) have made further progress in the e-CNY pilot for cross-boundary payments to expand the scope of e-CNY pilot in Hong Kong to facilitate the setup and the use of e-CNY wallets by Hong Kong residents, as well as the top-up of e-CNY wallets through the Faster Payment System (FPS).   

The interoperability between the FPS and the e-CNY system operated by the Digital Currency Institute (DCI) of the PBoC also marks the first linkage of a faster payment system with a central bank digital currency system worldwide. It provides a use case which underscores interoperability, a key area set out in the G20 Roadmap for enhancing cross-border payments.

The expansion of the cross-boundary e-CNY pilot in Hong Kong is one of the six measures announced by the PBoC earlier this year under the “three connection, three facilitation” initiative.  With the expansion of the pilot scope, users can now set up e-CNY personal wallets in Hong Kong, which requires only their Hong Kong mobile phone numbers.  The e-CNY wallets can be used for cross-boundary payments but cannot be used for person-to-person transfers.  

Users can top up their e-CNY wallets via the FPS through 17 retail banks in Hong Kong.  In addition to the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), the e-CNY can also be used in other mainland pilot areas.  Progress is being made on the interoperability of e-CNY with traditional e-payment service providers in the mainland, which will also provide more consumption choices to Hong Kong residents in the future. 

The HKMA will continue working with the DCI to explore upgrading the e-CNY wallet to higher tiers through real-name verification and enhancing the interoperability in payments to provide more convenient user experiences, whether for individuals or merchants.  Additionally, corporate use cases will also be explored with a view to facilitating cross-boundary trade settlement.

 

Regional differences in climate investing enthusiasm highlighted

Robeco’s fourth annual survey of 300 investors has revealed significant regional differences in attitudes towards climate investing. The Asia-Pacific (APAC) region powers ahead while interest in North America lags behind. The number of APAC investors for whom climate change is central to, or a significant part of, their investment policy was 79%, surpassing Europe (76%) for the first time. 

Enthusiasm is, however, continuing to fall in North America amid political wrangling over the perceived cost of integrating environmental, social and governance (ESG) factors into investments, where only 35% prioritise climate investing. This knocked back the global average to 62% from 71% in 2023 but still signals that most investors prioritise climate investing.

Insurance companies stand out for making a net-zero commitment compared to other institutional and wholesale investors, perhaps driven by their unique exposure to climate change from both sides of the balance sheet. Some 39% of insurers have made a public commitment, and another 20% are in the process of doing so. Regionally, North American investors are more likely to be ‘commitment-phobic’; nearly half (46%) have ruled out a commitment to net zero, up from 26% last year.

Over three-quarters of investors expect the transition to be disorderly in some way, with too little done collectively. Only 15% expect an orderly transition in which governments and markets work together to cut emissions, and 8% expect a ‘hot-house world’ in which very little action is taken to avoid global warming. On this note, fewer investors believe the core Paris Agreement 2-degree goal can be achieved. Just 30% think this is possible compared to 38% in 2023, while 41% think it is not achievable, up from 30% the last time.

Investors are currently allocating more funds to general climate strategies rather than those focusing specifically on 'transitioning' companies. Only 37% are investing in strategies targeting companies with credible transition plans, although a majority (63%) plan to do so in the next one to two years. The transition issue has a bearing on the investment styles preferred. Some 45% use active equity strategies that specifically target allocations to transition-oriented companies, while 43% invest in green or sustainability-focused bonds. This approach is again more popular in Europe and APAC.

“The transition among corporates and others from brown to green, as they decarbonise, cannot take place without the active involvement of investors, rewarding those making the change and withdrawing support from the unwilling or reluctant,” said Lucian Peppelenbos, Climate and Biodiversity Strategist at Robeco. “One interesting facet of this year’s findings is how investors in the Asia-Pacific region are forging ahead on sustainability, as they increase their support for the climate transition.”

 

RMB remains fourth most active global payments currency

Swift’s RMB Tracker has shown that in April 2024, the RMB remained the fourth most active currency for global payments by value, with a share of 4.52%. Overall, RMB payment value decreased by 3.07% compared to March, while all payment currencies increased by 0.58%. Regarding international payments, excluding payments within the Eurozone, the RMB ranked fifth with a share of 3.08% in April.

The tracker uses data from live and delivered MT 103 and MT 202 - customer-initiated and institutional payments - and ISO equivalent messages exchanged on Swift. RMB’s fourth place out of all international currencies in April saw it behind the US dollar (47.31% of all global payments value), the euro (22.55%), and the British pound (6.84%).

As a global currency in the trade finance market, based on live and delivered inter-group only MT 400 and MT 700 messages exchanged on SWIFT, RMB ranked third based on value, accounting for 4.71% of April’s trade finance transactions. This field remains dominated by the US dollar (84.11%), while RMB also trailed the euro (5.94%).

Regarding FX spot transactions, RMB was April's sixth most used currency for FX confirmations. The US dollar claimed the top spot, followed by the euro, pound, yen and Canadian dollar. In terms of the top economies carrying out FX spot transactions in RMB, the UK came out on top in April (39.31%), followed by the US (14.38%), Hong Kong (11.95%), France (8.81%) and China (8.14%).

 

Swedbank enters strategic partnership with Aktia in Finland

Swedbank has entered a strategic partnership with Aktia, a Finnish bank, asset manager and life insurer, to expand the bank’s corporate offering on the Finnish market. The pair will provide a complementary offering to support the continued growth of their respective customers in the Nordic region.

Swedbank’s ambition is to continue to focus on large corporations, midcorps, and institutions in the Finnish market and develop its business in these segments. The strategic partnership is designed to be a way to continue building on foundations where the parties’ respective offerings complement each other. The collaboration entails that customers outside of Aktia’s area of focus will have the opportunity to be served by Swedbank Finland, while those outside of Swedbank Finland’s focus will, in turn, have the opportunity to be served by Aktia.  

As part of this change, Swedbank will wind down its cash management and payment services offering in Finland. Swedbank’s corporate customers who use these services will be given the opportunity to be served by Aktia.  

 

Finastra helps LGT fast-track compliance with EU instant payments regulation

Finastra has been selected by LGT to roll out instant payment services in Austria and Liechtenstein, with other markets to follow. LGT will implement Finastra’s payment hub using a model bank implementation approach, to accelerate its readiness to meet the EU instant payments regulatory timeline. 

By uncoupling payment processing from its core banking platform and implementing the new solution, the bank should also now be able to meet the anticipated growth in instant payment volumes while providing the required 24/7 service availability.

“Payments are becoming increasingly sophisticated, and it is crucial that we continue to evolve to meet our customers’ business needs and regulatory requirements,” said Bernhard Strauch, Head Securities & Payments Services at LGT Financial Services. “We selected Finastra’s payment hub as it supports multiple payment types within one standalone system, while enabling seamless integrations of new services as and when we need them.”

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