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GenAI’s most immediate impact is explaining forecast and budget variances - Industry roundup: 28 June

GenAI’s most immediate impact is explaining forecast and budget variances

Finance leaders say generative AI (GenAI) will have the most impactful use case in forecast and budget variance explanations, according to a survey by Gartner, Inc. Respondents anticipate revenue and spend data classification and management reports as the following most impactful use cases for GenAI in finance.

Recent GenAI advancements have refined models, so they are more capable of supporting tasks related to forecasts and variances, industry information and other factors that generate hypotheses around business performance, which can be tested through statistical models.

Regarding potential challenges around implementing GenAI, finance leaders expect to contend with issues around talent, data accuracy and governance, technical compatibility, budgeting and change management. Data accuracy and talent limitations cause slightly more concern, although the relatively even distribution of other potential barriers reiterates financial leaders’ relatively limited experience with GenAI.

Finance leaders seeking to adopt GenAI in their function should keep an open mind, the Gartner report suggests, and involve key stakeholders, including the finance leadership and IT teams, to discuss priorities and expectations. They should also identify when to approach vendors to help determine which GenAI offerings are worth acquiring for the organization’s needs. Finally, CFOs should audit critical data with respective owners before implementation to decide what modifications must be implemented for use by a GenAI model.

 

BIS tells central banks to prepare for AI’s profound impact on economy 

The rapid adoption of AI requires central banks to embrace the new technology, the Bank for International Settlements (BIS) has said, urging policymakers to anticipate the transformative effects of AI on the economy and to use it to sharpen their own analytical tools in pursuit of financial and price stability.

A special chapter of the BIS Annual Economic Report 2024 lays out the implications of new AI applications for central banks. AI is poised to impact the financial system, labour markets, productivity and economic growth. With widespread adoption, it could enhance firms' ability to adjust prices faster in response to macroeconomic changes with repercussions for inflation dynamics. The job of central banks as stewards of the economy will also be directly affected as frontline users of AI tools.

Central bank use cases for AI include enhancing nowcasting by using real-time data to predict inflation and other economic variables better and to sift through data for financial system vulnerabilities, allowing authorities to manage risks better. Data have become an even more valuable resource with the advent of AI and will be the cornerstone of central banks' use of the technology. 

The effects on demand and, therefore, on inflationary pressures will depend on how quickly displaced workers can find new jobs and whether households and firms correctly anticipate future gains from AI. In the short-run, supply could outstrip demand, which could lower pressures, but those effects could reverse over time as demand also catches up through higher incomes. Central banks must stay attuned to these dynamics in their monetary policy.

The report said that AI can improve efficiencies and lower costs in the financial sector for payments, lending, insurance, and asset management. However, the BIS cautioned that AI also introduces risks, such as new types of cyber attacks, and may amplify existing ones, such as herding, runs, and fire sales. The BIS Innovation Hub is testing AI's capabilities in several areas with central bank partners.

 

Data confirms UK out of technical recession

UK gross domestic product (GDP) is estimated to have increased by 0.7% in Q1 2024, according to data from the Office for National Statistics. This has been revised up from a first estimate increase of 0.6%. GDP is estimated to have increased by 0.3% in Quarter 1 2024 compared with the same quarter a year ago.

In output terms, services grew by 0.8% in the quarter, with widespread growth across the sector. This follows three consecutive quarters of decline. The largest contributor to the growth in services output was a 1.8% increase in the professional, scientific and technical activities subsector. This was primarily driven by growth of 7.2% in scientific research and development and growth of 3.3% in legal activities.

Elsewhere, the production sector grew by 0.6%, revised down from a previous estimate of 0.8% growth. The production sector revision is because of a downward revision in the manufacturing subsector (the largest contributor), which is now estimated to have increased by 1.1% (previously 1.4%). The construction sector fell by 0.6%, and the level of construction output in Q1 was 0.4% lower than the same quarter a year ago.

Commenting on the UK GDP data, Douglas Grant, Group CEO of Manx Financial Group, said: “The most recent GDP figures in the UK serve as a stark reminder that despite certain recent positive indicators, challenges still persist for UK businesses.” 

 

Raiffeisen taps Surecomp to enhance trade finance customer experience

Surecomp has been selected by Raiffeisen Bank International AG (RBI) to reinforce its trade finance customer engagement. Aiming to elevate the bank’s service delivery, RBI will be using Surecomp’s collaborative trade finance platform RIVO to streamline the management and processing efficiency of guarantees and letters of credit (LC).

RIVO is deployed as a SaaS solution hosted by Amazon Web Services (AWS), which should enable Raiffeisen to enrich its business capabilities without the need for internal IT resources. RBI’s global corporate customers will be serviced with a fully digital workflow and processes.

“Delivering a superior digital service to our customers is our top priority,” commented Sabine Zucker, Head of Group Transaction Banking at RBI. “Recognising Surecomp’s market standing and its adoption by numerous prominent European trade finance banks, we appreciated their grasp of our business needs, attention to customer experience, and their practical methodology.”

 

ECB selects Boerse Stuttgart to participate in EU-wide blockchain tests

Boerse Stuttgart Group says it is the only exchange operator in Europe to have successfully applied for the second wave of the European Central Bank's (ECB) EU-wide tests, in which the settlement of blockchain-based financial transactions against central bank money is being explored.

With its partners, Commerzbank, Deutsche Bank, DZ Bank, LBBW, Bankhaus Metzler and V-Bank, Boerse Stuttgart Group will test the settlement of exchange transactions with tokenised securities against euros for the first time. The banks act as trading and settlement participants and are directly connected to the new blockchain-based settlement solution of Boerse Stuttgart Group. The Deutsche Bundesbank is providing its trigger solution for the test, which connects blockchain transactions with the traditional euro payment system.

Boerse Stuttgart Group will settle secondary market transactions of tokenised securities directly between trading participants on the blockchain within minutes, without a central securities depository and against payments in central bank money. This end-to-end delivery-versus-payment process enables peer-to-peer settlement and reduces the number of intermediaries and counterparty risks.

Until November, Boerse Stuttgart Group will implement its use case in a test environment with the participating banks. The aim is to gain practical insights into the scalability, efficiency and speed of the settlement process involving central bank money. On behalf of Boerse Stuttgart Group, its broker EUWAX AG and its crypto custodian Boerse Stuttgart Digital Custody are also involved in the ECB tests.

 

Airwallex integrates with Intuit QuickBooks for multicurrency reporting

Airwallex, a global payments and financial platform, has announced an integration with QuickBooks. With the QuickBooks Bank Feed integration, Airwallex customers can connect with the accounting software and sync their Airwallex transactions across supported currencies into their QuickBooks Online account. This should eliminate data entry and speed up the reconciliation process.

With this integration, Airwallex customers can eliminate repetitive manual inputs which should help to better manage their time and cash flow. It is possible to sync card, foreign exchange (FX), payment, and transfer transactions across Airwallex’s currency balances using the QuickBooks Multicurrency feature. An OAuth connection service provides enhanced security when authorising automated transaction syncing between QuickBooks and Airwallex. 

Adaptovate, a global management consulting company headquartered in Sydney, has been an Airwallex customer for four years and a beta customer for the QuickBooks Bank Feed integration. 

“As an Australian-founded business with offices across Europe, Southeast Asia, and North America, we need a global and always-on platform to support our financial operations,” said Douglas Ross, Co-Founder, Senior Partner and Managing Director at Adaptovate. “Airwallex’s cross-border payments and card capabilities have been critical to our ability to operate across currencies and manage money responsibly. The unique multicurrency bank feed integration with QuickBooks streamlines our reconciliation and money movement processes even further, helping us get back to what we do best: unlocking value for our global clientele.”

 

DBS powers Mashreq’s global same-day cross-border payments

DBS and Mashreq have announced a collaboration that extends same-day and near-instant peer-to-peer cross-border payments to Mashreq’s retail customers in selected markets across Asia Pacific, Europe and the Americas.

The service is powered by DBS Globesend, a cross-border payment solution enabling fast and transparent payments covering up to 132 currencies across 190 markets. With the service, customers can make same-day cross-border payments to popular digital wallets, in line with the growing demand for e-commerce transactions. In addition, payments to Singapore and Hong Kong can be tracked end-to-end in real-time, providing greater certainty and peace of mind.

“Global cross-border payment flows have surged as businesses, investors and talent pursue opportunities in new markets,” said Terence Yong, Global Head of Sales, Global Transaction Services at DBS Bank. “This is especially evident in Asia which has attracted considerable business attention globally, including from the United Arab Emirates. Our longstanding relationship with Mashreq aims to facilitate the seamless flow of capital, ultimately benefitting businesses, end-consumers and communities.”

 

CIBC Innovation Banking provides C$10m financing to Clariti

CIBC Innovation Banking has announced C$10m in growth capital financing for Clariti, a provider of purpose-built community development solutions for North American local governments. This funding will accelerate the development of new product features, support the ongoing integration of permitting technology provider Camino, which was acquired by Clariti in 2023, and be reinvested in customer service teams to support the company’s rapidly growing customer base across North America.

Clariti’s platform helps governments of all sizes simplify the permitting process, from pre-application to review and approval. It is used by many local governments across Canada and the United States. The cities of Albany, NY, and Honolulu, HI, recently announced selecting Clariti to simplify and modernise their planning and permitting processes. The City of Tampa, FL, launched Clariti's Camino Guide to help customers quickly identify the permits they need and the steps to submit their applications correctly.

Clariti also recently received an investment of C$18m from Vistara Growth, which, in combination with CIBC Innovation Banking, will accelerate growth across the company.

“With the CIBC Innovation Banking facility in place we can confidently accelerate plans to scale our customer-facing teams during a time of continued leading growth,” said Cyrus Symoom, Co-CEO, Clariti. “Additionally, Vistara Growth’s investment underscores confidence in our innovative solutions driving digital transformation across government operations, simplifying processes, and enhancing citizen services.”

 

OBE programme aims to expand UK open banking blueprint abroad

Open Banking in a Box, a programme from Open Banking Excellence (OBE), is leveraging the UK’s prominent open banking position to help regulators globally develop their own open banking markets.

The programme gives access to insights, expertise and practical advice honed from the UK’s experience in creating the blueprint for open banking. This provides the building blocks for regulators globally to drive transformational change in their own countries. This programme is designed to make it simpler and faster for regulators to shape and implement their domestic open banking and open finance frameworks and policies.

OBE says Open Banking in a Box can match the right capabilities and skill sets to each project, sharing best practices to fast-track open banking development. By better understanding the challenges the UK faced and the lessons learned, regulators globally could make more informed choices that lead to a thriving and sustainable ecosystem.

The programme will also provide strategic and operational workshops covering open banking use cases, operating models, monetisation, and support in growing a thriving open banking ecosystem. OBE says it provides support at each phase of a country’s open banking journey.

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