Lack of reliable data holding FP&A back from technology success - Weekly roundup: 21 January
by Ben Poole
Lack of reliable data holding FP&A back from technology success
Financial planning and analysis (FP&A) professionals identify bad data — more often than people skills or tools — as the primary hindrance to their technology success. Some 61% of respondents to the 2025 AFP FP&A Benchmarking Survey Report: Technology and Data stated that the data's lack of reliability posed a challenge, while 60% reported that the lack of accessibility to data held them back.
FP&A juggles multiple planning and reporting tools, which is both a cause and a result of the data challenges. More than half of survey respondents reported using at least eight categories and 10 types of reporting tools on a quarterly basis. The top reasons cited for this include the inability to merge and analyse data coming from multiple sources, systems and geographies; organisations’ failure to upgrade legacy systems; a lack of system integration; and an insufficient number of decision-makers willing to use the tools.
Spreadsheets remain the dominant tool for FP&A professionals, with 96% of survey respondents using them for planning, 93% using them for reporting purposes on a daily or weekly basis, and all using them on at least a quarterly basis. These numbers hold true when considering company size, geography, type of ownership and level of seniority.
Over 80% of survey respondents reported they view technology and data skills as valuable as finance skills. The most common technology skills FP&A professionals hire for are “last-mile skills,” which focus on business intelligence, spreadsheets and building dashboards. A significant majority of practitioners (79%) hire for specific technology skills, and 96% hire for general technology skills.
Enterprise performance management (EPM) tools, intended to minimise the problem of data being neither reliable nor accessible, are broadly applied across FP&A. Most survey respondents (71%) use them for planning at least quarterly, and over half use them for planning daily or weekly.
The use of artificial intelligence (AI) in FP&A has not reached a level of commonality, with just 23% of survey respondents using it on a daily, weekly or monthly basis. That said, 40% of survey respondents are in the testing phase and plan to implement AI in the next year.
Dim sum and other bonds to remain popular amid US-China rate gap - Moody’s
Dim sum bonds - renminbi-denominated bonds issued in offshore markets - convertibles and exchange bonds are emerging as lower-cost alternatives to senior unsecured US dollar bonds for Chinese non-financial companies with significant offshore funding needs, according to a report from Moody’s. In 2024, the issuance volume of dim sum bonds more than tripled from the low base in 2023 to CNH 56.4bn ($7.9bn). Convertible and exchangeable issuance reached a three-year high of $12bn. Moody’s expects the elevated issuance of dim sum bonds, convertibles and exchange bonds to continue in 2025 as Chinese companies raise offshore funds for overseas investments, share repurchases and refinancing.
Chinese non-financial companies have significant offshore funding needs. Some companies have accelerated overseas expansion to counter a slowing domestic market. Others have been conducting buybacks of offshore shares, while many are facing a large upcoming maturity wall of cheap offshore funding raised during the pandemic.
Conventional US dollar bonds remain pricey for Chinese companies amid a wider rate differential. The US-China rate gap will likely remain wider until further rate cuts from the Federal Reserve. This will deter companies, especially investment-grade state-owned enterprises (SOEs), from issuing large quantities of conventional offshore US dollar bonds. Meanwhile, investor risk aversion after multiple property company defaults has driven up interest rates on US dollar bonds for high-yield companies.
Dim sum bond issuance more than tripled in 2024. The interest rate differential between the offshore renminbi (CNH) and the US dollar makes dim sum bonds attractive for Chinese companies. Issuing these bonds also helps reduce currency mismatch for companies that mostly earn in renminbi. For example, Alibaba Group issued CNH17bn in November 2024, while large central government-owned construction companies like China Railway Construction Corp Ltd and China Communication Construction Co Ltd sold CNH3.5bn and CNH7.1bn between August and October 2024, respectively. Moody’s expects dim sum bonds to remain popular in 2025.
The report also expects the surge in convertible and exchange bond issuance to persist. Convertible and exchange bonds are attractive to Chinese companies because of their much lower coupons compared with conventional senior unsecured US dollar bonds. If conversion occurs, they can also help reduce leverage. The Moody’s report highlights companies in the technology sector and companies with lower equity values to lead such issuance in 2025, driven by high offshore funding needs and share price volatility.
Investor bullishness fades as inflation caution rises
Investors are turning more bearish amid rising concerns about inflation and expectations of fewer rate cuts this year by the Federal Reserve, according to the latest Marquee QuickPoll of market sentiment, which surveyed nearly 680 institutional investors in early January.
More than half of respondents to the poll expect the Fed funds rate to be 3.75% or higher at the end of 2025. This implies about 50 basis points of cuts for the year. Goldman Sachs Research forecasts two cuts this year with a terminal rate of 3.5% to 3.75%. Views on inflation were split, with about half of survey respondents expecting core inflation to end the year above 2.5%.
The percentage of investors describing themselves as bullish or slightly bullish declined to 42% in January, from 60% in early December and 67% in November. “This could be partly attributed to the change in tone at the December FOMC, with less easing expected and more caution around inflation,” commented Oscar Ostlund, Goldman Sachs’ global head of content strategy, market analytics, and data science. “But on aggregate, investors are still bullish on risk assets.”
In line with prior months, investors say their favourite investment is to hold developed market equities, with developed market bonds and gold coming in as their second-favourite investments.
UK headline inflation drops to 2.5%
The UK’s Consumer Prices Index (CPI) rose by 2.5% in the 12 months to December 2024, down from 2.6% in the 12 months to November. On a monthly basis, CPI rose by 0.3% in December, down from 0.4% the previous December.
Core CPI (excluding energy, food, alcohol, and tobacco) rose by 3.2% in the 12 months to December 2024, down from 3.5% in November; the CPI goods annual rate rose from 0.4% to 0.7%, while the CPI services annual rate fell from 5.0% to 4.4%.
The largest downward contribution to the monthly change in CPI annual rates came from restaurants and hotels. In this sector, the annual inflation rate was 3.4% in December. This is down from 4.0% in November and is the lowest annual rate since July 2021. On a monthly basis, prices fell by 0.1%, compared with a rise of 0.5% a year ago. The easing in the annual rate mainly reflected a downward effect from hotels, where prices fell by 1.9% on the month, compared with a rise of 3.1% a year ago. Restaurants and cafes provided a smaller downward effect, where prices rose by 0.2% on the month, down from the 0.3% monthly rise a year ago.
The largest upward contribution in the statistics came from transport. Overall prices in the transport division fell by 0.6% in the year to December 2024, compared with a fall of 1.1% in the year to November. On a monthly basis, prices rose by 1.0% in December 2024, up from 0.6% a year ago. The change in the annual rate was mainly the result of upward effects from motor fuels and secondhand cars, partially offset by a downward effect from airfares.
“The economic environment is still nowhere near stable, with inflation yo-yoing back and forth from the 2% target,” commented Paul Noble, CEO of Chetwood Bank. “The uncertainty surrounding the budget has not dissipated, but these figures will help to calm nerves nationwide, at least in the short term. However, the spectre of public sector wage increases will keep experts guessing as the year goes on, and the Bank of England will be watching CPI closely as they consider the timing of their next rate change.”
Belvo and J.P. Morgan Payments to boost recurring payments in Mexico
Belvo and J.P. Morgan Payments have joined forces with the goal of transforming the recurring payments ecosystem in Mexico. This strategic collaboration aims to provide businesses with an automated and efficient solution for managing recurring payments through direct debit, a core payment method among companies looking to streamline their financial processes.
The collaboration is designed to open new opportunities for businesses across various sectors to implement direct debit quickly and securely to help enhance the user experience and customer retention.
Belvo, with its advanced technology and seamless integration, provides the ideal solution to automate these collections and facilitate the process for both businesses and end users. Belvo now joins the J.P. Morgan Payments Partner Network, which delivers end-to-end payment experiences through an ecosystem of third-party applications that can help grow businesses faster.
Industries such as utilities, subscription services, insurance, lending, and automotive will be able to directly benefit from automating their recurring collections. By eliminating the need for users to make manual payments, direct debit reduces errors and ensures that payments are made on time, which in turn improves companies’ liquidity.
PSR sets out updated strategy to deliver competition, innovation, and growth
The UK’s Payment Systems Regulator (PSR) has set out commitments for the next two years following the mid-term review of its five-year strategy. Payments are vital to the UK economy, and PSR plays an important role in supporting a growing, competitive payments sector. These commitments set out an impactful programme of delivery as the regulator seeks to achieve world-leading payment systems where competition and innovation deliver secure, accessible, and value-for-money services that meet the needs of people and businesses.
Since launching its strategy in 2022, the PSR says it has made strong progress in delivering positive change, including introducing protections against APP fraud, advancing Open Banking, and reviewing card fees. However, the payments landscape is constantly evolving, with new technological and market innovations.
This review reflects extensive engagement with stakeholders, trends in payments – both at home and abroad, the UK government’s growth mission, and the impact of the National Payments Vision (NPV). Having reflected on these developments, the PSR now says it will focus on three core commitments within its remit for the remainder of the Strategy term. These are to:
- Complete the important work underway – protecting consumers and supporting competition. The PSR will fully embed its APP fraud reimbursement requirements, including commissioning an independent review, and deliver the outcomes from its card market reviews. The PSR will work closely with the FCA to enable it to take forward work on the overall framework for commercial Open Banking payments, focussing on the initial phase of Variable Recurring Payments, which offers consumers more choice and control when making payments.
- Drive forward, with the Bank of England, work to upgrade the Faster Payments system, and reform of Pay.UK, as well as assess long term retail infrastructure needs. This is critical to providing a sound foundation for future innovation and competition in payments.
- Sharpen its focus on competition and innovation in payments systems, supporting economic growth and enabling the ecosystem of the future. The PSR will further build its innovation capability, focussing on removing unnecessary barriers to payments innovation and helping to create the conditions for innovation in payment systems to thrive. The PSR will ensure that as it takes action, it considers how that supports economic growth and will play its role in supporting the Government’s growth mission.
The top 5 business banking trends shaping 2025
Digital innovation, and centralising cash and liquidity management, are among the top five business banking trends identified for the year ahead in a report from Alkami Technology. These trends emphasise the importance of leveraging digital innovation, data-driven strategies, and proactive relationship-building to create meaningful partnerships, achieve sustainable growth and empower businesses with smarter, more efficient financial tools.
One area of focus for financial institutions is how tools like artificial intelligence and automation can drive transformation. “We’ve taken steps towards adopting tools like artificial intelligence and automation,” said Samantha Pause, senior vice president and chief innovation officer at Mascoma Bank. “We’re starting to implement many of these tools and we’re being very intentional about how we approach it. It’s about laying the groundwork to ensure we’re doing it responsibly and effectively.”
The five key business banking trends for 2025 in the report are as follows:
- Modernising processes through digital innovation: Automating manual processes with tools like robotic process automation (RPA) to enhance efficiency and compliance.
- Leveraging data analytics: Using predictive modelling and real-time insights to deliver hyper-personalised services and anticipate business needs.
- Reducing risk and preventing fraud: Strengthening cybersecurity and implementing real-time fraud detection and automated compliance solutions.
- Building profitable relationships: Empowering relationship managers with data to provide tailored solutions and act as strategic advisors.
- Centralising cash and liquidity management: Offering businesses real-time visibility into financial positions while improving treasury services and risk management.
Data analytics continues to be a powerful driver for smarter decision-making and fraud prevention. “We use data analytics to understand our members’ needs and offer targeted solutions in addition to behavioural analytics tools to monitor how users interact with online banking,” said Jeffrey Luczak, vice president, cash management at Landmark Credit Union. “If something seems out of pattern, it can alert us or block access to prevent fraud.”
Similarly, enhancing treasury and cash management products remains a top priority for financial institutions seeking to meet client demands. Kyle Guest, vice president of business banking at Mountain America Credit Union said, “We invest heavily in treasury and cash management products, continually enhancing them to meet our members’ needs. When evaluating products to offer to our business clients, we ask if they save time, improve efficiency, or reduce costs.”
Subway wins Alexander Hamilton Award for Treasury Transformation
Subway has won an Alexander Hamilton Award in Treasury & Risk’s Treasury Transformation category. Subway’s strategic implementation of GTreasury’s treasury and risk management platform played a significant role in how the company successfully modernised and transformed its global treasury operations.
The awards recognise companies taking big leaps forward in treasury, finance, and risk management through process innovation and technology implementation. Subway’s transformation has revolutionised the company’s cash management capabilities, achieving 98% cash visibility across its global operations while consolidating its banking partnerships.
The transformation enabled Subway to establish automated reconciliations, implement sophisticated foreign exchange hedging programs, and develop new cash forecasting processes. This new treasury infrastructure proved crucial during Subway’s recent acquisition, supporting the largest whole-firm securitisation in history with seamless weekly certification processes.
Financial services professionals hail apprenticeships but gaps remain
Research from Davies, a specialist professional services and technology business serving insurance and highly regulated markets, highlights the widespread benefits that apprenticeship schemes bring to financial services organisations, while also shedding light on the missed opportunities for firms not investing in such initiatives.
504 full-time employees survey respondents from UK financial services firms were asked about their organisation’s approach to apprenticeships. Of those surveyed, 57% confirmed their organisation has an apprenticeship scheme in place, while 35% said theirs does not, and 8% were unsure.
Among organisations running a scheme, 73% indicated that permanent roles are typically offered at the outset for those who complete their apprenticeships. These schemes were also widely viewed as a cost-effective recruitment strategy, with 71% stating they are more economical than hiring graduates or junior employees through other channels.
The survey also found that 85% of respondents believe apprenticeship schemes help build loyalty between participants and their organisation, while 78% reported that participants in their apprenticeship programmes often progress to long-term careers within their company.
Senior managers in organisations running apprenticeship schemes were overwhelmingly supportive of their value. 87% stated their schemes aim to create pathways for diverse talent, enabling a wider range of people to build careers in financial services. Additionally, 74% said the government’s Apprenticeship Levy – which provides government funding to pay for apprenticeship training costs – is an important incentive for their organisation.
Of those without an apprenticeship scheme, however, 15% of respondents said they do not know how to take advantage of the Apprenticeship Levy, while 11% do not know how to establish an apprenticeship scheme. One-fifth (19%) said they do not see the value in running a scheme, while 42% indicated that they attract enough talent through other means.
Trafigura successfully closes $1bn financing facility
Trafigura, a market leader in the global commodities industry, has announced the closing of its inaugural uncommitted discounted facility of credit-insured receivables and prepayments (the facility) totalling $1bn. The facility was substantially oversubscribed and upsized from its initial launch amount of $800m, with seven financial institutions participating in the transaction.
The facility has been strategically structured to optimise the accounting treatment of insured receivables and prepayments in accordance with the Capital Requirements Regulation. This innovative approach transfers the credit risk from the end buyer or producer to the insurer, enabling banks to discount these receivables. Under this facility, Trafigura Group companies will benefit from discounting on a limited recourse basis, with the credit risk fully backed by insurers approved by the participating bank syndicate.
Natixis CIB was mandated to arrange and coordinate the facility, serving as the document, facility and security agent, as well as sole active bookrunner and mandated lead arranger. First Abu Dhabi Bank PJSC, Mizuho Bank, Ltd. and MUFG, acted as mandated lead arrangers; Abu Dhabi Commercial Bank PJSC, Nedbank Ltd, London Branch, acted as lead arrangers; and Bank ABC (ABC International Bank Plc) acted as arranger. Brokers Lockton and Guy Carpenter supported the structuring of the facility.
“This is the first time a commodity trading company has successfully aligned the interests of financial institutions and insurers around a syndicated facility of this nature, allowing off-balance sheet treatment of receivables and prepayments,” said Stephan Jansma, Group Chief Financial Officer, Trafigura. “We’re grateful for the strong collaboration with our financial institutions, insurance and legal counterparties to successfully conclude this new facility.”
US equity trading business gaining momentum
After two years of decline, US equity trading commissions rebounded in 2024, reaching $6.2bn. This follows a drop from $7.4bn in 2021 to $5.4bn in 2023. The increase is attributed to strong equity market performance, according to annual research of hundreds of US institutional equity investors from Crisil Coalition Greenwich.
“The buy side is cautiously optimistic about the future,” says Jesse Forster, Senior Analyst at Crisil Coalition Greenwich Market Structure & Technology and author of ‘U.S. equity market trends hold steady in 2024’. “The recent SEC reforms and the new SEC Chair's focus on cooperation between regulators and market participants have created a sense of renewed possibility.”
The US equity market continued its migration toward electronic trading last year, with 44% of overall trading volume executed electronically (including algorithmic strategies and crossing networks). Managers expect electronic trading to increase to nearly half of their flow within three years, at the expense of high-touch trading, which they anticipate will account for only 39% of their flow by then.
Across the market, traders are looking for a delicate balance between technology and human touch, with high-touch sales traders still playing a crucial role in finding hard-to-find liquidity and working complex orders.
“Buy-side traders remain resolute in their dual mandate of finding liquidity for their clients while exploring opportunities for automation within their firms,” noted Forster.
Buy-side traders prioritise sourcing natural liquidity when selecting a broker, with 29% of the buy side and 34% of hedge funds citing it as their top consideration. For electronic trading providers, ease of use, reliability and technical support are key, with over two-thirds of buy-side traders naming these as their primary criteria.
“The buy side has long said they wish to reward brokers who consistently add real value to their day,” concluded Forster. “Now that the commission pool is growing again, they may finally have the means to do so.”
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