Silos to Ecosystems: Finding the Best Fintech Cash Management Models
With ever-increasing fintech solutions, corporate treasurers find it hard to pick the best cash management solutions to save money, time and reduce risks.
The rapid growth of
financial technology (fintech) companies has been both an advantage and a challenge
for corporate treasurers: an advantage, because today’s solutions can streamline
processes and make the corporate treasurer role much more efficient and
strategic; and a challenge because of the sheer number of options available.
In a world with
thousands of specialised solutions, how do time-poor corporate treasurers go
about selecting the right ones for their cash management needs? Which vendors
are reliable? Whose products will best fit their organisation and work well
with current and future IT systems? And which will help them in the next
three-to-six months, rather than five to 10 years down the road?
To answer those
questions, BNP Paribas Cash Management set up a Fintech Lab two years ago to
screen and map out a fintech panorama across Europe, to determine which
innovations could bring value to the treasurer’s role, with a particular focus
on working capital, payables and receivables. At the same time, the bank
developed several fintech acceleration programmes, taking a collaborative
approach to help us build agile partnerships with fintechs and bring co-created
products to our clients through our ecosystem.
Vincent Marchand, Head of Cash Management Fintech Lab at BNP Paribas, shares insights to corporate clients at the BNP Paribas Design Factory Asia in Singapore
As we roll out our
Fintech Lab expertise from Europe to Asia Pacific (APAC), it is worth looking
briefly at what we have learned: which technologies look to be the most
promising, which partnership models fintechs are adopting with banks and other
ecosystem players, and the due diligence needed to determine which solutions
will add the most value.
Differing maturity levels
The first rule of
thumb is practicality: New technology should address immediate treasury needs.
This means working with reasonably well established fintechs that have
demonstrated their ability to scale and are already serving live clients.
Following the path of
practicality also means excluding some technologies that may be promising going
forward, but which have yet to deliver scalable products. Among the solutions
that we categorise as maturing or worth monitoring are blockchain/distributed
ledger technology – which has shown its value in areas like logistics and trade
finance, but which is yet to do so in cash management – as well as machine
learning and natural language generation.
Key technologies impacting Cash Management Areas that are ready
to implement, on the other hand, include application programming interface
(APIs), cloud services, data management, artificial intelligence (AI) and
robotic process automation. Many of these are interconnected and will build
upon each other, bringing synergies and greater efficiencies in future.
Application in practice
Instead of looking at
the fintech world as a whole, which would be a daunting task for time-poor
treasurers, we assess fintech solutions through the corporate treasurer’s eyes
and key priorities to ensure the solutions being created are practical and
relatively easy to implement, by answering some frequently asked questions,
such as:
“How
can I improve my working capital?”Treasurers
typically have a fragmented view of liquidity and positions, and they spend
time reconciling information across different accounts. They often cannot make
use of internal data owing to a lack of tools to access and exploit it. One
solution is Cashforce, a state-of-the-art forecasting tool that helps to
improve control of working capital by providing real-time visibility of cash
flows from all data sources, across different banking partners and various ERP
solutions.
“How can
I improve my international operations?” Reconciliation
of payables and receivables remains a major headache for most companies,
especially those with international payables and receivables. Duco Cube, a
cloud-based self-service reconciliation tool, aims to resolve this pain-point.
With an intuitive front-end that allows corporates to reconcile any type of
data in any format, Duco Cube uses an algorithm which has been tested for
capital market operations.
“How can
I achieve effortless daily customer service?” Another common problem treasury departments face is
tedious manual, paper-based processes such as audit confirmations which often
leads to siloed views between the company, the auditor and the banks. A
solution like Confirmation.com allows audit confirmations to be obtained
through secure digital communication channels. Auditors are able to use a
digital platform to provide fast, secure control of data requests and
responses, and to ensure easy validation of information like audits.
Breaking down the
corporate treasurer’s digital journey into bite-sized solutions that address
specific needs has helped us map out a practical fintech ecosystem based on how
innovations will improve specific processes and resolve pain-points.