Silos to Ecosystems: Finding the Best Fintech Cash Management Models

This article is also available in Japanese.

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.

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.

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.