Western Europe: The Treasury Of Tomorrow

European treasurers must decide what they want their future treasury operations to look like.

Last March, PwC’s Global Head of Brexit for Financial Services and chair of its UK Brexit steering committee, Andrew Gray, issued a statement advising businesses to plan for the worst and “activate their no deal plans” immediately. Whether this means holding extra stock to lessen supply-chain disruptions, improving cash and liquidity forecasts to cope with FX volatility, moving operations or changing banking partners, the disruption to businesses in Europe demands that treasurers don’t delay their contingency plans.

Brexit notwithstanding, European treasury departments are being tasked to up their game to cope with the many changes that will impact how they operate. Michael Spiegel, head of Cash Management and regional head of Global Transaction Banking at Deutsche Bank, says the region’s cash management landscape is evolving, catalyzed by the introduction of real-time payment schemes and open banking initiatives. “One of the key challenges for corporates in the year ahead will be strategic: How do they want their treasury of tomorrow to look and function? Based on this, which solutions should be implemented and along what timeline?”

He says this requires a clear, long-term vision of what an optimized treasury looks like. “Liquidity management, in particular, continues to be a crucial issue,” says Spiegel. “The rise of real-time payments will likely lead to the end of batch processing and end-of-day cut-offs, which means corporates will need to invest in the infrastructure to monitor and manage liquidity in real time.” If corporates can overcome these challenges, Spiegel says the opportunity is there to accelerate and optimize their processes. “For instance,” he says, “once in place, real-time liquidity processes can enable businesses to make just-in-time payments, earning additional interest on investments and reducing the need for sizable working-capital buffers.”

The advent of open banking is stoking competition in the banking sector. Spiegel says banks are looking to step up their own services as a result, as well as working with fintech partners as part of a more open ecosystem. Leveraging the revised Payment Services Directive’s (PSD2) compulsory opening up of bank client data to authorized third parties, Deutsche Bank has positioned itself as a Payment Initiation Service Provider (PISP) for the International Air Transport Association (IATA). With the customer’s consent, PISPs can initiate a payment from their bank account to a merchant’s account. “Push payments are just one example of how banks can add value for corporate clients,” Spiegel states. “In this case, initiating online payments directly from buyers’ accounts to the seller’s eliminates card acquirer fees in the process.” These fees can add up. According to IATA, the airline industry incurs billions of euros in transaction costs annually.

New services that combine real-time payments and connectivity via Application Programming Interfaces (APIs) have two fundamental functions at their heart: first, the ability to send and receive information instantly; and second, the ability to react on that information instantly. However, Spiegel says standards are needed for this exchange of information to function effectively. “APIs that act as the interface between different bank and corporate platforms must be standardized in order to facilitate the seamless exchange of information,” he explains, “and the messages that are sent must also conform to common standards.” With a standardized infrastructure in place, Spiegel says real-time payments and APIs will generate all sorts of new products and services for corporate clients. “I’m excited about the innovations that this will bring to the industry,” he says.


Best Overall Bank for Cash Management Deutsche Bank
Best Bank for Liquidity Management Citi
Best Bank for Payments and Collections Nordea
Best Provider of Short-Term Investments/Money Market Funds BNP Paribas
Nordic Region Nordea
Centeal & Eastern Europe UniCredit
Asia-Pacific DBS Bank
Middle East Emirates NBD
Africa Rand Merchant Bank