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Sibos Wrap-Up: The Corporate Treasury View

  • By Magnus Carlsson
  • Published: 10/13/2016

This article originally appeared on LinkedIn.

Sibos 2016 in Geneva has come to an end. After four days of payments content, here are the big takeaways corporate treasury professionals should consider.

GPI has potential for easy adoption.

It should come as no surprise that Global Payments Innovation (GPI) initiative was one of the hottest topics, given it is scheduled to roll out next year.

What makes the GPI interesting for corporates is that it enhances the functionality of the existing payment rails for cross-border transactions. What makes this very appealing is the potential of easy adoption. Changes to payments system set-ups can be expensive for corporates, and therefore something to stay away from. But since the GPI uses existing rails, adoption may not be too complex or expensive.

According to banks that have pilot tested the GPI, the implementation process is quite easy. One bank noted that they did all the work in-house, and that it only took about a month. I’ve also heard that for corporates, banks will be very accommodative for stepping up to the plate and using the GPI. So in the short-term, corporates may not have to change anything. In the long-term, however, there may be some adjustments needed for implementation—so there is some uncertainty surrounding the initiative.

Some of the other features of the GPI include tracking of payments and transparency and predictability of fees. Hopefully this means there will be no more surprise delays of payments, another major issue for treasurers. If a payment for some reason is still held up, it should be transparent enough that it can be communicated with the payee. Additionally, making all fees transparent under the GPI may eliminate a very frustrating dilemma corporates face when an amount smaller than expected arrives at the payee’s account. But this means there cannot be any additional hidden fees from a RDFI, or this feature falls flat.

With all of that said, there are of course a number of unknowns, such as pricing. There has not been any information on what the banks will charge corporates for this service. As cross-border payments are already expensive, any additional cost would act as a wet blanket, and risk low appetite for adoption.

Increasing technological connectivity creates a big risk.

Another hot topic was cybersecurity, which is not surprising. It quickly became clear that this concern is growing because of the increasing connectivity of all things. As one speaker said, it is wonderful what technology and connectivity can do for us, but at the same time we will see threats and attacks from sources we are not even thinking about.

An example was given that a corporate could be attacked through their building’s air conditioning system, since it also most likely is, or will be connected to the internet in one way or another. The idea that we can’t protect against all attacks is an uncomfortable but very real fact in today’s world. So it is important to know what information is most sensitive and protect that as best as possible. Also, one way of protecting yourself may just be to disconnect devices. Not everything needs to be hooked up.

Standards are necessary for blockchain adoption.

The blockchain focus has shifted a bit towards a more practical adoption rather than lofty promises. Many professionals I talked to about this also seem to agree that even if it may be easy to adopt blockchain for certain tasks, it is important to understand that these processes are of limited scope. To acquire widespread usability for this technology, it is absolutely crucial that standards are agreed upon. During a session on technology moderated by AFP’s Andrew Deichler, panelists agreed that standards will be needed for blockchain to truly become mainstream.

Since I’m often talking about ISO 20022 for payments, it is particularly interesting to me that we now are looking at the same complexities for blockchain to gain a broader adoption.

Magnus Carlsson is manager of treasury and payments for AFP.

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