Magnus Carlsson, Manager, Treasury & Payments, AFP
Fintech is a pretty broad term. I hear it pretty much everywhere I go these days, in reference to blockchain/distributed ledgers, cross-border payments, trade finance —pretty much anything that involves finance and technology. Hence the name ‘fintech’.
At AFP, we’ve taken note of this upcoming fintech revolution and have been looking at ways that it is applicable to our members. We are currently looking to add a specific focus on fintech at our annual conference in October by devoting a substantial portion of sessions on the topic, as well as adding other fintech features.
Currently, the gap between fintech developers and corporate treasury and finance professionals is pretty wide. However, we believe corporate interest in this space will only continue to grow, since the promises of the new technology can result in great efficiencies at the corporate level. Typically, corporate practitioners on the whole tend to take their time when it comes to changes and especially adopting new technologies. But eventually I’m sure we will get to the point where the mainstream corporate won’t be able to ignore this growing industry.
But as I said before, fintech covers a wide range of technologies—many of which are not particularly relevant to corporate treasury and finance professionals. So, as Johan Nystedt, vice president treasury and investor relations for ConAgra Foods, noted during the latest meeting of AFP’s Treasury Advisory Group (TAG), we must clearly define fintech as it pertains to treasury and finance before devoting multiple conference sessions to it.
A lot of interesting talk came out of that meeting, and it left me feeling encouraged about how financial professionals view fintech. While sales reps for the latest new startups and even payments guys like me might be quick to embrace the virtues of distributed ledger technology, corporate practitioners are, as I mentioned, naturally going to be more skeptical, and for good reason. After all, treasury and finance professionals are the ones who are tasked with making wise decisions with company money. This is true for all changes they need to make, and maybe especially so when faced with the prospect of investing in some new fintech solution. It has to make sense and actually solve a problem or achieve significant cost savings.
But the majority of practitioners at the TAG meeting, who hail from a diverse group of industries, were overall positive, albeit a bit apprehensive, about fintech. Right now, the general consensus is that there needs to be a business case to adopt it. As one practitioner noted, much of this technology is still in the proof-of-concept stage, so devoting a whole series of conference sessions to it might be difficult at this juncture. After all, many of our sessions are case studies that display how a technology solution has helped a treasury or finance department achieve a particular goal. That model doesn’t fit if the technology is theoretical.
Nevertheless, it won’t always be this way. All the major banks are investing in this. Firms like PwC have entire teams devoted to researching it. And soon, you’re going to have to at least consider how some of these technologies can benefit you. So here are some things you can do now.
Identify areas that could use a technology boost. Many processes in treasury and finance are still very manual, and could potentially be improved by various fintech solutions. For example, at the TAG meeting, Jayna Bundy, director of treasury operations for Microsoft, provided a look at how her company partnered with Bank of America Merrill Lynch on a blockchain solution for trade finance. Additionally, experts like Symbiont chairman and president Caitlin Long believe blockchain could be an ideal solution to improve the antiquated syndicated loan process.
Talk to your banking partners. If they’re still in the proof-of-concept stage, your banks may not be able to give you the full lowdown on solutions they’re developing. But if you have an idea of which of your processes could benefit from more automation, perhaps they can clue you in on something they are developing that could help. And if none of the tech they’re working on is relevant to you, it might be time to seek out some new banks.
Ask us! AFP is here to help, and we’re working to become thought leaders in the fintech space. If you’re unclear how this technological revolution pertains to you and your company, we may be able to show you, or at least point you in the right direction.
As I said before, fintech is going to be impossible to ignore in the long run. Now is the time to get ahead of it so that eventually, your peers will have to catch up to you.