BETHESDA, MD -- Treasury professionals weighed in on blockchain and fintech Tuesday morning during the latest meeting of AFP’s Treasury Advisory Group (TAG). Overall, practitioners appear interested in the technology, but are a bit apprehensive about how they could build a business case to implement it.
Craig Martin, AFP’s director of executive programs and treasury practice lead, noted that AFP has been looking heavily into blockchain and fintech to see how it applies to corporate treasury and finance. “Our job is to educate,” he said. “We’re trying to find out what you’re looking for; what you want. But I think it’s a freight train; it’s coming.”
Fintech at the AFP Annual Conference
Magnus Carlsson, AFP’s manager of treasury and payments, noted that AFP is planning to include more of a focus on fintech at upcoming annual conferences and other events. Although it’s unlikely that an entire track would be devoted to fintech this year, it could be possible down the road.
However, Johan Nystedt, vice president treasury and investor relations for ConAgra Foods, noted that “fintech” is a popular term that can refer to multiple technologies, many of which are not all applicable to the corporate sector. Therefore, it is important to clearly define fintech as it pertains to corporate treasury and finance before devoting multiple sessions to it at the conference.
An assistant treasurer who wished to remain anonymous agreed. Additionally, even for the technologies that are applicable, treasurers have to determine whether the investment is truly worth it. “You’ve got to do your homework; you don’t want to invest in something that won’t last,” she said. “None of these are small undertakings, so you need that comfort of what it’s going to look like long-term.”
Furthermore, Karen Nash-Goetz, vice president and senior legal counsel for T. Rowe Price Associates Inc., noted that AFP has to determine the difference between this technology and other technology used by practitioners. “How would this be different from what’s already at conference,” she asked. “At conference, you have people talking about new payments systems, integration with old systems, etc. So what are you trying to do that’s different than what’s already at conference? That’s what you have to figure out.”
The assistant treasurer noted that one issue with a fintech track or series of sessions at the AFP Annual Conference is that a lot of the technology is still in the proof-of-concept stage. In contrast, when most treasury and finance practitioners host a session on technology at the conference, they discuss solutions that are currently in use. “In the fintech space, it’s more a high-level discussion of what’s coming,” she said. “Conference is more the reality; this is technology that actually exists.”
Building the business case
Of course, for most practitioners, it all comes down to the business case. Even if all of these solutions were past the proof of concept stage, there is still the issue of whether or not you can justify the cost. “Do you know what to adopt or how to adopt it?” asked Sassan Parandeh, CTP, global treasurer for ChildFund International. “You can’t just jump and adopt any technology. You have to dollar-vote it in. For us, PayPal was dollar-voted in, bitcoin was dollar-voted out.”
Parandeh clarified that his organization does accept payments in bitcoin, but that’s all it does, and it had to write out a whole policy for that. Other organizations looking at adopting various fintech solutions will have to do the same; implementing a new technology is a lengthy process and practitioners need to understand that. He noted that a conference session on fintech that might work would be one on determining how practitioners can situate their companies for what is coming.
Mark Smith, head of global liquidity, global transaction services for Bank of America, whose organization is working with Microsoft on a blockchain solution for trade finance, noted that banks have a great opportunity here to partner with fintech companies to offer their corporate clients new solutions. If they don’t, they run the risk of falling behind in the technology space.
Ultimately though, any financial technology that a bank adopts has to improve what it already does, Smith explained; hence when BofA decided to venture into the blockchain space, it targeted areas that could specifically address the issues faced by its corporate treasury clients.
Nash-Goetz added that many of the companies represented in TAG are large ones that have substantial resources that could invest in fintech if they want to. However, mid-size and smaller companies don’t have that luxury. “They have to wait and see if fintech sticks before they can implement it,” she said. Moreover, even if those organizations are all-in on fintech, many of them will be looking for plug-and-play solutions; they’re not going to be building anything out the way that large multinationals potentially could.