A new report from Ovum has found that 75 percent of corporate treasures in Africa and Latin America are interested in the solutions that blockchain can deliver to banks.
Developed in partnership with Temenos, a Swiss financial services software specialist, the report, Understanding Today’s Corporate Treasurer: The Implications for Corporate Banking Services [PDF], looked at how the priorities and attitudes of today’s corporate treasurer across four main areas of responsibility are changing. These are cash and liquidity management, forecasting and analytics, risk and compliance, and cost and operational efficiency.
The report found that since the financial crisis, the role of today’s corporate treasurer has essentially changed. As a consequence of the uncertainty and variability, the needs of the corporate treasurer has expanded significantly compared to improvements within corporate banking services. Unfortunately, bridging the gap between the two is proving a challenge for treasurers.
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In order to determine the operational issues for corporate treasurers, from July to September, Ovum interviewed 200 treasurers in 23 countries.
The survey focused on the regions of Africa, Asia-Pacific, Europe, Latin America, the Middle East, and the U.S. across five different industries: automotive and manufacturing, food and drink, pharmaceuticals, retail, and technology.
Rethinking Corporate Bank Products
In a bid to remain relevant to today’s corporate treasurer, banks need to re-think their products and services.
According to the report, the biggest challenges facing treasurers today is the lack of real-time data and reliance on manual processes.
It found that 35 percent of all corporates found the lack of real-time data availability as a significant operational issue while that figure was higher at 42 percent for those with over $10bn in revenues.
Additionally, only 13 percent of multi-national corporates are able to see their global cash position in real-time. This, in turn, presents a challenge to effective cash and liquidity management. Furthermore, 25 percent of treasures stated that the impact of growing foreign exchange risk remains a challenge.
However, due to the macroeconomic volatility, increased business complexity, and regulations imposed, there are more challenges to the day-to-day running of cash and liquidity. As a result, corporate treasurers are seeing their role evolve into that of a strategic and advisory partner for the business, according to Ovum.
With 34 percent of corporates working with 11 or more banks, they provide a range of services including FX services, local market payroll, domestic banking requirements, inter-company or intra-group lending, and cash repatriation.
Blockchain to Help Corporate Treasurers
In an interview with Caitlin Long, Dave Morton, CFO of Seagate Technology, said that blockchain could help corporate treasurers. Seagate Technology is a data storage company that handles a global supply chain and global customer base. After researching the technology in 2014, Morton found that the use of blockchain was solving many issues for different companies.
We pay upwards of +100,000 invoices a month, and transparency for where our cash is around the world as we manage hundreds of bank accounts. This persistent cash velocity friction keeps us from using some of our working capital for other corporate treasury purposes. It is extremely clear to us that corporate use of blockchain technology will simplify corporate treasury operations and improve efficiency.
The Ovum report also found that the use of the blockchain could potentially lower trading risks after it found that a high percentage of corporate treasurers are keen to explore the technology.
At the very least, banks need to demonstrate their understanding of the opportunities around blockchain, as 75 percent of corporates in both Africa and Latin America are interested in solutions here.
Blockchains are Expanding
The adoption of blockchain is growing in Africa. In March, the first blockchain conference series, Blockchain Africa, took place.
While the land registry startup, Bitland, in Ghana is a blockchain initiative that places land titles in 26 communities on the blockchain to help ensure that owner’s deeds and titles are not destroyed or lost.
Not only that, but in July, one of South Africa’s largest banks, Absa Bank, became the first African member to join the R3 blockchain consortium.
Earlier this month, Banco Santander published a report, Brazil: Banks & Financial Services: To Bitcoin to Not to Bitcoin, focusing on the growth of blockchain and bitcoin in Brazil, stating that to answer the question of their report, would be a yes to bitcoin.
This suggests that one day we must be ready to face the potential challenges and opportunities we describe in this report for the banks and financial services companies we cover.
Meanwhile, Latin American bank Banco Bradesco also joined the R3 consoritum and announced in July that they are planning to launch a pilot utilizing the blockchain technology for a new digital wallet.
Images from iStock and Shutterstock.