The role of corporate treasury has become less of a silo to banking and more integrated into global investment banking services, as regulatory changes, technology issues and the focus on liquidity, credit and risk management has forced major corporations to reassess the way cash and payments services are delivered to the end user.
In an interview with Euromoney | Sibos Insider in Toronto, Canada, a top executive at Scotiabank revealed that post credit-crisis the landscape for corporate treasury has not only had a number of challenges to overcome, but the way it conducts business has also dramatically changed.
“I think the role of corporate treasury has changed a lot over the last few years,” says Alice Eastman, senior vice president of cash management and payment services, global transaction banking at Scotiabank. “In the past, the corporate treasurers were managing banking relationships and minimising the number of bank relationships for the firm. It was considered to be more beneficial to focus on the credit side of the relationship and the amount of working capital and collections. Compared to today, corporate treasury had a simpler role.”
Eastman says that the economic crisis was the pivotal point at which corporate treasury and investment banking had to work in a more integrated fashion. This was in order to accommodate the changing demands of the client.
“When the economic crisis hit, there was, all of a sudden, a lot more focus around risk management and liquidity, which of course led to a change in the regulatory environment,” adds Eastman. “The risk perspective and focus on counterparties has become a major concern for clients, so integrating corporate treasury with banking allows the process to become more streamlined. With the growth in globalisation over the years as well, knowing where all cash and deposits are at any time is one of the key areas of concern.”
While corporate treasury has changed over the years, Eastman also revealed a number of pain points that the cash management and payments side of the business face over the next few years, especially in light of globalisation broadening out the amount of markets, products and client bases.
“It is important to appreciate how small in terms of headcount treasury areas are in comparison to other banking units,” says Eastman. “There are difficulties with resources assigned to treasury products and internal resources are limited. What we really need is an integrated solution base in order for us to accommodate the more cyclical way we do business with banking now, as opposed to when corporate treasury was more of a side business. While I know everyone talks about needing more integrated solutions, now is the time that we need to make sure this is implemented – more than ever – as the changing landscape has forced us to make sure that all information and business is conducted in a more straight-through processed and automated fashion – preferably in one portal.”
Euromoney reports from the Sibos conference in Toronto all week. Visit www.euromoney.com/sibos for all the latest news and interviews. During Sibos, you may sign up for email alerts from Sibos, including daily news and interviews with senior people in the market.