Trust isn’t going away
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Trust isn’t going away

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Trust matters more in banking now than ever before.



Philippe Penichou,
Head of the payments & cash management international network, Societe Generale

In the pursuit of mechanical excellence and efficiency we must be careful not to forget the importance of the human element. Our role as bankers does not begin and end with the simplification, acceleration and externalization of the administration of banking services. Indeed, the time traditionally dedicated to such administration arguably can be most profitably reallocated to those human factors: enhancing client awareness and identifying true underlying client needs.

History repeats itself

Money has existed in one form or another for millennia and it continues to fascinate people. One of the best recent books on the subject, Felix Martin’s Money: the unauthorised biography, is an excellent read and should be on the bookshelves of anyone working in the financial industry, from the humblest retail official to the most grandiose international star banker.

If nothing else, the book helps to demonstrate that, in the world of money, there is little or nothing that is new. Did you know, for example, that there was a credit crunch in Rome in AD 33 under the emperor Tiberius?

The Roman Imperial treasury solved the problem by refinancing overextended lenders with a 100 million sesterces programme of three-year interest-free loans. This will sound rather familiar to anyone who has followed financial events of the past few years, with particular reference to the measures taken by European Central Bank president Mario Draghi to save the European single currency.

This admittedly extreme example demonstrates that cash management has been a key topic since the treasury function was created. Fast-forward to the present day and it can be observed that the quality of the job done by the modern treasurer is, in turn, highly dependent upon the quality of cash forecasting available and the use made of the available tools. The more things change, the more they stay the same.

Technology’s persistent influence

From the moment I started in cash management in 2000, as a banker it was obvious that technology was critical to access the right information. Over the intervening years I have witnessed first-hand the evolution of this trend, starting with the unexpected worldwide growth of the internet and then simultaneously SWIFTnet (resulting today in Swift gpi, the new cloud-based standard for cross-border payments), application programming interfaces (APIs), virtual accounts and the creation and rollout of the ISO 20022 format for greater harmonization of payment messages.

The API era is clearly a game changer for treasurers and an opportunity for banks. By opening their systems to new entrants, whether internal or external, banks are beginning to acquire the agility that they have been lacking for historical reasons ‒ mainly the technology and language upon which banks had implemented their core banking systems and payment engines in the first place, adding one layer after the other and ending up with a monstrously complex environment.

Banks and corporates, or software providers, are yet to build a new ecosystem rethinking existing cash pooling structures and tools and developing new services. Agility and ubiquity are now expected by everyone for everything, and will sit at the heart of the next phase of the revolution in our industry.

Unprecedented investment in technology

Bankers are making an unprecedented level of investment in cash management at a time when disruptive technology is changing how treasurers and bankers manage it ‒ delivering to treasurers what they have always wanted: an accurate 360 view of their cash position.

The underlying reasons are well rehearsed and need little reiteration. The majority of companies, particularly those with a track record of overseas expansion, will acknowledge that their systems display certain deficiencies when it comes to ascertaining the availability of cash at group level. 

This is not hard to understand, as cash has an uncanny ability to conceal itself ‒ especially when processes are manual and technology is fragmented ‒ and account management can be challenging. Treasurers need to be able to see their cash in order to forecast, mobilize and control it. This has clear implications for the management of foreign exchange risk, making investment decisions, and ensuring that the right funding is in the right place in the right currency at the right time. 

The problem of unintended consequences

Technology is clearly a large part of the solution to help bankers access information, but it must be deployed in such a way that it does not have unintended consequences and cause as many problems as it might help solve. 

One key issue is interoperability between corporate clients and the banks with which they need to work. Another is consideration of the new generation of services that banks must focus on developing in the cash management world in the interests of concentrating liquidity and moving money more quickly.

Access to information in multiple currencies, in multiple geographies, in multiple corporate entities, remotely and at an acceptable cost, is already a given. The next major advance, instantaneity, is almost with us. What once took weeks, then days, then hours, will in the future take a matter of seconds, subject to legal, regulatory, security and operational constraints.

The new payments landscape will change the way that treasurers manage cash balances around the world, and the way in which bankers interact with them to help maximize their myriad resources.

Relationships between bank suppliers and their corporate partners will inevitably change. The management of those relationships to enable the provision of value-adding expertise has always been important but it will become ever more so as we assist clients in adopting best-in-class systems and solutions and accessing top-value propositions.

It might sound counter-intuitive at a time when no financial industry conversation is complete without stressing the advance of artificial intelligence and the rise of the robots, but human beings will continue to play a central role in the automated future. 

Any properly built machine can count numbers and carry out what to the human eye look like impossible trades ‒ and futurists will argue till they are red in the face that the next and only step is full automation ‒ but it remains a cold, hard fact that only humans can fully understand client needs and strategies and build relationships and trust accordingly.

Despite all the hype surrounding AI, robotics and algorithms, I still firmly believe in personal and interpersonal relationships. I always say that if a client needs anything anywhere in terms of banking services, that client can pick up a phone and breathe a sigh of relief when a fellow human answers it rather than a desiccated calculating machine.

It is more important than ever for our businesses to develop relationships and use them to provide solutions for our clients. Times and tools are changing and with them services and solutions. But one thing remains absolutely constant: the importance of trust.

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