Why Treasurers Should Be Influencers Inside Their Companies
In today’s rapidly evolving corporate landscape, treasurers need to do more than manage cash flow, investments, and risk. They must step up as influencers within their organizations. Unlike the influencers you find on TikTok or Instagram, corporate treasurers need to wield influence across various departments—like Procurement, Sales, and Financial Planning & Analysis (FP&A)—to ensure the seamless flow of accurate and timely information. They must also know how to influence their own leadership, particularly the Chief Financial Officer (CFO), to secure the budget and resources needed for critical improvement projects and technological advancements. The Challenges: Information, Formats, and Timing Treasurers often find themselves navigating a sea of data that isn’t always suited to their needs. For example, departments like Sales, Procurement, and FP&A are typically more focused on profit and loss (P&L) statements rather than cash-based formats that are essential for treasury operations. While P&L data provides valuable insights into a company’s profitability, it doesn’t always align with the cash reality—when the money actually hits or leaves the bank account. Timing differences between revenue recognition and actual cash inflows can lead to misalignments in financial planning and decision-making. Why Treasurers Need to Be Influencers To mitigate these challenges, treasurers must adopt a more proactive role, akin to that of an internal influencer. Here’s why: Influencing the CFO for Budget and Resources A critical aspect of a treasurer’s role as an influencer is to also engage effectively with their direct boss, often the CFO. Treasurers may need to influence the CFO to secure budgets for improvement projects, new technologies, or additional resources that enhance treasury operations. Here’s how treasurers can achieve this: Strategies for Treasurers to Become Influencers Here are actionable strategies for treasurers to build their influence within their organizations: The Benefits of Being an Influential Treasurer By becoming influencers, treasurers can drive several key benefits for their organizations: Insights from Treasury Experts We thought it would be valuable to get perspectives from Treasury expert James Kelly, who is also a Treasury Mastermind Board member. James Kelly, Senior Vice President of Treasury at Pearson, Comments Influencing skills are particularly necessary to get buy-in for cross-departmental projects. Treasurers often won’t be able to offer direct benefits to other teams and so need to be able to influence others to get involved. That may require a quid pro quo from time to time where treasury prioritises projects for others. Treasurers often sit on the finance leadership team, but to justify that position, they need to show their worth beyond just treasury, showing commerciality, project management and technical skills Even internal promotions within Treasury may require advocation from other teams, meaning it’s important to build alliances. Conclusion Treasurers have a unique vantage point within organizations, but to maximize their impact, they must step out of their traditional roles and become influencers. By cultivating relationships, communicating value, leveraging technology, influencing their CFOs for resources, and standardizing processes, treasurers can influence the flow of information, ensure their involvement in strategic decisions, and enhance their organisation’s financial resilience. In doing so, they not only elevate their own role but also contribute significantly to the company’s long-term success. Additional Resources Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
Franklin
Treasury for Non-Treasurers: What is Treasury?
Treasury for Non-Treasurers: Article 1 – What is Treasury? Summary: 4 pillars, simple but with massive implications.
Nicholas
Organizations Shift Deposits to Large Banks Amid Economic Uncertainty
In a proactive response to the challenging economic environment, 45% of organizations have moved their deposits to large banks, according to the 2024 AFP Liquidity Survey. This strategic shift aims to enhance financial security by leveraging the stability of systemically important financial institutions. Additionally, 35% of organizations diversified their deposits among multiple banks to mitigate counterparty risk. The survey also revealed an 8% increase in cash holdings within the U.S. over the past year, with 44% of treasury professionals reporting this rise. Larger organizations prioritize safety in their investment policies, with 69% emphasizing this, compared to 58% of smaller organizations. Despite rising interest rates, over two-thirds of respondents noted that their companies’ earnings credit rate did not keep pace. The overall relationship with banks remains crucial, as 89% of professionals consider it the most important factor in selecting a banking partner, surpassing credit quality and counterparty risk. Money market fund reform has had minimal impact, with only 4% of allocations in prime or diversified funds. However, 32% are adopting a “wait and see” approach regarding upcoming regulatory changes. The survey underscores the importance of robust banking relationships and prudent liquidity management in navigating economic challenges. Counterparty Risk in Corporate Cash Management From a corporate perspective, counterparty risk—the risk that the bank holding the deposits might default—is a significant concern. In the current volatile economic environment, this risk has become more pronounced, prompting organizations to reassess their banking strategies. 1. Diversification to Mitigate Risk By spreading deposits across multiple banks, corporations aim to reduce their exposure to any single financial institution’s potential failure. This strategy ensures that a company’s liquidity is not overly dependent on one entity, thereby safeguarding its cash reserves. 2. Preference for Large Banks Larger banks are often deemed more stable due to their substantial capital reserves, regulatory oversight, and systemic importance. These institutions are typically considered too big to fail, which provides an added layer of security for depositors. The recent trend of moving deposits to these banks reflects a strategic move to enhance financial stability. 3. Monitoring and Evaluation Continuous monitoring of the financial health of banking partners is crucial. Corporations are increasingly relying on credit ratings and other financial metrics to evaluate the solvency and reliability of their banks. This ongoing assessment helps in making informed decisions about where to place their deposits. 4. Regulatory Environment Changes in banking regulations can impact counterparty risk. Corporations need to stay informed about regulatory developments that may affect the stability of their banking partners. The evolving landscape of money market fund reforms and other financial regulations requires a proactive approach to risk management. 5. Balancing Yield and Safety While seeking to maximize returns on their cash reserves, corporations must balance this objective with the need for safety. Higher yields often come with higher risk, and in uncertain times, the focus tends to shift more towards preserving capital than earning high returns. Insights from Treasury Experts We thought it would be valuable to get perspectives from Treasury professional, Jessica Oku, who is also Treasury masterminds board member Jessica Oku, Director of Fund Development at Women’s Health Coalition Canada, Comments A shift of 45% of organizations moving their deposits to large banks is expected. This trend is driven by the safety net provided by large banks, attributed to their substantial balance sheet size, robust risk management frameworks, and strong corporate governance, which are crucial for treasurers aiming to protect their assets. Additionally, 35% of organizations are diversifying their deposits among multiple banks to mitigate counterparty risk, which is also expected. This is because counterparty risk has become a growing concern. Spreading deposits helps to protect your organization’s liquidity from the potential failure of any single institution. It is also crucial to choose institutions with top ratings to further secure your funds. Larger organizations prioritize safety in their investment policies shows that there’s a clear trend towards capital preservation over higher returns. Invariably, these organization’s risk appetites will be clearly reflected in their policies and affect investment decisions. Which is understandable, especially in the current economic climate. Conclusion In conclusion, counterparty risk is a critical factor in corporate cash management strategies. By diversifying deposits, choosing stable banking partners, and staying vigilant about regulatory changes, organizations can effectively manage this risk and ensure the security of their financial assets. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
HSBC Partners with Visa to Develop Zing International Money App
In a significant move towards enhancing digital financial services, HSBC has teamed up with Visa to launch the Zing international money app. This collaboration marks a strategic effort by both financial giants to simplify and innovate cross-border transactions for consumers globally. Streamlining Cross-Border Payments The Zing app aims to streamline the often complex and time-consuming process of international money transfers. By leveraging Visa’s robust payment network and HSBC’s extensive global reach, the app promises users a seamless and efficient experience. This initiative comes at a time when the demand for convenient and cost-effective digital payment solutions is rapidly increasing worldwide. Key Features and Benefits Market Impact and Future Prospects This collaboration underscores HSBC’s commitment to digital transformation and innovation within the financial services sector. By harnessing Visa’s technological capabilities and HSBC’s extensive market presence, the Zing app is positioned to capture a significant share of the rapidly growing digital payments market. Moreover, the launch of Zing reflects broader industry trends towards enhancing digital banking experiences and meeting the evolving needs of consumers in an increasingly interconnected world. As more consumers opt for digital solutions over traditional banking methods, partnerships like the one between HSBC and Visa are crucial for staying competitive and meeting customer expectations. Insights from Treasury Experts We thought it would be valuable to get perspectives from Treasury professional, Lorena Pérez Sandroni, who is also Treasury masterminds board member Lorena Pérez Sandroni, Head of Treasury at PayU GPO, comments The collaboration between HSBC and Visa indeed represents a strategic move that capitalizes on their combined expertise. By leveraging HSBC’s extensive experience in banking and payments alongside Visa’s open banking technology, they aim to create a seamless and secure international money app. This collaboration is crucial for the fintech companies journey to empower people worldwide with easy-to-use financial services. From my perspective, transferring money should be as straightforward as sending a text message, and cost-effectiveness is crucial. While traditional methods still dominate in some regions, not mentioning the restrictions and regulatory aspects in complex countries. Partnerships like this one can drive innovation and expand the possibilities for users. It’s exciting to witness how this collaboration will impact the global financial landscape. What is clear to me is that traditional banking and fintech partnerships are becoming increasingly prevalent, signaling a dynamic shift in the industry and the allocation of resources. This partnership reinforces the idea that traditional banking and fintech collaborations are here to stay!! Conclusion The partnership between HSBC and Visa to develop the Zing international money app represents a pivotal moment in the evolution of digital financial services. By combining their expertise and resources, both companies aim to redefine how individuals and businesses conduct cross-border transactions, offering greater convenience, transparency, and security. As the app rolls out globally, it will be interesting to observe how it influences the digital payments landscape and sets new benchmarks for customer experience in international banking. For consumers seeking efficient, reliable, and user-centric financial solutions, Zing promises to be a compelling option in the ever-expanding realm of digital banking. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Understanding the Differences in Treasury Teams & functions: Middle East vs. Europe and the US
In the intricate world of corporate finance, the structure and setup of treasury teams can vary significantly depending on the region. From the oil-rich landscapes of the Middle East to the regulatory frameworks of Europe and the dynamic capital markets of the US, each region has distinct characteristics that shape how treasury functions operate. Understanding these differences is crucial for multinational corporations looking to optimize their financial strategies across diverse markets. The Middle East: Navigating a Unique Financial Terrain The Middle East presents a unique financial landscape characterized by its regulatory environment, corporate governance structures, and economic dependencies. In this region, the regulatory environment is notably complex due to the presence of multiple financial regulations across different countries. For Treasury teams, this means a heightened focus on compliance to navigate these varied regulations effectively. A distinguishing feature of the Middle Eastern financial landscape is the influence of Islamic finance. Some companies may need to adhere to Sharia-compliant financial practices, which prohibit earning interest and promote risk-sharing This affects treasury operations significantly, influencing investment choices and financing activities to ensure compliance with Islamic principles. Corporate governance in the Middle East is also unique, with a significant number of family-owned businesses and state-owned enterprises. Family-owned businesses often exhibit centralized decision-making, where treasury functions are closely knit with the core leadership. This can lead to a more streamlined, albeit less flexible, approach to treasury operations & liquidity On the other hand, state-owned enterprises, particularly in sectors like oil and gas, have distinct reporting structures and strategic priorities, often driven by national economic policies. Given the region’s economic and political volatility and heavy reliance on oil revenues, treasury teams in the Middle East place a strong emphasis on liquidity management. Ensuring sufficient liquidity to navigate market fluctuations and manage foreign exchange and commodity risks becomes a top priority. This also involves risks around currency devaluation and repatriation due to exchange control regulations that are in place in some of these territories. This risk management focus is essential to mitigating the impact of global market dependencies on local economies. Europe: A Harmonized Yet Diverse Financial Environment In contrast, Europe’s treasury teams operate within a relatively harmonized regulatory framework, thanks to the European Union’s unified regulations. This harmonization facilitates streamlined compliance and reporting, allowing Treasury operations to function more smoothly across multiple countries within the EU. However, the General Data Protection Regulation (GDPR) imposes strict data protection requirements, impacting the handling of financial information and necessitating robust data governance practices. European corporate governance exhibits a diverse mix of ownership structures, including family-owned businesses, publicly traded companies, and multinational corporations. This diversity necessitates varied Treasury practices tailored to different governance models. High transparency and detailed financial reporting standards are hallmarks of European corporate governance, demanding meticulous financial stewardship from treasury teams. One of the key focuses for European Treasury teams is optimizing cash flow and working capital management. Operating across multiple currencies and jurisdictions, these teams must adeptly manage cash flows to ensure liquidity and minimize currency risks. Additionally, Europe is at the forefront of sustainable finance, with increasing emphasis on green finance initiatives. Treasury teams are increasingly tasked with integrating sustainability into their financial strategies, aligning with broader environmental and social governance goals. The US: A Dynamic and Technologically Advanced Financial Landscape Across the Atlantic, US Treasury teams navigate a dynamic regulatory and corporate environment shaped by landmark legislation like the Sarbanes-Oxley Act (SOX) and the Dodd-Frank Act. SOX compliance requires stringent internal controls and financial reporting for publicly traded companies, while the Dodd-Frank Act imposes regulations on financial transactions and risk management. These regulations drive US Treasury teams to maintain rigorous financial oversight and robust risk management practices. Corporate governance in the US often emphasizes shareholder value, influencing treasury practices to support stock performance and dividends. The US market features a blend of large public corporations and innovative private companies, particularly in sectors like technology and finance. This blend fosters a dynamic treasury environment where accessing and optimizing capital markets for funding becomes paramount. US Treasury teams are also at the forefront of technology integration, leveraging advanced tools and automation to enhance efficiency and data analytics. The adoption of fintech solutions and blockchain technology is transforming Treasury operations, enabling real-time financial management and improved decision-making. Common Threads in a Globalized World Despite these regional differences, there are common trends shaping Treasury teams globally. Digital transformation is a unifying theme, with increasing adoption of digital tools and technologies to improve efficiency and data analytics in Treasury operations. Globalization also necessitates managing cross-border transactions and risks, driving Treasury teams to develop strategies that can navigate diverse financial landscapes. Moreover, talent development is crucial across all regions. Developing skilled treasury professionals who can adeptly manage complex financial environments is a priority for companies worldwide. As the financial landscape continues to evolve, the ability to attract and retain top talent will be a key determinant of success for Treasury teams globally. Insights from Treasury Experts We thought it would be valuable to get perspectives from Treasury professional, Nena Koronidi, who is also Treasury masterminds board member Nena Koronidi, Strategic Corporate Finance and Treasury Advisory, Family Office Advisory The majority of businesses in Middle east do not adhere to Sharia compliant financial practices and they choose to use between conventional or Islamic finance depending on their needs and associated costs. With regards to Islamic financing, the most significant challenge is the increased documentation and the rollover of the loan (e.g. tied with a commodity transaction in a commodity Murabaha financing case); the rest is the same as conventional. In conclusion, while the structure and setup of treasury teams in the Middle East, Europe, and the US are shaped by distinct regional characteristics, they are united by common challenges and opportunities in a globalized world. Understanding these nuances is essential for multinational corporations aiming to optimize their financial strategies and navigate the complexities of international markets. Also Read Notice: JavaScript is required for this content.
The Hidden Costs of Not Having a Treasurer: A Risky Oversight
In the realm of corporate finance, the treasury function is often viewed as a cost center, primarily because the salaries of treasurers and treasury teams represent a direct expense on the company’s financial statements. Unlike profit-generating departments, a treasury does not directly contribute to the company’s bottom line. However, this perspective overlooks a crucial aspect: the hidden costs and risks associated with not having a dedicated treasurer or treasury team. Neglecting these critical financial functions can lead to significant financial instability and missed opportunities, ultimately costing the company far more than the salaries of a competent treasury team. The Role of a Treasurer A treasurer’s role is multifaceted, encompassing cash management, risk management (particularly foreign exchange and interest rate risks), debt capital market activities, and cash flow forecasting. Each of these functions is vital to the financial health and stability of a company. 1. Cash Management: Effective cash management ensures that a company has sufficient liquidity to meet its obligations and capitalize on investment opportunities. Without a dedicated treasurer, companies may face inefficient cash utilization, higher borrowing costs, and even liquidity crises. 2. Risk Management: Managing foreign exchange (FX) and interest rate risks is crucial for companies engaged in international trade or those with significant debt. A treasurer identifies and mitigates these risks, protecting the company from volatile market conditions. Without this expertise, companies are exposed to unpredictable financial swings that can erode profits and destabilize operations. 3. Debt Capital Markets: Accessing and managing debt is a complex task that requires expertise in financial instruments and market conditions. Treasurers negotiate favorable terms, manage interest expenses, and ensure compliance with covenants. Without this, companies might incur higher costs of capital and face difficulties in funding growth initiatives. 4. Cash Flow Forecasting: Accurate cash flow forecasting enables better financial planning and decision-making. A treasurer uses sophisticated models to predict future cash flows, helping the company to anticipate and prepare for financial needs. Without this foresight, companies might experience cash shortages or miss out on investment opportunities due to poor planning. The Costs of Not Having a Treasurer 1. Increased Financial Risks Without a dedicated treasury function, companies are vulnerable to financial risks such as currency fluctuations and interest rate changes. These risks can lead to unexpected losses, impacting profitability and shareholder value. 2. Higher Borrowing Costs Inefficient cash management and lack of expertise in debt markets can result in higher borrowing costs. Companies may face unfavorable loan terms and higher interest rates, increasing their cost of capital and reducing profitability. 3. Liquidity Crises Poor cash management can lead to liquidity shortages, where a company cannot meet its short-term obligations. This can result in missed payments, damaged supplier relationships, and even insolvency in severe cases. 4. Missed Investment Opportunities:** Without accurate cash flow forecasting and effective capital allocation, companies might miss out on strategic investment opportunities. This can hinder growth and competitive positioning in the market. 5. Operational Inefficiencies: A lack of focus on cash management can lead to operational inefficiencies, such as excess cash sitting idle or insufficient funds for critical operations. This misallocation of resources can affect overall business performance. Insights from Treasury Experts We thought it would be valuable to get perspectives from Treasury professional, Patrick Kunz, who is also Treasury masterminds board member Patrick Kunz, CEO and Founder of Pecunia BV Treasury and Finance, Comments Treasury Departments are (should) always be costs centers. That doesn’t mean they can add to the bottom line of a company. Not via extra profit but definitely by costs savings. A great treasurer has minimised bank (transactions) costs, has the FX exposure hedged at minimal costs and optimised his cash (investments). Therefore a treasurer is often a positive business case to a company Even for smaller companies a fractional or part-time treasurer or treasurer-as-a-service can add value at limited costs. In a majority of my assignment I realised at least some costs savings, in several of mine if realised costs savings that could have bought a small treasury team! Conclusion While the cost of maintaining a treasury team is apparent on the surface, the hidden costs of not having one can be far more detrimental. Companies without a dedicated treasurer or treasury function expose themselves to significant financial risks, higher borrowing costs, potential liquidity crises, and missed growth opportunities. Investing in a skilled treasury team is not just about managing costs; it is about safeguarding the company’s financial stability and ensuring long-term success. In the complex and dynamic world of corporate finance, the value of a treasurer is immeasurable, and their role is indispensable. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Stripe and Coinbase Integrate Crypto Services
Coinbase and Stripe have recently announced a partnership to promote the global adoption of cryptocurrencies. This collaboration aims to enhance the financial infrastructure by making crypto transactions faster and more affordable. Read more about the partnership in Coinbase + Stripe team up to expand global adoption of crypto Key Points of the Partnership: 1. Integration of Technologies 2. Global Reach and Accessibility 3. Benefits to Users and Businesses 4. Market Impact 5. Background Insights from Treasury Experts We thought it would be valuable to get perspectives from Treasury professionals, Alex Ilkun and Patrick Kunz, who are also Treasury masterminds board member Q: Do you see the partnership between Coinbase and Stripe to facilitate the increased demand for crypto payment in Corporate Treasury? If consumers are using crypto payments more should companies look to adopt it more? Alex Ilkun provided several insightful comments regarding the recent partnership between Coinbase and Stripe, focusing on the global adoption of cryptocurrencies. His views are captured below: 1. Benefits to Users and Businesses:I don’t quite see the speed of payments to typically be an issue in the corporate world, save for, possibly, M&A transactions, but it would be quite a niche and an infrequent use case for most companies. What could be a use case for corporates is the ability to make payments without being subject to cut-off times. However, it would require a significant penetration for that to happen since the parties will need to send and receive the funds, and I have doubts that penetration will occur. 2. Background and Concerns:My biggest concern about cryptocurrency usage by corporates is their seemingly widespread malicious use. Due to the anonymity it offers, cryptocurrency is enabling black market participation and sanction circumvention. The ease with which significant amounts can be transferred is not comparable with the logistics associated with suitcases of cash. As a corporate, it is a reputational matter to be involved in this structure. Blockchain technology boasts the ability to trace all the history of transactions, allowing you to see each unit of cryptocurrency travel between wallets. It’s easy to imagine a situation where a wallet is exposed to be criminal, making all the currency units that traveled through it tainted. Could a corporate that used one of those currency units be exposed to claims of engaging in criminal activity regardless of how remote? I’d claim yes as it would make a great story that would go viral. Now imagine a criminal network on purpose engaging with reputable companies to establish their wallet numbers? That would make a perfect recipe for a new era of digital crime. 3. Final Argument Against Cryptocurrency Use:My final argument against the use of cryptocurrency is that the currency should be a REASONABLE store of value. There are cryptocurrencies that are pegged to fiat, but it automatically reduces the range of currencies that can be used. Corporate Treasury will not hold significant amounts of funds in crypto as their value will change significantly in reporting currency. Therefore, at worst fiat will need to be exchanged to crypto for each sizeable settlement which is hardly efficient.” Patrick Kunz, CEO and Founder of Pecunia BV Treasury and Finance, Comments I would like to see Crypto as a payment type, not looking at it from an investment class perspective, so the risk is like just another foreign currency. The crypto can be used to send payments around quickly but there are some issues: (1) The transactions costs are not always clear up front. For some crypto your transaction costs are a factor on time and speed of the transaction (2) The transaction speed is not known up front (3) At the receiving end the crypto still bears price risk (i.e. like it is a foreign currency). (4) The anonymity of the receiver wallet could make it difficult to make sure there is no fraud involved. This doesn’t mean corporates shouldn’t look into it. To convert all their payments to crypto payments just for speed or transaction costs doesn’t make sense; we just have good alternatives for it. However, on the acceptance side I think corporates should not ignore it. If their market/customers would like to buy your goods with crypto a company should consider it. Stripe does offer the (immediate) exchange into fiat currency so quickly eliminating the price risk of crypto. A slight issue may incur if you have to do refunds in the same currency and buy back the crypto, but in a way this is also the case with FX risk. With the help of the PSP the hurdle to accept crypto as a payment type has decreased, using crypto also for pay outs and payments is another hurdle to take. Conclusion Overall, this collaboration between Coinbase and Stripe is a strategic move to leverage their respective strengths and drive the mainstream adoption of cryptocurrencies, making digital finance more inclusive and efficient for users worldwide. Recommended Reading Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange manage Notice: JavaScript is required for this content.
Reuters FED Interest Expectations
The article from Reuters discusses how U.S. Treasury yields remain high due to lowered expectations for Federal Reserve interest rate cuts. Initially, markets anticipated significant rate cuts in 2024, but strong economic indicators and persistent inflation have adjusted these expectations downward. Currently, traders foresee only two modest rate cuts next year. This change has caused Treasury yields to be volatile, standing at around 4.44%. The Federal Reserve’s upcoming decisions and economic data releases will be critical in shaping yield movements, with analysts predicting only a slight decrease in yields by year-end. Recommended Reading Key Points: This context highlights the intricate relationship between Federal Reserve policies, economic indicators, and Treasury yield movements. For more detailed information, you can read the full article on Reuters Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Bunq Unveils its own AI Money Assistant
Bunq, a prominent European Neobank, has partnered with Mastercard to innovate in open banking by introducing a new generative AI platform named Finn. This move marks Bunq as the first AI-powered bank in Europe, showcasing its commitment to leveraging advanced technologies for enhanced user experiences. To learn more about Bunq AI Finn, check [HERE]. Recommended Reading Key Features of Finn 1. Generative AI Integration Finn replaces the traditional search function within the Bunq app, offering users a chat-style interface where they can ask questions about their finances. This integration allows for more personalized and efficient management of financial activities. 2. Advanced Query Handling Users can inquire about detailed aspects of their spending and savings. For example, Finn can answer questions such as “What is the average amount I spend on groceries per month?” or “How much did I spend on Amazon this year?” It can also provide contextual answers, such as identifying a specific restaurant visit or the amount spent at a particular location on a given day. 3. User-Centric Approach The platform is designed to enhance user convenience, allowing them to manage their finances seamlessly. According to Bunq’s founder and CEO, Ali Niknam, the goal is to make banking more intuitive and aligned with users’ lifestyles through the use of cutting-edge AI technology. Impact on Bunq’s Growth The introduction of Finn is part of Bunq’s broader strategy to expand and innovate. Neobank has seen significant growth, now boasting 11 million users across Europe. Since July 2023, user deposits have increased by 55%, reaching 7 billion euros. This growth is attributed in part to the successful integration of AI, which has helped Bunq attract and retain a larger user base. Additional Features and Services 1. Free Credit Cards Bunq now offers free credit cards that can be set up in just five minutes and used immediately through Apple Pay or Google Pay. This service aims to provide greater financial flexibility and convenience for users. 2. Tap to Pay Leveraging Apple’s Tap to Pay technology, Bunq allows business users to turn their iPhones into payment terminals, facilitating on-the-go payment acceptance. This feature is available to all Bunq users at no extra cost, further enhancing the app’s functionality. Strategic Significance The partnership with Mastercard and the launch of Finn underscore Bunq’s ambition to redefine banking through technology. By focusing on AI-driven solutions, Bunq aims to set a new standard in the neobanking sector, emphasizing user-centric innovation and international expansion. This strategic move aligns Bunq with tech giants like Google and Amazon, which are also at the forefront of AI development. In summary, Bunq’s introduction of the Finn AI platform in partnership with Mastercard represents a significant advancement in open banking, highlighting the bank’s commitment to innovation, user convenience, and rapid growth in the European market. Insights from Treasury Experts We thought it would be valuable to get perspectives from a Treasury professionals, Royston DaCosta and Sebastian Muller Bosse, who is also a Treasury masterminds board members Q: What do you think of this, Royston and Sebastian? What does this mean for the future of banks/banking? Royston Da Costa, Assistant Treasurer at Ferguson PLC, Comments Excellent innovation-this will be the future for at least retail banking! There is still the caveat, in my mind, that AI is not perfect yet and all data/answers must be vetted or handled with some care. Of course, the game changer is when corporations are able to take advantage of this functionality. I believe “Finn’s” advanced query handling functionality is already available with some FinTech/Banks but I agree with the idea that it should be more widely available. A great way for the app to be user-centric is it could for example, analyse your monthly spend and automatically invest your surplus cash for the days its not required, to maximise the interest you earn on your cash balances? It makes sense (that Finn is part of Bunq’s broader strategy to expand and innovate), although caution should still be applied, i.e., we would not wish to experience a repeat of SVB, i.e., ensure you invest up to the limit covered by the Central Bank and diversify your investments with multiple counterparties. Bunq’s free credit card offering sounds great but is this too good to be true, i.e., what sort of limits are offered and/or is everyone really eligible? Although, its Tap to Pay technology is not farfetched, because it has become the standard method of payment for the current generation! Bunq’s partnership with Mastercard and the launch of Finn underscore its ambition to redefine banking through technology but Bunq does not have the financial power that Google and Amazon hold! In conclusion, I believe Bunq’s AI money assistant is a positive step and will enhance value for consumers (and hopefully for corporations soon). Banks/banking will have to seriously ratchet up their game if they wish to keep up with this innovation! It is interesting to me that I am seeing a two tier race developing, i.e., Fintechs/Banks investing and developing technology that is ‘future proofed’ vs. mainly banks that either refuse or are not willing to invest in technology and WILL lose customers as a result. Furthermore, the banks that are not willing to upgrade their technology will find it increasingly difficult to adapt to new regulations as they arise. Sebastian Muller Bosse, Manager Administration & Operations at Finance & Treasury Services GmBH, Comments The feature to look at your overall spending, search for specific transactions , and transactions being automatically categorized by a banking app isn’t necessarily new to retail customers. The ability to ask questions directly rather than just looking at default graphs, exporting data and making own calculations is of course a much more convenient way and will ease the use of adoption (especially for the older generations!). For innovators and early adopters these AI features will likely be a reason to try it out and to expect these kind of features in future. For the late majority and laggards it could feel more like…
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