00;00;00;18 - 00;00;33;23
Unknown
What are the main currents in Treasury technology? And how should you, as a corporate treasurer, make decisions regarding your investments in Treasury technology, especially when it comes to foreign exchange risk management? Welcome to CurrencyCast! My name is Agustin Mackinlay, I'm the Senior Financial Writer at Kantox and your host. In this episode, we have the pleasure to welcome Michael Bach, Senior Manager at Deloitte in Frankfurt and Head of Treasury Technology Advisory.
00;00;33;25 - 00;01;00;22
Unknown
Michael, a warm welcome to you and thank you for joining us. In this episode of CurrencyCast. Thank you Agustin for having me. Looking forward to that interesting discussion today. All right. So let's start as we do always by giving you the chance to introduce yourself to our audience. Okay. Happy to take the baton here. So a brief introduction from my side.
00;01;00;25 - 00;01;31;10
Unknown
Agustin, as you already said, I'm leading the Treasury technology advisory piece. What does that mean? So that's the part where we are looking for from an end-to-end process on Treasury processes with a clear focus at mostly step one or two, you will end up with the supporting system. So that means looking at the Treasury process and defining the correct, maybe replacing, maybe acquiring the new Treasury technology, which supports Treasury teams to deliver at the most automated and most efficient way.
00;01;31;12 - 00;01;55;04
Unknown
So that is the part I'm doing. And what do I bring to the table? 21 years and with an investment banking and eight and a half years before I joined Deloitte running the professional services team and the Treasury Management System provider. So I think that's a bit laying the foundation, knowing markets, knowing technology and combining that now in more agnostic way at Deloitte.
00;01;55;07 - 00;02;26;07
Unknown
Absolutely. And you mentioned the end-to-end automation. That's music to our ears. Michael, it's said that great things can only be achieved when passion is involved. And on your LinkedIn profile, it says “A passion for Treasury.” Tell us a little bit more about that, how it came about and where is it going or is it leading you? So I think that is a bit that I'm happy that we have that slogan that honestly goes to our partner who is leading that whole practice.
00;02;26;07 - 00;02;50;22
Unknown
And that's even the podcast where he said, okay, well, what do we care about? That's simply that's Treasury, the Treasury teams where we deliver throughout the various parts we have. And that's for me. And that case you said it's passion for Treasury. It can also, in extent that put its passion for Treasury, Treasury and technology. So combining that both things simply looking at projects at Treasury teams, is it the same?
00;02;50;22 - 00;03;11;07
Unknown
No. Every Treasury team that deals with the different approaches. And so the passion, the piece is definitely saying, cool, I know the industry, I know the markets and that is the part I'm happy from a Deloitte perspective really to say, okay, well what can we do to make the Treasury team as easy as possible? Cause what we have in mind is the part that is.
00;03;11;14 - 00;03;53;20
Unknown
The Treasury team should definitely be able to make decisions, to support decisions and not to take on a daily basis, look about where to find the data they need to work on. So that's with the passion part and definitely Treasury. And in my part, especially auto technology. All right, that's really, really great. If you add to that, like the Bloomberg article, I think a couple of days ago said that foreign exchange risk management is cool once again, and that's because of the recent volatility in markets due to trade policy uncertainty, tariff policy and retaliation, and all of that.
00;03;53;20 - 00;04;24;07
Unknown
So we have a mix of being cool and fashion is really, really interesting. Let’s start Michael with the world or maybe the universe of Treasury technology. And let us start with a broad view. First, I would like you to guide us a little bit into the main trends in Treasury technology. What's going on in the world of ERPs, Treasury Management Systems and all of that.
00;04;24;07 - 00;04;47;26
Unknown
So really provide us the outlook, the panorama, if you will. I’m happy to do so. And I think that that's very important and very interesting question, Agustin, there because the part is, when you look at trends, you simply get that the first answer that needs to be something with AI or something with automation, yes, but they are supporting.
00;04;47;26 - 00;05;07;09
Unknown
So it's not the self-purpose of that one. So in that case, when looking at Treasury, I definitely think it's more or less looking at three pillars. That's definitely the technology. That's one huge part and that has different aspects and maybe that is a part we can, will definitely take a look at one of the other aspects in more detail.
00;05;07;09 - 00;05;33;00
Unknown
But take technology as a pillar, enabling ensuring automation, making it, error safe and all these topics. Then the second pillar is that goes with what you said with the challenges we are still facing. So we are coming through crisis to crisis. Started it with the back in banking times, with the part is, with 2008, seven, eight years.
00;05;33;02 - 00;05;52;13
Unknown
Then we had corona and all deposits. We never went out of crisis mode. No, you were dealing with the terrorism on the part. So there is one that the second pillar is really about cash or liquidity, knowing simply what's in there, because what we would or what I often say in that case is definitely I regard Treasury as a last line of defense when it comes to corporate liquidity.
00;05;52;20 - 00;06;13;03
Unknown
That's the ultimate decision. So you need to know your positions and that is exactly facing in what you said in terms of we're looking at the FX exposure, the FX importance. That is the third pillar, looking at risk management. I think that is the three of the major pillars there. Other parts depending on the underlying business that the nature of the business.
00;06;13;05 - 00;06;35;20
Unknown
But what we see and in overall in our projects, we will tackle all these three pillars at an even stage or if Treasury technology needs to involve further. But nevertheless, looking at the overall trends, yes, the three pillars and definitely AI and all these parts are enabler throughout some of the parts, but it's not a self purpose in that case.
00;06;35;22 - 00;07;06;22
Unknown
Yes, I think we are on the same page here. And also I would presume that when you mentioned three pillars and so the tech one, the challenges and the cash management, the vital importance, of course, of liquidity management and cash management and then risk management. But are they not interrelated one to another, that's a favorite topic of us at Kantox.
00;07;06;24 - 00;07;35;16
Unknown
So for example, some aspects of of currency management are just having multi-year or swap execution or even of selling in the currencies of your customers to diminish the risk of their accounts receivable. Are these these topics not linked one to another? These three pillars I mentioned at a certain degree? Absolutely. I think that is a bit going back with the differentials.
00;07;35;18 - 00;08;06;28
Unknown
When you look at corporates, if there is one lucky guy, look more looking at continental Europe and maybe only the Home Service paying in euro, definitely they will have it a bit indirect. Definitely that the issue with that FX part because if competitors will be running also globally and they bring in the different currencies that might bear that part, the technology, then more or less when we look at the take the first deep dive moves down to a foundation part, simply enabling ensuring the parts, the cash liquidity piece.
00;08;07;03 - 00;08;35;20
Unknown
I think that's the maturity, even if you're not involved in risks and even commodity risk, the interest risk definitely is a part you need to deal with. But for the majority, definitely when looking globally, these both risks, these both pillars go hand in hand. You can't deal with a, can't have a proper cash liquidity management without, having the same pillar in risk management also at a certain maturity level, ensuring that you are able to deal these parts hand in hand.
00;08;35;20 - 00;09;06;29
Unknown
Because looking at the cash liquidity, the forecasting piece, that's the first foundation which you hand over to a system, or if it's a one-man show in that case and they do all of the things on their own, but you need the exposure to derive any related actual when moving over to the risk management. So absolutely, it goes hand in hand some of them might be lucky if they don't need to deal with certain risks, but in a global in orientation, it's interrelated.
00;09;06;29 - 00;09;43;27
Unknown
Definitely. Yes, that's right. Yes, I think we would agree on that point. Michael, let's go a little bit into slightly more detailed view of systems on, I hear people saying that TMS, the Treasury Management Systems, that are mostly in place suffer from being a little bit a static type of systems. weren't for example you compared to two platforms that use real time API connectivity and allow them to monitor the markets.
00;09;43;27 - 00;10;09;28
Unknown
And when I say monitors, not just passively watching, it's also, as you mentioned, compiling the exposure and recalculating the for example, the weighted average exposure rate when you have stop-loss and take-profit so, is it fair to say that there is an element of dynamism that needs to be incorporated?
00;10;10;01 - 00;10;42;13
Unknown
Definitely. I think that is when we're looking at that all the crisis we had, the bigger ones, the smaller ones. There is one thing as you need the correct data at the right place to make the right decision and that is a bit the part. Do I need to do that decision on my own? And every time? Or am I able to educate the system and hand over some parts where that's the classical part, can I give a ruleset and say, well, take 80% of the things I can give it to the dedicated ruleset, take it out of my table so I can focus on the 20 ones which are critical, where I
00;10;42;13 - 00;11;00;12
Unknown
need to deep dive further in the system. So or that, as you said, that it's a very important part. Sometimes we're looking at the overall space. When you look at all the treasure management systems globally, the part is simply the question where did they originate and how did they develop and how will they develop? That's a bit the part.
00;11;00;14 - 00;11;24;01
Unknown
So some yes, definitely might be a bit more static in that case and some might have, well, we are focusing on cash liquidity. Maybe we are only taking monitoring positions or recording positions, but we are not actively evolving. And I think the part is, where do they develop? That is the part where some treasure management system provider might switch to the pot saying, well, we need what you said to hand over the treasure.
00;11;24;01 - 00;11;48;29
Unknown
Keeps a more active decision part. But that's the question. Also on their side, what's the type of investment they need to go? And maybe isn't it better to take out the look at the market and see what's out there, what's trading platforms, what's really integrated platform which offer these modern technologies already. And then it's coming back to one important question is what you ever have on the table when looking at a Treasury technology.
00;11;49;03 - 00;12;17;26
Unknown
It's an interfacing part because you will ever interface as a Treasury team with one core part of the company. That's the ERP landscape. In that case, you're lucky if it's only one ERP. Most reality is more fragmented ERP landscape. So that is the part where Treasury has a first interfacing project and that's a bit the question where some of them are still hesitant saying, I go for a Treasury Management System, I hope that the Treasury Management System can cover everything.
00;12;17;28 - 00;12;52;25
Unknown
I wouldn't take that stance because the part is, if the Treasury Management does not bring that additional function by nature, it's better to seek a best in class solution. But definitely don't forget about the integration effort. And I think that's the hardest when looking at teams, providers and especially solutions at one point that they also start talking or some of them already talk to each other to make it as feasible as possible for Treasury team to not that they need to care about, there is another integration project coming up because that's a painful process.
00;12;52;28 - 00;13;30;11
Unknown
That's right. Let's try to avoid those pain points to our two beleaguered treasurers and let's try to put ourselves for a couple of minutes in the shoes of all of corporate treasurers and how can they make decisions regarding their investments in Treasury technology. Of course, we know from corporate finance that the finance team has to make the well, the investment decision mostly with net present value, the financing decision, the balance between equity and debt and the dividend decision.
00;13;30;11 - 00;14;09;05
Unknown
So it would put into a go into the the investment decision regarding Treasury technology. Here we have a viewpoint. I don't know if you're going to be in agreement or not, but what we tell treasurers is think of as if you had infinite resources at your disposal and to manage in particular currency risk, and then only then think the delta or the difference with your current situation and see what's going to happen.
00;14;09;05 - 00;14;32;09
Unknown
See, in many cases, the massive losses in maybe competitiveness or in the protection of your profit margins. Do you agree with that broad approach, Michael? Yeah, I totally agree. And that partly because you're bringing up one very important thing, definitely it's all about founding the business case, justifying an investment. And the interesting piece is on risk management.
00;14;32;09 - 00;14;57;02
Unknown
I unfortunately see the parties, it's more down to figures. So sometimes it's really easier to say, okay, well look, that's the investment and that's the parties. We are bringing 80% of our risk exposure over to that platform. It might be executed. So that's the parties we can increase margins negotiated with banks. We can have a more timely 24-seven approach because that's all the parts that you need to ensure.
00;14;57;04 - 00;15;20;16
Unknown
Okay, well, I have someone in Europe, someone in the Americas, someone in APAC taking care of that one, they can have that more outsourced to a platform and a more switching to a monitoring position. In that case, making sure that everything goes as planned. So in that case, justifying that investment definitely makes sense because on an FX part, it's really easier to get the figures.
00;15;20;24 - 00;15;52;07
Unknown
Sometimes it's harder to justify the full technology investment. Thus in the end it's spending money. There's no way around that. It wouldn't be not on the same call. Yeah, you would save X, no, at a certain point, Treasury technology and whatever invest system that comes with it isn't investment but the parties you get errors out of the pot, you might achieve higher automation grade, you get more visibility and all the things so that the question most of what we discuss with finance or even addressing to the CFO, what is that?
00;15;52;07 - 00;16;15;03
Unknown
that Treasury can answer you faster, more reliable. And I think what is, what is the birth of such an outcome? And that's the same hard with what is that, say, the birth of time to execution. And it's an FX risk management automated position, keeping feeding back to the ERP, feeding back to the Treasury Management System. So that's a bit too modest.
00;16;15;06 - 00;16;36;22
Unknown
Where do you determine and that's the part what you had with the definitive part, because unfortunately that would be a luxury. Most of them don't have it. So I like that part and saying now take reality and say put a price tag on these efficiencies, on these efficiency gains. And that is the part which justifies, in general, an investment in the technology landscape.
00;16;36;25 - 00;17;09;21
Unknown
That's right. Come up with those, an estimation those net present values. I that would be correct. Really terrific. Yes. And that's what we say. So my also one regarding investments in Treasury technology. So imagine that you have infinite resources at your disposal and then take the delta with your situation. Let's go Michael into some some other issues in Treasury technology.
00;17;09;21 - 00;17;47;20
Unknown
And to tell you the truth here, I had a recent conversation with our Victor Carcouet, who happens to be Kantox’s implementation manager, and it completely changed my views on the implementation phase of the, on technology. And so I would like first if now that we discussed that board implementation let you guide us again into the general topics that are related to implementation.
00;17;47;20 - 00;18;22;19
Unknown
Perhaps the resources that I mean the trainings on all of that, a broad view and then we will discuss this on some more detailed points. Okay. Happy to do so. And I like that part what your colleague mentioned, because the part is if you select a system saying, yeah, well there is an implementation, we will do that and a lot of the time and then something strikes in general that's a daily business that occurs at your Treasury team, that's the part is, you select something new, you're really happy about this, you want to drive that forward and that reality.
00;18;22;19 - 00;18;59;03
Unknown
There is a new refinancing round coming up. There's another project crossing your path internally. So that's what the reality on the Treasury team that means, and that's the parties when looking at the implementations and it would started on the negative side. In that case, derive a bit. What do you need to do to get the proper is expected of parties underestimate the implementation timeline that is the part is you can't to be too bullish because there will be unforeseen parts so take your time that's the parties say define clear objectives you want to achieve at a certain in a certain time with a fair planning on that one.
00;18;59;09 - 00;19;16;14
Unknown
Not the most left side approach saying, well, we need to have that up and running in four weeks time that support us clear objectives and clear timelines. So that's definitely two part. And the two or three other points is the part is what you also mentioned is the part is who will be involved. Also in an earlier stage.
00;19;16;14 - 00;19;36;18
Unknown
Is it the CFO who is backing that whole part? Do you get his blessing to call it that way? So that's one person on the other side, correct? That's the part is who picks it up and who is making sure when you go global in that case that you are able to really push that forward. And that's the part with, ensure at the stakeholder engagement.
00;19;36;18 - 00;20;00;18
Unknown
So the stakeholders are clear and they're engaged in the project. So that's very important because that is driving the overall change management piece. Don't underestimate change management. You're changing processes, you're evolving, but you are changing things. Keep everyone informed, keep them on the journey, and even if it's sometimes painful, maybe repetitive, but keep them on board that, it needs to be balanced.
00;20;00;18 - 00;20;20;22
Unknown
Definitely. You can't go for two people only doing change management if it's a smaller project, but the part is keep them on board. That's simply keep them close to you, that you don't lose any one of the team or in the corporate in such a change project. And the other part is definitely what what you also said is the pod with the training and so on.
00;20;20;24 - 00;20;42;06
Unknown
Invest in the training, take the time to train during the implementation. And way more important also once you entered hypoxia and then I would say take, take you and myself and think about the solution. Advisor we are out. That's now your system, that's now your business. So that's the part is. Do not underestimate the part in investing in training.
00;20;42;12 - 00;21;05;12
Unknown
Once the vendor and the advisory might have had the project it. Because the ultimate goal I think for both of us is create that solution, make it work, that is really feeding on the corporates needs. But on day X we had all the key and it's their solution that they need to be 100% happy saying to where we can maintain it, we can train it and we can run it.
00;21;05;15 - 00;21;45;19
Unknown
Absolutely look that both of on the job training and implementation going hand in hand that was brought home to me again by our implementation manager, Victor Carcouet. We talk to voices in fact and it's a bit it was a bit of a surprise at the beginning, but when you're implementing, say for example, a for instance, or a risk management or hedging program to protect the budget rates or it turns out that then even members of the Treasury team are not so sure on how to create a budget rate where the whether you take this and right the is the one rate.
00;21;45;19 - 00;22;22;20
Unknown
What are the markups? Where do you set your stop loss and take profit orders? All of that. So there is an element of on the job training in the implementation process that really a very interesting. Michael is there, should you be sector agnostic when it comes to implementation or do you have specialists say whatever in trouble in specialty chemicals or in dollars? You need to unfortunately, you need to be both.
00;22;22;22 - 00;22;48;13
Unknown
You need to be sector agnostic because that is a bit the part is when you advise one of your clients. And in terms of saying, well, how to talk to banks when it's that that's a basic part and maybe what is your experience, and in terms of connection to banks, in terms of negotiating at fixed rates and all that, the pieces on who can, which bank banking group can guide you perfectly when going to a specific region in that case.
00;22;48;13 - 00;23;10;07
Unknown
So that's more that that is definitely a pod which I would call a second or sector agnostic. The part is definitely and that is going back what you just mentioned in terms of the budgeting and all the things. That's definitely the difference. If you are a heavy industry where you maybe even huge machinery, even complete factories you're building compared to the total retailer.
00;23;10;11 - 00;23;30;15
Unknown
So that's a total different part is. It's a timing. How long do you plan? So looking at heavy industry, that's definitely a part. You have, one, two, three, four, five years, maybe even longer. The retail part, sometimes we see it's even harder to get something over three months visibility in that case because it's so dynamic, so high turnover.
00;23;30;23 - 00;24;01;20
Unknown
So that's definitely the part is, the system or sector agnostic on that part for the basics, for the part is, for the giving that guidance. But definitely having the sector knowledge and think about where to look at. The difference is where to retrieve data and what are the key challenges depending on the sector? Definitely. Absolutely know, Michael, I would like to use the expression to pick your brains on a variety of topics.
00;24;01;22 - 00;24;30;29
Unknown
And let us start with the topic of processes and risk. I say this because I'm a fan of looking at for American companies for example at the earnings statements or the 10-Q forms of other European companies. Other European companies also provide a lot of interesting information as to their risk management policies.
00;24;31;01 - 00;25;11;16
Unknown
I saw, for example, very recently a large dance company saying that all their process is to manage their, to hedge their balance sheet exposure. And they do that once a month. I find that really, really surprising. We see clear that in this case what you would need is much more of a market-based approach than a time-based approach because these approaches, this process can create risk on themselves.
00;25;11;18 - 00;25;34;27
Unknown
Do you see that or as well? Maybe not. Then this is an inference dangerous one as well, but in other aspects as well that the process itself may be a source of risk, even if you have very good systems in place. Yeah, and that's combined with the system, it's definitely the part is that sometimes the process doesn't match the system.
00;25;34;27 - 00;26;13;00
Unknown
So that's a bit the part is where definitely ever would encourage take a step back look at the process, look at the standard process in the system and try to really harmonize them because that is the part definitely no one last deep dive in terms of the technology. If you think if you use a standard in a system which is a market standard which is developed over years, that eases your life going forward. Because if you're running releases and all the things you're not jeopardizing own develop process where you need to rethink them or make sure that with every major release, you need to maybe then have the there will be jeopardize.
00;26;13;03 - 00;26;35;01
Unknown
now I need to reinvent by process. So that's a bit the combination between process and technology. Yes. Some of the processes they might have been absolutely correct ten years ago, for example. But. Well, the environment is definitely changing. And now we are really changing it way higher speeds, too, compared that to earlier. I'm quite, quite a few years out in the market.
00;26;35;01 - 00;26;56;01
Unknown
So that means simply I definitely would say when I started back in banking times in the nineties that was really more stating the part is you had, four or five products and that was the complexity that is no longer given. So you need to act very more timely. So that's also feeding back that I need to have a proper system but also have a proper process which lives with that one.
00;26;56;04 - 00;27;17;05
Unknown
The main challenge I see there is sometimes really the discussion saying, well, we did that over the last ten, 15 years and somehow it did work. So that is the part being hesitant, being resistant to change. That is sometimes for when we talk to the Treasurer, one of the biggest parts, even in the team itself, I think what we need to change, we need to evolve.
00;27;17;07 - 00;27;42;18
Unknown
That is the part saying called raising the topic, the process, not 100% fitting. We need to involve that. You still have even in the Treasury team, some of them may be older or older. Join us and think what? Yeah, but it worked somehow. It will also work in the future. No, it will not, because that is the part you at least you lose competitive advantage if you stay at a certain process and do not question it, it can prove that it's absolutely fine on that process.
00;27;42;20 - 00;28;05;11
Unknown
But nevertheless, the part is what you meant. And I like that part is on the balance sheet hedging. If you do that on a monthly basis, the only thing is maybe that is a bit sarcastic on that part. And some of my former colleagues and in these days banking colleagues might forgive me but at a certain point, sometimes balance sheet hedging at a certain point is only increase in the income on the banking side, where they can rely on that every month.
00;28;05;13 - 00;28;28;20
Unknown
They need to redo a lot of position, which sometimes don't make sense from a common mind in that case, from a common understanding perspective. And that's also going on the part when you look at, for example, the driving value at risk. If you drive your exposure by value at risk and sometimes you take actions which are totally against your position because you're following only a number, then it's for me.
00;28;28;20 - 00;28;48;16
Unknown
Sometimes we see the part is take a step back and really challenge if that process fits to your underlying business and what might be the the best part. So I would ever see processes and the technology as one unity. In that case, it's one unit and you need to check that on a regular basis. That is the part I will check on a regular basis.
00;28;48;16 - 00;29;21;06
Unknown
And Agustin and I'm with you island definitely with the part is saying not the monthly partt under the heading. The part is take processes and system in a regular review. And the other part is really if something goes wrong or maybe goes off a certain threshold, then take the action. Yes, I think we agree on that. Michael, you may I saw on the I write the Financial Times article saying that that's going to be less need for armies of junior employees in accounting doing repetitive work.
00;29;21;09 - 00;29;59;05
Unknown
And we will see that at play in our own company here at Kantox, as we can automate the process of compiling all the records documentation, for example, for hedge accounting. What's your view there on the impact of technology in the accounting world? And just to phrase that the part is, I would look at two aspects. In that case, I'm totally with you in terms of when looking at the junior or the part is.
00;29;59;07 - 00;30;19;05
Unknown
What I most often say is that's led in the tech industry that's really upon us. Well, when you look at automation, all the things get the role of robot out of the human. What is a click, What can be automated should be automated. So that's definitely the part is. So someone sort of was only ticking boxes who was only pressing the button.
00;30;19;11 - 00;30;45;27
Unknown
That is definitely the part I see that's even going back to automation and hopefully that will definitely shift in the future way more. So yes, if that is that the job description at a certain point that will change, it will vanish in some parts, but hopefully it will change because that is the second point on that. Because if you get that automation, that execution, that collection piece out, and that's done automatically, it's more than we need.
00;30;46;00 - 00;31;04;06
Unknown
We need the juniors being well-trained to make decisions based on that data collected. Because that is a part what I said initially in terms of if I get 80% automated as the process in place, I have the rules in place, the guidelines in place, and I have a platform where I can place that. And this platform takes place,
00;31;04;13 - 00;31;24;13
Unknown
It takes care for me. The part is I have the time to consider the remaining 20% in way more depth. I won't be able to go to the CFO and say, Yeah, well look, that is our issue. How do we tackle that one? That would be my suggestion, A-B-C, That's the pros and cons on that one. Dan for the first time, you have the time to do so, and that is also adding value.
00;31;24;13 - 00;31;53;03
Unknown
You get the automated part out. Yes, definitely. That will impact a job description at a certain point. But on the other part, the value creation work. And that's also going back to the platform because I don't want to put the remaining 20% to pick up the phone and call the bank. No, that is where I also would say, okay, well, I need a platform to be able to deal the automated fees and to go as manual or as individual as possible in one central place.
00;31;53;06 - 00;32;11;23
Unknown
So that's my part is on that one. Yes, I totally agree with that article that will vanish. That will change in a lot of industries. But we definitely need to make sure that we educate our juniors and give them the chance to learn. Yes, sometimes I learned that back in banking too. I'm saying, well, yes, it wasn’t clicking
00;32;11;23 - 00;32;33;03
Unknown
in that case. You get to know processes in detail. You will not need that in the future. So we need to make sure that they get the full understanding to take this educated decision later on. Right. And what you say fits really nicely with the following question that I had in mind. It regards visibility as just doesn't happen with implementation.
00;32;33;03 - 00;33;09;11
Unknown
I happen to talk to our visibility expert here at Kantox on PowerBI and he told me that that very very dramatic sentence what's the use of a black box even if it does everything perfectly if it cannot actually see your KPIs. So this also is a very a major trend in Internet technology right now to improve your visibility and the granularity on those KPIs.
00;33;09;13 - 00;33;31;19
Unknown
The possibilities are really amazing. Are you in agreement with that? Yes, totally agree that part. And what I and that is more what I urge all the vendors outside in the Treasury space that's opening up the system. What do I mean with that one? Because that it's going back to the black box and some also might forgive me for that one might call that the data.
00;33;31;19 - 00;33;54;28
Unknown
Lake. It's no advantage to put data somewhere without doing anything. The part is what I sometimes see in the development. You look at a Treasury Management System, you look at a fintech system saying, now to fancy dashboards and reporting. No, that the parties the question is, is it meaningful? Does it make sense?
00;33;54;28 - 00;34;30;14
Unknown
Is it feasible with at a given cost to improve the reporting in the system? If so, why take it? If not, make your platform as open as possible? So that's the podcast. What August would you mention with the API? The interface increases and so on, because then feeding the data in a data like you will need that because we are looking at mass data, but then giving that the corporate at the Treasury, the whole finance department saying, well, now we take sales figures and we take other figures in to calculate our KPIs because not all of them are completely driven by, by Treasury, right?
00;34;30;15 - 00;34;50;09
Unknown
They're adding other aspects. So the part is definitely what I need to have the data in the system there, it's collected. I need it as accessible as possible and maybe then put it in a in a data lakes in that storage in a black box, but then give light in that black box and say, okay, well now I put the the I reporting whatever I have.
00;34;50;09 - 00;35;14;23
Unknown
They're saying, well, now I combine everything and that is sometimes the pod. What are missing and where is this corporate struggling to develop dashboards, reporting and so on. If the reporting if you look at 15 projects, you will have 15 times ask for I need my exposure, I need my financial status. And believe me, it will be 15 times a total different reporting.
00;35;14;26 - 00;35;33;28
Unknown
So that's the hardest thing. Do I need to build that in the system or do I open up the system to give guidance and say, okay, well that's it. That's the same time every day, every month year it's the same format, take it and integrate it in a meaningful reporting. So that's about all about with ability. So I definitely see the journey.
00;35;34;00 - 00;36;00;06
Unknown
No, it doesn't make sense to really have a black box where you put something in and no one sees it and no one does anything with it. You really need to bring it to broad daylight in that case. That's right. The problem might lie with, where one of our engineers also told me this morning we designed this stuff as a black box from the start and we think of visibility only later on.
00;36;00;08 - 00;36;39;21
Unknown
Michael, let's wrap up this conversation but before that, a comment on the issue of control in general. I say this because we were, the FX corporate world was a little bit surprised recently with news that a Canadian company, Nutrien, on exposure to the Brazilian real announced that an unauthorized trader had taken a large position and okay, claimed a material loss of 220 million CAD.
00;36;39;23 - 00;37;17;27
Unknown
I think this example, just to mention the lines of defense that we have in the, we call currency management automation, the fact that every single trade in foreign exchange derivatives most are hand in hand with a corresponding commercial exporter or even if you consider an in-house type or set up where only Headquarters does external trades with banks.
00;37;18;00 - 00;37;43;04
Unknown
What's the importance also that we give to control in automation? Yeah, I totally agree with that. I like that in terms of the, when you look at the most systems and thinking especially look at, now from an FX perspective, when we look at your system, in that case, what the part is you have to clear your order transactions on, that's the prerequisite from a system centered perspective.
00;37;43;06 - 00;38;03;12
Unknown
Without taking the step on the customer side, definitely the old split, while simply you look at front office, you look at middle of a local back office. Also, this part is definitely in terms of segregation of duties is evolving. So but nevertheless, the part is definitely what what shifted to the header is the part who who is authorized for what and where do I control that?
00;38;03;15 - 00;38;31;12
Unknown
And that is the parties with way more automation with many more platforms. Yes, the responsibility shifts on the decisions to a smaller group. Definitely. That is giving them some burden in that case, definitely. But it's a clear hierarchy in terms of who can reach out to the bank. So if I cut down the bank line only on emergency contacts and that case and go via a centralized platform, that's an easy part to really maintain, easier access overview.
00;38;31;12 - 00;38;51;25
Unknown
So that's one part on the banking relationship. The other part is definitely when you see most of the corporates following single sign-on logics, in that case, that's the easy part and saying, okay, well single sign-on combined with the rights and role it provides in the respective systems, it's simply preventing that someone can bypass that one.
00;38;51;28 - 00;39;14;27
Unknown
Definitely looking at basic things like four eyes principle and all the things in maintaining such wrote principles. That's definitely obvious. But the part is definitely if you have a platform, if you can centralize it, you will be able to control that way more. And sometimes, yes, you will discover some inefficiencies in the processes. You acquire a company, for example, that’s a part is.
00;39;14;27 - 00;39;37;04
Unknown
It's there will be a certain time where it might be a bit bumpier and saying, well, unless and unless you have harmonized that integrate that. So that's a policy you need to be aware of it. But again, that's going back to part is if you have the standard in on the system side already, you're way more able and faster to deal with unforeseen things in a way more efficient way.
00;39;37;11 - 00;40;03;07
Unknown
So definitely you need to have that the segregation of duty in place, depending on your company size, on the requirements you have. Absolutely, now, Michael, there's so many issues that we could continue discussing about. I just want to mind comes ideas about the spreadsheet risk, email risk, APIs and all of that. But we will have to wrap it up here.
00;40;03;08 - 00;40;29;21
Unknown
So Michael Bach, Senior Manager at Deloitte in Frankfurt, and Head of Treasury Technology Advisory, thank you so much for joining us in this episode of CurrencyCast. And Michael, is there something you would like to add? First of all, thank you for having me and thank you for that interesting discussion and the part is definitely well, an encouragement to the Treasury space.
00;40;29;21 - 00;40;52;01
Unknown
In that case, look at technology as your supporter, as your eight and not the painful process in terms of the implementation. It will be there, but it will help you once you plan to thoroughly technology and the systems will help you to be more efficient and more, being the business partner to the CFO you want to be.
00;40;52;04 - 00;41;04;10
Unknown
And that is that's my five cents on that one. All right. Thanks a lot, Michael. Thanks very much again. And let's see you soon in CurrencyCast. Thank you very much. Have a good week. Take care!
