2010 in Review: Mounting Challenges for Treasurers

Publication: gtnews.com

This year has seen treasurers face challenges on several fronts. This review of 2010 examines industry trends and reveals the top 10 most read topics on gtnews this year. 

Looking back at 2010, it is fair to say that, thankfully, it has been less tumultuous than the couple of preceding years. This was the year that many economies around the world emerged from recession and, while not exactly sprinting into growth, the widely predicted doubledip recession has failed to materialise. So far, so good? 

Perhaps not - looking beneath the surface, there are clearly still many structural cracks in the global economy that could derail future stability. In Europe, the sovereign debt crisis threatens to catch up with many more countries in 2011, while the euro itself is under the most intense pressure of its short history. How long will German taxpayers be content to lead the bailout of other nations? 

In the US, the Dodd-Frank Act became law, creating huge changes for both banks and corporates in their accounting and reporting processes, while ‘QE2’ showed a marked difference in approach to deficit management compared with most European countries. Even China, seen by many in the west as the saviour of the global economy, has been struggling with a number of economic issues of its own. Under fire from the US and Asian neighbours for manipulating the value of the renminbi (RMB), the spectre of inflation also looms large in China. 

With considerations such as these, the role of the treasurer is not getting any easier. The rise in profile of the treasury department over the course of the credit crisis has been well documented, but in many cases this has not been matched by a similar rise in resources. So in a situation of having to do more with less, what have been the topics that gtnews subscribers have been reading the most this year?

Cash Management Concerns to the Fore 

Perhaps unsurprisingly, cash management issues dominate the ‘most read’ list for 2010. But within this broad umbrella description, a number of issues emerge, including cashflow forecasting, cash management systems and the centralisation of cash management processes. 

Forecasting 

Looking at cashflow forecasting, the gtnews Treasury Insider’s blog on the topic had the rather provocative title “Cash Forecasting: Is It Really Worth It?” In the post, the gtnews Treasury Insider explains that, while they don’t need convincing of the importance of cashflow forecasting, there are a couple of major challenges they face in their organisation: 

1. I need to encourage the subsidiaries to get into the habit of forecasting regularly, by which I mean once per week, with updates when necessary. 
2. I need to improve the accuracy of these forecasts. I am keenly aware that the nature of our business dictates the frequency required for forecasting. 

The Treasury Insider sees the issue for their company as being an internal personnel issue rather than a system issue. And the blog post gained a large response from the gtnews readers. Selected reader comments include: 

• “I can only support the absolute MUST of cashflow forecasting and also the need to have a at least three months outlook especially when you have to plan out your short-term financing needs, like we are having to do in my company.” 
• “We went from a loose two-week forecast model in 2008 to a very rigidly enforced 13 week model in early 2009 in response to the economic crisis. The outcome played a large part in ensuring that our company avoided any breach of financial limits or covenants - its simply that important.” 
• “Regarding your issue no 1, the best way to solve this is from the top down. Your CFO [chief financial officer] needs to be behind you. Anything less than that will get short-term attention.” 
• “Better cash forecasting will not occur until the link between profitability and liquidity is measured more precisely, and those involved are rewarded for meeting their goals.” 
• “... treasury needs to take the lead not only by owning the cashflow forecast process, but by clearly articulating the benefits across the organisation.” 
• “Technology also helps complete the information loop by quickly communicating back forecasting effectiveness at a level of detail that is actually useful to the remote user.” 

Clearly the optimum forecasting rate - daily, weekly or monthly - varies from company to company, and there were different views on this from the readers who commented. Common themes surrounded the importance of getting senior management onboard with the forecasting process, and also educating business units as to the importance of accurate and timely cashflow reports. To get a successful cashflow forecasting project off the ground, treasurers need to be adept at communicating the benefits to all invested parties. 

A centralised approach to cash management 

In their article that looks at centralising the cash management function, Diejana van der Wal and Heijmert Rijken from Rabobank acknowledge the role that cashflow forecasting can play as part of a centralisation programme. Integrated with cash pooling, it can be an important tool for improving cash management as it lets the treasurer have visibility of their company’s cash, no matter which country or currency the account is held in. 

In terms of pooling, one example of this helping to centralise liquidity management that is given is this article is the end-of-day sweep. This process makes it possible to transfer balances from local accounts to one central account or to centrally maintained accounts in the name of the local subsidiaries. It is also possible to automatically move the balances back to local subsidiaries, while profiting from the advantages of a central interest pool. 

Van der Wal and Rijken explain that this allows the treasurer to have better control over their cash, while they can also view it as a corporate asset within the organisation. 

System choices 

The most read piece of content on gtnews in 2010 was an article from Joergen Jensen at Nasarius, who provided a guide to cash management systems in Europe. In the article, Jensen examines a variety of areas related to cash management systems, such as the type of vendors (banks, enterprise resource planning (ERP) providers and specialist vendors), what you should look for in a system to suit your organisation, and how to approach the selection process. Jensen also takes a look at some of the specific offerings from the different types of vendors that are available, and offers some advice as to which types of systems may better suit which types of organisations. 

This year, gtnews also published a buyers guide to treasury management systems (TMS), providing a comprehensive report on the various issues that treasurers face when selecting and operating a TMS, featuring interviews and case studies from a variety of treasury professionals and a TMS matrix comparing the functionality of a large range of systems. You can download the TMS buyer's guide free of charge. 

SWIFT Success? 

Articles related to SWIFT take up two of the top four places in the most read chart on gtnews this year, demonstrating the demand for information that exists when it comes to the role that SWIFT can play in making corporate bank communication more efficient and secure. The content with most relevance to corporates in this list is Debunking the SWIFT Myth, written by Joy Macknight and published in July this year. In this feature, Macknight asked the question why, despite the benefits that SWIFTNet offered corporates by providing a single, standardised and secure channel, had not a greater number signed up to use the service? It certainly seems that preconceptions about the accessibility of the SWIFT network had played a role in the slow take-up, with many corporates questioning whether they have the volume of payment information necessary to justify the cost of gaining SWIFT connectivity. 

To combat this perception, SWIFT has launched a variety of different connection methods for corporates - from plugging in a USB stick to gain off-the-shelf connectivity through Alliance Lite, through to outsourcing connectivity to a SWIFT service bureau (SSB). The additional services that SWIFT is now looking to offer as part of an overall package is also helping to gain traction, through innovations such as: 

• Exceptions and investigations. 
• Trade finance. 
• Secure e-mail. 
• SWIFT Secure Signature Key (3SKey). 
• Electronic bank account management (eBAM). 
• Electronic invoicing (e-invoicing). 

As Marilyn Spearing, global head of trade finance and cash management corporates, Deutsche Bank, and chair of SWIFT’s Corporate Access Group, says in the feature: “Everybody is talking about electronic bank account management and e-invoicing - in other words really expanding what can be done through the same channel.” While SWIFT connectivity is still not going to be high on the agenda for some corporates, these value-added offerings look likely to give a welcome boost to SWIFT’s corporate numbers. 

To compare and contrast a selection of the SSBs available for corporates, download the buyer’s guide to SWIFT service bureaus that gtnews published this year. 

Evolution of corporate payments 

But there was a lot more going on in the world of corporate payments during 2010 than just debate over SWIFT. An article from Nigel McCook of Edgar Dunn & Company discusses the possibilities for future trends in payment systems. Analysing survey results, the article focusses on understanding the importance, both today and in the future, of individual payment products, as well as the key industry events that are expected to shape the payments markets over the coming five years. Some of the key findings discussed include: 

• Credit cards were the payment product given the highest rating in terms of current importance, followed by domestic debit cards. 
• Respondents from Asia gave comparatively higher ratings of importance to cash, mobile SMS, remote payments and remittance. 
• The top four payment products, in terms of their expected growth in importance over the next five years, are: 

1. Contactless cards. 
2. Mobile SMS/remote payments. 
3. Prepaid cards. 
4. Mobile NFC. 

These were among the payment topics under discussion at this year’s Sibos conference in Amsterdam. Following the past couple of years of battering this conference has taken - both from the Lehman Brothers’ collapse in 2008 and typhoon Koppu in 2009 - this year saw delegates and exhibitors alike emerge from their emergency shelters and hit the conference ready to do business and network. You can find full gtnews coverage of the conference here, including both the Corporate Blog and Banking Blog and a wealth of video interviews with perspectives from a number of industry experts. 

Risk Management Issues Rise 

One of the more blatant legacies of the credit crisis has been the rise of risk management and mitigation that treasurers are responsible for. A glaring example of this is the fact that corporates now actively need to carry out counterparty risk analysis of their banking partners - something completely at odds with the ‘one global bank’ policy that many corporates were actively pursuing when credit was both plentiful and affordable. 

A key area of risk management this year has been foreign exchange (FX) - from currency volatility in Europe and South America to concerns over ‘currency wars’ in Asia, corporate treasurers have had to be increasingly mindful of their FX exposures. As such, it is no surprise to find the article from SunGard’s Ryan Heaslip in the top 10 content list. Entitled Cost-effective Foreign Exchange Risk Management, the article looks at steps corporates can take to ensure they have an efficient FX risk management strategy in place. Some questions Heaslip suggests treasurers start by asking include: 

• Are you currently able to gather a complete dataset of exposures?
• Is exposure information provided in a timely, detailed and accurate manner? 
• Is there an operational focus on reducing exposure? 
• Are risk factors used to rank exposures? 
• Is there a strategy that prioritises the types of risk to hedge (e.g. balance sheet, short-term forecast, long-term forecast)? 
• What type of derivative strategies will be used to hedge, after operational considerations? 

The topic of FX risk management was also high on the agenda at the inaugural Global Corporate Treasurers Forum Europe that gtnews hosted at the Grosvenor House Hotel in London in June. The event is an annual independent forum bringing together European corporate treasurers to meet face-to-face, listen to leading speakers and network with industry peers in a high level and exclusive environment. 

Discussion at one session of the forum turned specifically to the transaction risk element of FX risk - where the risk of value changes depending on where the transaction is. Some transaction exposure is not shown in the profit and loss (P&L) because it has not yet been recognised, or the contract is anticipated rather than committed to. A couple of the questions raised at the forum referred to a) whether transaction exposure should be hedged; and b) if it was hedged, whose responsibility within the organisational structure was this? 

One group treasurer explained that their company had decided not to hedge its transaction exposure as they would have had to involve all of its investors, which would have added complexity. It has an impact on reporting - the company would have had to have shown like-forlike figures, and they wanted to protect this information. The factors involved in weighing up whether or not to hedge this risk requires a full evaluation by corporates. 

If you are a treasurer or group treasurer, and would like to find out more about the Global Corporate Treasurers Forum Europe and register your interest in attending the 2011 forum at the Ritz Hotel in Paris, click here. 

Growth in Supply Chain Finance 

Another area of interest to corporates that received a ‘boost’ from the credit crisis is supply chain finance (SCF). The contraction of available credit in the market led to an increased need for bank financing. With a dearth of liquidity solutions available, SCF solutions gained a much greater global popularity. Picking up this trend, Alexander Mutter from Deutsche Bank examined what the future may hold for SCF offerings in his article that rounds out our top 10 for 2010. 

Mutter sees the growth of SCF leading to more diversified and bespoke solutions emerging, driven by banks. He uses the example of a supplier portfolio where there are large, mid-sized and smaller enterprises involved. “Today, a similar supply chain finance solution will be offered to all of them. In the future, the offering to the individual supplier will be customised according to their balance sheet objective, based on the need analysis of this portfolio and risk policies, as well as financial needs,” suggests Mutter. By taking this approach, the SCF offering will be more flexible and tailored to suit the individual customer profile. 

Responding to the growth in popularity of SCF as a topic among corporate treasurers, this year gtnews has worked with Enrico Camerinelli, a senior analyst at Aite Group and SCF expert, to publish a monthly blog on key SCF issues. Topics covered in 2010 include the return on investment in SCF, the importance of sustainable supply chains and the need for an industry standard taxonomy in SCF. You can find every blog post on the topic here. 

Looking Ahead 

2010 proved that, while the role of the treasurer has grown in stature, the demands this places on the treasurer are fierce and come in many forms. The economic world can still be paranoid and reactionary in the aftermath of the credit crisis and, as many corporates stockpile cash, perhaps some treasurers could be accused of fuelling the fire in this regard. It seems that this year has answered a number of questions - regarding global recession and the credit crisis - but thrown up several more challenges. 

Despite this, there are excellent examples of corporate treasury departments and individual treasurers demonstrating best practice across the myriad different disciplines mentioned above. We were lucky enough to witness this first-hand at gtnews in 2010 through the quality and quantity of entries we received for our first annual Global Corporate Treasury Awards, which was this year held in Amsterdam alongside the Sibos Corporate Forum. As you can see from the winning projects, teams and treasurers, innovation is alive and well in treasury departments around the world. 

Coming up on 4 January in our first upload of 2011, we’ll be publishing a series of articles offering perspectives and predictions for the year ahead and mulling over the challenges that are likely to come the way of the treasurer. Until then, best wishes for the holidays from everyone here at gtnews.

Sibos 2010: Banking Blog

Publication: gtnews.com

Post 1: Introducing the Payments Maturity Model (25 October 2010)
The first day of Sibos saw the launch of a new tool designed to help financial institutions on the path to an agile payments environment. 

Sibos 2010 has opened its doors in Amsterdam, attracting around 8,300 exhibitors and attendees, according to the organisers. Bankers, corporates and technology vendors attending the event have hundreds of exhibition stands to browse and a wide variety of conference sessions to attend. 

One session of the opening morning revolved around the concept of a ‘Payments Maturity Model’ (PMM). Louis Blatt, chief product officer (CPO) at ACI Worldwide, was joined by Michael Anderson, senior vice president of Union Bank, Nancy Atkinson, senior analyst at Aite Group, and Leo Lipis, founder and chief executive officer (CEO) of Lipis & Lipis, to discuss this work-in-progress model that takes its lead from the Capability Maturity Model/Infrastructure (CMM/CMMI). 

A live poll asked delegates how their payment structures are currently organised. When asked “Which of the following most closely describes how payments are organised at your bank/clients?”, a majority (65%) said that their payments are managed and processed by individual payment type (such as ACH, ATM, cards, wire transfer, etc) and line of business. The next most popular answers, although far behind the lead response, was shared between “payments are managed and processed by consolidated payment systems (such as one ACH system, one card system, or one wire transfer system, etc)” and “payments are managed and processed through consolidation of all payments types, but segregated by retail banking or commercial banking”. Despite being the next most popular responses, both only polled 14% of the session attendees. The least popular response (7%) was “payments are managed and processed as a single line of business from the bank”. A following poll asked which best described the audience's banks'/clients' current situation with regards to their payments transformation. By far the most popular answers were “in the process of implementing changes now” and “planning for payments consolidation within the next two years, and confident about how to make that happen” - each statement chosen by 36% of the delegates in the room. In third place was “planning for payments consolidation within the next two years, and have an established plan for the evolution”, with 21% of the poll. Trailing far behind were the responses “happy with our existing payments structure and systems as they are” and “have given no consideration to payments transformation”. 

In this environment, there's clearly a role for the PMM to play. In its structure, the PMM identifies five stages: 

1. Reliable. 
2. Scalable. 
3. Efficient. 
4. Responsive.
5. Agile. 

The PMM assesses a bank's current position and determines next steps in that bank's evolution towards an agile payments environment. The model is designed to provide direction on the order and types of activities required to progress to the next stage of this payments evolution, as well as helping provide the business case to invest in this move. Both Aite Group and ACI stressed that this model is still in the development stage, so interested parties are encouraged to contact either company to provide feedback on this project.

Post 2: Practical Finance in an Open Account World (26 October 2010)
A session focusing on financial supply chain issues asked the big question: to what extent is collaboration between banks necessary in order to sustain international trade? 

The second day of Sibos saw some morning sessions starting later than advertised due to the sheer amount of people trying to get through security and into the RAI conference centre in Amsterdam. One of this morning’s sessions was a panel discussion looking at financial supply chain issues in the modern world, particularly the balance being struck between open account and letters of credit (LC). 

The global nature of this debate attracted a diverse panel of speakers. The moderator, Alexander Malaket, president of Opus Advisory Services International, encouraged debate and industry insight from Daisuke Kamai, manager from The Bank of Tokyo-Mitsubishi UFJ; Karin Mathebula, director, head of product, transactional products and services at Standard Bank South Africa; Michael McDonough, managing director and head of product management for trade services with BNY Mellon; and Lakshmanan Sankaran, head of trade sales and services at the Commercial Bank of Dubai. 

The four main themes for the debate were: 

1. Risk. 
2. Client orientation/demands. 
3. Collaboration. 
4. Innovation. 

Kicking off discussion on the risk strand, McDonough made the point that there is a very clear need for the development of common standards in open account - something that the more mature LC markets have had for some time. The risks that financial institutions face in this area vary between the obvious and the rather less obvious. McDonough pointed out that credit risk is the most obvious , and while this isn’t a difficult risk to manage, it is managed differently in open account. He added that financial institutions need to ensure that they fully comprehend and adhere to this different management style. Some of the less obvious risks that McDonough listed included cost risk, declining revenues, and the increasing role of non-banks taking clients from banks. This as a big issue in the payments world, so it was very interesting to hear McDonough argue that it is also happening in supply chain finance. 

McDonough also pointed to the systemic/operational/technology risk that banks are now facing in this area, specifically the nervous disposition of those banks who fear they may misjudge the technology that their clients require, and end up in the equivalent position of offering their clients ‘Betamax’ technology, when what they really want is ‘VHS’. Combine this uncertainty with the trouble that some banks are having in getting sufficient capital from their boards for the required investment in technology, and it is clear that technology is a pain point for some financial institutions in this regard. 

Turning to client orientation, Kamai noted that banks, particularly those operating in Asia, need to be preparing their open account solutions for the market, as there will be a surge in demand for these products as Asian corporates grow in size. While there was a growth in the use of LCs in Asia as a result of the financial crisis, the panel agreed that this was a temporary aberration, and that open account will grow as Kamai predicted. 

In terms of the offerings that banks provide in this area, Malaket drew attention to the fact that the threat of disintermediation is actually forcing banks to be very innovative with their products. Mathebula added that it was important to make the distinction between volume and value in terms of client orientation, and the small and medium-sized enterprises (SMEs) are increasingly investigating supply chain finance solutions and open account. 

Collaboration was the third major point under the microscope in this debate, with Sankaran noting that there is a great deal more willingness for global and regional banks to collaborate on their trade finance initiatives. In its best form, this sees the local knowledge and expertise of the regional financial institution being leveraged across the scale of the global banking partner. Looking at Africa specifically, Mathebula added that it is very important to demystify the business transaction world in Africa, country by country, as the continent is not just one homogenous banking market. 

Turning to innovation, Mathebula told the delegates about the work Standard Bank has been doing with SWIFT in order to get the trade services utility (TSU) up and running. She explained how there is a desire to offer off-balance sheet solutions and that the banks and industry innovators need to proliferate the level of understanding around the TSU and how to get the most out of it. The challenge ahead, according to Mathebula , is how to integrate the TSU with the supply chain. Despite this, the general mood among the panel was one of enthusiasm for this innovation. The same may be true for corporates, and it was pointed out that SMEs are currently demonstrating more interest in the TSU than their large counterparts. 

Overall the mood of the session was positive towards the open account world, in terms of the current state of the market and the huge potential for growth. There are challenges - for example the need for universal standards and a greater understanding of the risks faced and how to manage them - but the benefits of open account solutions and the innovation in the space provide plenty of reason for optimism.

Post 3: Recovery: Transaction Banking One Year On (27 October 2010)
The third 'Big Issue' debate at Sibos looked at how the global transaction banks have fared since last year in Hong Kong. 

The third ‘Big Issue’ debate at Sibos 2010 shone a spotlight on the world of global transaction banking, its place within the wider organisational structure of financial institutions, how it has evolved since the previous Sibos in Hong Kong last year, and what the future may hold for the sector. The moderator, Jeremy Wilson, chairman Global Councils at BAFT-IFSA (formed by the merger of the Bankers’ Association for Finance and Trade (BAFT) and the International Financial Services Association (IFSA)) and vice chairman at Barclays Bank, posed questions to a panel of transaction banking specialists: 

• Karen Fawcett, senior managing director and group head of transaction banking, Standard Chartered Bank. 
• Marco Bolgiani, head of global transaction banking division, UniCredit Group. 
• Karen Peetz, chief executive officer (CEO), financial markets and treasury services, BNY Mellon. 
• Peter Connolly, executive vice president (EVP) and group head of transaction banking group, Wells Fargo. 

The Role of Transaction Banks 

The discussion kicked off with a look at the importance of transaction banking, with Wilson probing where exactly transaction banking now sits within the industry and within a bank itself. Fawcett led the bullish tone of the panel on this talking point, claiming that transaction services are front and centre for financial institutions today. She cited the turnaround in attitude from two years ago, where transaction services were blamed for many of the problems in the financial services sector, and added that there is now a much greater recognition that transaction banking units facilitate trade flows, the lifeblood of the economy. Unsurprisingly, the rest of the panel were similarly optimistic about the current, and indeed future, position of transaction banking. For example, Bolgiani explained how UniCredit has recently reviewed its strategy for the next five years, and that transaction banking is one of the organisation's core strategic focus points. 

As Wilson drew in a more specific comparison between investment banks and transaction banks, the panel again demonstrated their confidence in the current state of transaction banking, while also pointing out the interrelated nature of the different types of bank structures. Connolly commented that focus has shifted from areas such as debt and equity markets, and that a key driver here has been the emerging economies, which have given a lift to transaction banking through their increase in demand for these services. Fawcett noted that a balance is necessary when making this comparison, noting that investment banks need the liquidity that transaction banking services provide. 

The western world is in a prolonged period of low interest rates, and the moderator was keen to understand what effect this has been having on the panel members' transaction banking organisations. Peetz kicked off this part of the discussion by describing how she sees the effect of low interest rates as being different depending on which product you are talking about and that in fact the effect is distributed by different product. Connolly expanded on this point by explaining how product bundling was enabling banks to manage this situation, by mixing those with low interest with others claiming higher fees to create a value added package. When it came to collecting higher fees, Fawcett suggested that some banks had been lazy with their approach to charging fees in Asia and the Middle East, and that this was certainly an area where banks could find more value. 

Pressures on Banks 

Keeping with the regional flavour, discussion turned to the top pressures on business that both transaction banks and their clients face. A key point picked out by Peetz here was the pressure on revenue growth, noting that, as yet, growth in developing markets are not enough to offset losses felt in the contracting markets of the west. Risk management also came up as a key pressure, specifically around operational and counterparty risk. Connolly argued that banks could have been more proactive with intraday liquidity problems, and also tougher on their client counterparties. Certainly intraday liquidity visibility and cost has been an important topic at Sibos 2010, and SWIFT is vocal about the work it is putting into providing solutions to give banks a much better visibility of their intraday liquidity position. 

Back to the pressures that banks are facing, and the issue of regulation loomed large. Wilson asked the panel whether, in their opinion, the capital requirements that are being discussed - particularly with regard to Basel III - are being set correctly. Peetz suggested that senior transaction bankers should be trying to co-operate and talk with the regulators to explain the unintended consequences of such requirements. She argued that during the formulation of the US Dodd-Frank Act, bankers had gone underground and their voices weren't heard. Fawcett agreed with this point, saying that as the regulations stand, 2% could be wiped off global gross domestic product (GDP), and that the problem actually goes back at least 30 years, not just three. 

Peetz argued that transaction bankers need to present fact-based arguments to regulators - for example around areas such as trade and liquidity - but in a way that doesn't sound purely interest led. Fawcett then highlighted how tricky this path can be to go down for the transaction banks, pointing out that heads of global transaction banks do meet with regulators as a group, but that they then also need to deal with a disparate group of national regulators with their own set of individual interests. 

The New Economic Axis 

Wilson then probed the panel on the issues they face with the shifting nature of the global economy. As far as Connolly is concerned, this is an opportunity for the transaction banks. He pointed out that 30% of Wells Fargo's payments go through China, so the current issue is to work out what to do with the renminbi (RMB). He reiterated the point that the volumes in this part of the world are still not overtaking the existing business, but that they will become advanced over time. For Peetz, the key issue is that her organisation is in dialogue in countries where they predict the volumes will be. 

At this point Wilson wondered if the big banks in Asia are going to start eating into this potential growth area for western banks, and Fawcett also drew attention to this point, stating how, with the birth of effectively a new global reserve currency happening as we speak, (with RMB) there are a number of extraordinarily powerful Asian banks that are looking to come west. Looking around the Sibos 2010 exhibition halls, this has felt very tangible this week. As well as the Asian banks, Connolly also identified non-bank payment providers, companies such as PayPal and Google, as future competition for the global transaction banks. Finally, Bolgiani made the point that growth in eastern Europe is also underestimated currently. 

Certainly the past couple of years have been tumultuous for the global transaction banks and, as we've seen, the challenges are only going to get stronger. However, there is a good news story in the way that transaction banks have turned their position around from that they faced two years ago, and this fortitude and dynamism should be a powerful tool for them going forward. Connolly made the point, on the topic of sanctions and anti-money laundering (AML), that all the banks represented on the panel have great individual systems internally but that they don't share. Taking this point wider, a greater collaboration between the major transaction banks would create an even more powerful lobby when speaking with regulators and politicians alike.

Post 4: Banking Blog Review of Sibos 2010 (29 October 2010)

As Sibos 2010 comes to a close, the Banking Blog reminisces about the conference highs from Amsterdam. 

As Sibos 2010 came to a close in Amsterdam, it would be fair to say that the general mood in the RAI conference centre was one of optimism, tempered by the knowledge that there is a lot of hard work ahead. The three 'big issues' of the conference - regulation, rebuilding trust and recovery - provide a useful stake in the ground to see how far the banking industry has come since the dark days of the credit crisis and the collapse of Lehman Brothers. But equally, in each of these cases, the journey is far from complete. 

Looking at the regulatory side of the debate, the tone was set in the opening plenary session on Monday, when Charles Goodhart from the London School of Economics (LSE) questioned why banks were being regulated at all. While this point may have been slightly tongue-in-cheek, he did draw attention to the fact that many in the banking industry believe that the Basel Committee on Banking Supervision should be more concerned about the systemic failures which led to the crisis, rather than on individual institutions. 

Obviously, the regulators have the final intention of rebuilding trust in the banking industry through the measures they are developing, but there was definitely a sense this week that the volume and complexity of what may be in the pipeline will not necessarily lead to this end result, and that perhaps an opportunity is already being missed. Several bankers that I spoke to seemed concerned that the current regulatory approach tars the whole industry with the same brush, whereas an approach that treated financial institutions as individuals, with different risk parameters and model sophistication, for example, would be received in a much better way. 

One feeling at Sibos 2010 was that the approach from the regulators changes almost as regularly as the season - for example last year the focus was all about liquidity, whereas today it is capital that is in the spotlight. In this situation, the best thing that banks can do is make sure that they are focussed on the essentials of the business - such as getting their data in order. Quality of data was mentioned as essential in many of the conversations I had around the exhibition halls. As one industry expert put it: "you've got to compare eggs with eggs." The statistical models that the banking sector have relied on are so intrinsic to the role of the institutions - be it for calculating risk or viewing exposures - that it seems counter intuitive to throw these out purely on the basis that the credit crisis happened 'on their watch'. What a lot of banks are now looking to do is to build on the models they have by revising and stress testing a wide variety of scenarios. By using some of the latest technological advances - for example grid computing - to assist here, banks will be able to regularly refresh their parameters and understand which measures are applicable at any given time. 

The development of technology also speaks to the 'rebuilding trust' theme. The coincidence of the rise of microblog website Twitter and similar social media platforms as the credit crisis was unfolding has created the tantalising possibility of banks being able to listen and respond to their customers in near real time. The challenge for banks is how they analyse, process and respond to what can be, at times, disparate opinions. As one delegate put it, marketing for banks is becoming inbound rather than the traditional outbound, and institutions need to change their approach to this and become a lot more flexible in order to take advantage of the opportunities of social media. 

Overall, I found that representatives from banks at Sibos 2010 are well aware of what is expected of them from regulators and politicians, but also of what they should be striving for as an industry. A number of panel discussions brought together some of the best leaders and thinkers in the banking industry today, and it has been encouraging to see them acknowledge the need for closer co-operation between financial institutions in order to push for change beneficial to the banking industry and its clients, rather than change for change's sake. Delegates from this year's Sibos head back home to their respective 155 countries with a positive message and direction, as well as a lot of work to do before Sibos 2011 kicks off in Toronto, Canada.

2009: Treasury Management Under an Economic Shadow

Publication: gtnews.com

2009 has been a tough year for many in the financial industry, as repercussions of events from the preceding 18 months continued to resonate throughout the year. This commentary looks back over the most-read gtnews content over the past year, with comment from industry experts. 

Comparing the beginning with the end of 2009, you could use the cliché that the global economy has been involved in a game of two halves. The problem is that it can’t be said that the financial services industry ‘won’ either half. However, I think it’s safe to say that most would prefer the current economic conditions to those of January. The year began with terrible news and results almost everywhere - annual performance data from the major stock markets showed substantial falls, with Germany’s Xetra Dax, Japan’s Kikkei 225 and the UK’s FTSE 100 recording the worst performances in their history; bank stocks at major institutions continued to slump, leading to a shift in global power evidenced by both UBS and the Royal Bank of Scotland (RBS) selling their stakes in the Bank of China; while governments around the world implemented stimulus packages to bail-out their economies, failing banks and other major industries, at the taxpayers’ expense. According to Thomson Reuters, the amount of money pledged to economic stimulus around the world, as of 21 December 2009, stands at an eye-watering US$7,199,037,381,538. To follow how events have unfolded throughout the year, take a look at parts 1 and 2 of gtnews’ regularly updated Credit Crisis Timeline. 

All the time that the global economy was charging towards apparent meltdown, corporate treasurers across the world were fighting hard to ensure that their organisations were in the best position to survive, or even prosper in, the storm. Before the credit crisis hit, the role of the treasurer was rather low profile, and had already begun to expand into a number of different areas beyond core treasury competencies, such as cash management. But the credit crisis has brought the role of the treasurer front and centre. As Dub Newman, global treasury executive at Bank of America Merrill Lynch, pointed out to gtnews: “There’s now a treasurer-level focus in the C-Suite business.” Treasurers have never engaged with their chief financial officers (CFOs) and chief executive officers (CEOs) as much as now. And judging by the content that gtnews readers have been reading this year, the focus for treasury has now clearly shifted back to basics - managing cash, liquidity and payments.

Best Practice in Cash Management Crucial 

Renewed focus on pooling techniques 

With the credit crisis biting hard in 2009, the main focus for corporate treasurers has been on their cash and liquidity management strategies. Topics such as netting and pooling, for a long time thought of as dull, dusty topics, have suddenly found themselves back in vogue as treasurers are forced to examine every possible avenue in their quest to achieve best practice in cash management. This is one example of the ‘back-to-basics’ approach to treasury management that has grown out of the credit crisis. 

Two of the top three most-read features on gtnews look at the subject of notional pooling - although from fairly different perspectives. In Evolution of the Global Notional Cash Pool, Karen Kombrink, executive vice president, and Greet van der Steen, managing director, from Bank Mendes Gans looks at the evolving uses of the global notional cash pool. 

To understand the potential benefits of global notional cash pooling, it is important to understand what it is and how it works. In a traditional notional pool, credit and debit positions are offset, which reduces the expense of paying interest on overdrafts, and there is no physical movement of funds. A global notional cash pool uses a global overlay structure based on either a notional or inter-company loan cash pool (physical or zero balance cash pooling); in both cases the need to perform FX and/or swap transactions is eliminated. Again, no funds are physically moved. This offsetting process results in a total consolidated cash position, which is used to apply proper interest conditions to all of the cash pool accounts. The cash pool bank re-allocates the cash pool interest margins, which is effectively an intercompany margin, to its customers on compensated balances in the cash pool. The global notional cash pool is supported by a suite of applications on the internet. These should include bank account reporting, third-party payment abilities, and full integration of data into treasury workstations, enterprise resource planning (ERP) systems and proprietary bank systems. 

Figure 1: Global Overlay Cash Pooling at BMG 

The case that BMG makes for notional pooling is convincing - however, as with all corporate-bank relationships, there are areas that treasurers need to pay close attention to in order to ensure the process fits their needs. The Treasury Insider, featuring gtnews’s own treasury professional blogger, drew attention to these points in their post Are the Days of Notional Pooling Numbered?. The top three points from this blog are: 

1. For a bank to have even a chance at meeting a Basel II partial offset possibility, it will have to have credit facilities in place for the overdrafts and documentation to ensure full right of set-off in an insolvency. The documentation will probably encompass crossguarantees that may affect negative pledge clauses in other bank documentation. Ask any corporate that has recently put a notional pooling agreement in place what the major headache was and documentation often comes out on top. 
2. There is more attention being given now to thin capitalisation rules. Whereas in a company-wide group, consolidation may be adequately capitalised, notional pooling arrangements (just like intercompany lending) may mean individual companies are inadequately capitalised. 
3. There is the possible tax impact with notional pooling. Unless notional interest costs and revenues are charged based on the usual arm’s length principles, the tax authorities may not look favourably on the profit transfer effect of pooling. 

These are all valid points that treasurers should explore before entering such a banking relationship. However, when it works, companies do find benefits. For example, Stacy Cordier, assistant treasurer at Thermo Fisher Scientific, found that their global notional cash pool gave the company “much better visibility of our cash around the globe.” The company is now also self-reliant in terms of working capital requirements. Cordier adds: “Where we have excess cash, we can move that into money markets to increase the return a little bit - even though, in today's markets, excess cash does not generate much return.” Another of BMG’s clients, PSA Peugeot Citroën’s treasurer, Benoit Mulsant, explains how its two global notional cash pools proved their worth during the credit crisis, with reference to the company’s subsidiaries in eastern Europe. “The money markets were so disrupted that liquidity management would have been just unaffordable on these markets. With [our global notional cash pools], we were still able to manage our cash at money market rates without extra spreads. It has provided considerable protection for us,” explains Mulsant. 

Accounts receivable takes centre stage 

In 2009, the gtnews Fourth Annual Cash Management Survey, in association with SEB, produced interesting findings pertaining to how corporates were managing their cash in the credit crisis. In particular, when asked about which cash management process has the greatest potential to improve, our survey respondents did not disappoint. Over the past four years, survey respondents have provided different responses - reflecting the changing dynamics of the cash management environment. In 2006 and 2007, cash flow forecasting was highlighted as the cash management process with the greatest potential for improvement; last year, liquidity management topped the survey. In 2009, the priority has shifted once more, with 33% of the respondents agreeing that accounts receivable (A/R) is now the process with the greatest potential for improving cash management. 

“Working capital management has been elevated on the corporate agenda and for companies assessing their internal operations, A/R is a logical starting point to improve working capital management from a process-orientated angle,” explains Niclas Osmund, head of cash management advisory, at SEB. 

Osmund adds: “The current concern for corporates is not when they will get paid but whether they will get paid at all by some of their customers. As with any balancing act, there are two sides. It is very easy for corporates to get stuck between customers prolonging payment terms and suppliers requesting early payment in order to survive today. If this is the case, it is time for them to consider different options for discounting their cash flow.” One respondent, a senior manager at a western European company with revenues of US$500m- 1bn, commented: “Decreasing margins in the business and longer payment terms demanded by our clients means that we carry the working capital burden. This is coupled with shorter payment terms from suppliers as a result of high insecurity in the current economic climate.” Another, an executive/director at a North American company with revenues of US$500m-1bn, said: “Maintaining current payment terms with customers can be difficult, as they look for longer terms to aid their own working capital.” 

The important thing to remember during this potential squeeze between customers and suppliers is that, by and large, everyone is experiencing the same problems. The key is not to alienate either side of this problem, as in the long-term this could lose your organisation important ongoing business. It is certainly a time for the arts of negotiation and diplomacy to take centre stage - for example, if you can work with your suppliers on payment terms that help them avoid bankruptcy, they may well be willing to provide more beneficial terms for you later on. 

Trade Finance Best Practice to Manage Cash and Counterparty Risk 

Treasurers can use trade finance techniques to help optimise their working capital position, but another gtnews survey in 2009 found that there is still a knowledge gap on this subject in some treasury departments. The gtnews Trade Finance Survey 2009, in association with SEB, highlighted a ‘blind spot’ between how corporates manage their trade finance activity and the way they manage and monitor other cash flows. Only 20% of those surveyed manage their trade finance operations on a global basis, compared to approximately 75% that have global control over their cash management. By centralising the trade finance function, treasurers can claim control over a process that has a significant impact on their company’s working capital position. 

The credit crisis drove corporates to leverage their trade flows, but this in turn has, in some cases, exposed weaknesses in both the physical and financial supply chain processes. This comes back to a company’s governance models for trade finance processing, for example identifying who takes responsibility for trade flows. Corporate treasurers need to examine many internal issues before they can truly leverage their trade flows. For example: 

• How efficient and accurate are the invoicing/trade document procedures? 
• What proportion of the trade flows is included in the forecasting? 
• What are the payment conditions, for example, for a Chinese supplier? 
• Is the buyer fundamentally financing their operation as well? 
• How much political risk is the purchaser covering and has the new risk factor in the Organisation for Economic Co-operation and Development (OECD) countries horizon been strategically evaluated and a procedure developed for how to handle this risk (given the fact that many corporates lack a risk management strategy for the emerging market)? 

The focus on counterparty risk that currently exists among corporates has spilled out into trade finance, with the previous trend towards open account trade finance now actually falling away as many see it as increasing counterparty risk. To mitigate this perceived risk, instruments such as guarantees, documentary collections and letters of credit (LCs) are back in fashion again. LCs are being pushed by suppliers as they give them stronger contracts with the buyer, and also by the buyer themselves, who are seeing the free provision of funded credit facilities from banks, such as overdraft facilities, dry up. Instruments that were being faded out are now fashionable again - another example of the ‘back-to-basics’ approach to treasury management that has come out of the reaction to the credit crisis. 

Payments Automation and Standards 

Managing payments has been one of the other key treasury issues in 2009. The credit crisis has pressured treasurers into finding the most efficient ways to run their operations, and in the world of payments one of the best ways to achieve this is to automate the process and remove paper as much as possible. However, treasurers may also find that, due to the economic uncertainty, their company is less willing to provide the funds needed in the short term to aid the move from paper to electronic processes. To overcome this resistance, treasury departments need to build a convincing business case for the expenditure, something that Chris Bozek, integrated debt and treasury solutions manager at Bank of America Global Treasury Services, highlights in his well-read 2009 article, Payments Automation: Building the Business Case. Bozek argues that corporates need to have the ability to construct a compelling business case and financial model with all the relevant components, and that accounts payable (A/P) departments not aligned with finance, procurement, and technology groups need to agree on and drive forward a change process. His four-point plan to achieve this is: 

1. Conduct a high-level enterprise to enterprise audit by key payment types. 
2. Build a financial benefits model focusing on revenue and potential cost savings. 
3. Form a comprehensive plan to internally sell the business case. 
4. Construct a framework to evaluate solutions in the marketplace to support your organisation's specific goals. 

Automation can help corporates quickly improve their bottom line. However, the increasing number of choices combined with the process to drive change can be daunting. Treasurers should engage their banks and technology providers for help and advice about what is available to them and which solutions suit their specific needs. 

SEPA deadlines pass to mixed responses 

One of the largest ongoing payments projects in 2009 was the continued implementation of the single euro payments area (SEPA). November 2009 was the key implementation month for SEPA, with both the Payment Services Directive (PSD) and the SEPA Direct Debit (SDD) scheme coming into being. Well, sort of. Implementation of the PSD has not yet been universal across all participating countries, banks don’t have to accept SDDs until November 2010, and some countries are culturally opposed to any kind of direct debit at all. Speaking to gtnews, Jonathan Williams, director of strategic development at Experian Payments, sums up the problems SEPA implementation has faced in 2009: “While French banks earlier this year declared that they were planning to make SDD available only from November 2010, German retailers have now stated that they don’t see any direct benefits from SDDs in the first place. For retailers in Germany, the current ELV system works perfectly fine, so why would they want to make changes? Furthermore, a band of consumer and industry groups suggested that SDDs could be in danger of failure if issues on pricing, security and migration are not resolved.” 

Additionally, as Tony Richter, director, global transaction banking from HSBC Global Transaction Banking points out in Part 1 of our Guide to European Payments, on 24 April 2009, the European Parliament revised Regulation 2560/2001, stipulating that it will be mandatory for banks in the eurozone to be reachable for SDDs by 1 November 2010 onwards. For banks that operate outside the eurozone, the deadline is no later than 2014. While this has been a frustration for those that wish to see SEPA up and running as soon as possible, it does at least hold the tantalising possibility of 2010 being the year that SEPA gets one step closer to an end date. Speaking to gtnews, Richard Davies, director of global payments at Logica, agrees: “A mandated end-date for SEPA is needed for it to progress, of course. 2010 has to be better than 2009, so for example the end date of November 2010 for banks to be compliant for the SDD scheme will help.” Despite this, the way that implementation of SEPA seems to be so disjointed is a concern. “It is a shame that SEPA Credit Transfers (SCTs) went live before SDDs, as this led some banks to implement short-term fixes for SCTs, rather than taking an overall approach to SEPA,” notes Davies. 

But in the meantime, what are the potential issues for countries that are delayed in implementing the PSD or the SDD scheme? Ruth Wandhöfer, head of payment strategy and market policy, EMEA, Citi, asks the question as to how these delays will affect the rollout of services from payment services providers in the first part of our Guide to SEPA and the Changing Payments Landscape, which provides a first assessment of the live state of the PSD. 

The positive news on this matter is that the EC recently issued a statement that "Swedish PSPs will still be able to adhere to the SDD scheme if they wish to do so, as long as the scheme rules do not conflict with existing laws in Sweden. SDDs may therefore be offered in Sweden and cross-border on a temporary contractual basis, before the directive is implemented.” This sets a precedent that should apply to the other Member States that have also failed to transpose the PSD. 

One positive view of SEPA is to see the process as a catalyst to develop harmonised solutions across Europe. This is the view put forward by Vincenzo Calla, global head of CIB international cash management at BNP Paribas, in his article, Latest Techniques for Pan- European Cash and Liquidity Management, for the following reasons: 

1. The EU opted for three SEPA means of payments: 

• SEPA Credit Transfer (SCT) - From January 2008. 
• SEPA Direct Debit (SDD) - From November 2009. 
• SEPA Card Framework (SCF) - From January 2008. 

2. SEPA will promote homogenous means of payments across the eurozone and reduce cross-border charges. 

3. It will be based on one common standard (ISO UNIFI 20022 XML), which will facilitate end-to-end automation and facilitate payment reconciliation data. 

4. SEPA will lead to the introduction of additional optional services (AOS), such as electronic reconciliation, electronic invoicing (einvoicing), improved straight-through processing (STP), cost reductions, better cash flow forecasting and compliance. 

5. SEPA will also lead to the development of new solutions such as electronic bank account management (EBAM) standardisation, i.e. one public standard for interoperability and dematerialisation of the account management process as developed by SWIFT. 

Clearly for these benefits to come online for corporates, banks, PSPs and, indeed, governments need to provide consistency of implementation and service. But while this is lacking at the moment, treasurers can still prepare for how to efficiently use SEPA services as part of their overall treasury operations. Patrick Villers, managing director, global business services, corporate treasury at General Electric (GE) advocates that a company's SEPA strategy game plan is also an important project to consider right now in terms of pan- European liquidity management: "A SEPA review must be consistent with other internal strategic initiatives, such as centralisation, automation and standardisation through SWIFT and XML," Villers says. "There is no right and wrong blueprint but it helps to use a structured approach to evaluate what is best for your business." 

This year, ISO 20022 has emerged from the bank-to-bank space, and it is not just in Europe that this has been the case. As Experian’s Williams explains to gtnews: “For US banks, this development has provided a reason to join in with international bank account numbers (IBANs), as it reduces the number of standards that have to be maintained - one of the wider benefits Europe is already experiencing as part of the migration to SEPA. However, given the hesitations corporates have had in migrating to SEPA, especially around the conversion to IBAN and bank indicator code (BIC) formats, the US can learn a valuable lesson when it comes to standardising formats. 

“While a single, global payment initiation format is still some time away, the US should be looking at converting its data in time, setting clear guidelines and communicating the benefits to avoid wide-spread confusion among the corporates and the banks,” Williams adds. 

Banks Buffeted by Post-crisis Winds of Criticism 

The banking industry has clearly emerged from the credit crisis showing the most damage. The huge bank failures of 2008 were followed in 2009 by some vast restructuring programmes - swathes of staff laid off, take-overs and mergers, as some previously large players found they were unable to protect themselves, and of course, ultimately, the (part-) nationalisation of some of the largest financial institutions in the world in order to prevent their certain collapse. Such all-permeating failure of management among the world’s largest financial institutions led to a collapse of corporate confidence. Because of this, banks are now desperately trying to win back the confidence of disaffected customers, mainly by attempting to prove how great the value-added services that they offer are. But while attention is on innovative new technologies, such as contactless and mobile payments, the number of transactions generated by these emerging channels is still low. It is the traditional card-based payments that continue to generate significant transaction volumes and revenues. Speaking to gtnews, Paul Love, business solutions consultant at ACI Worldwide, comments: “While it is important that banks are ready to adopt new products when they reach critical mass, they must also ensure that their current card products remain competitive so that they bring in that important core payments revenue.” 

Love added: “The biggest innovation a bank should make is to equip itself with a stable, reliable and flexible platform to drive its current payments products and to facilitate smaller-scale innovation, where new products are configured, rather than coded, and then tested on selected customer segments. If a bank’s core platform can deliver this without the need for additional development or capital spending, it reinforces the business case and encourages innovation. When approached in this way, innovation can be very quick to market and can carry much lower operational and reputational risk than usually associated with the introduction of new products.” 

Looking globally, and while the large banks from Europe and North America continued to suffer in 2009, there were some strong signs of life in Asia and the Middle East. Chinese banks found themselves in a position to buy back stakes that overseas banks held in them, and the renminbi (RMB) is now being offered as a trade settlement currency outside of China. 

The Middle East has also seen a growth in its banking business, something that has meant financial institutions in the region have had to pay close attention to compliance issues in the new markets they are entering. Speaking to gtnews, Nolan Gesher, senior product manager at Fiserv, pointed out that banks in the region are putting more emphasis on controls, “especially with automating transaction matching and accounts reconciliation.” 

Regulatory Response to the Credit Crisis 

2008 cast the largest shadow over the regulatory world in 2009. How had such huge failures been allowed to happen? How can similar catastrophes be prevented in the future? Speaking to gtnews, Selwyn Blair-Ford, senior domain expert at FRSGlobal, points out that acceptance in the financial community that the regulatory environment has to change has occurred inf four phases: 

1. The aftermath of the Lehmans collapse - banks realised that, in this financial crisis, anyone can go. 
2. Passive acceptance of change. 
3. Denial from the financial services industry (some of which is still around). 
4. Arrival of the new liquidity regime, and other regulatory policy initiatives - change can now happen. 

The early part of 2009 saw a series of regulatory reports published, such as the Financial Services Authority (FSA) papers and the Turner review in the UK and the Geithner review in the US. Reports and reviews of this kind were all designed to tackle the both the problems caused by the credit crisis and address the underlying factors that created the crisis in the first place. 

When it comes to looking at how the implementation of the reports has gone, Blair-Ford says that we are currently in a dangerous place: “ The issue is now in the political arena, where they’re used to having a year or two to debate these issues. It is important that the political will around post-credit crisis regulation does not lose impetus.” 

While the recommended regulatory change will happen, it may take six to 12 months to really start achieving this implementation. With this time lag, it’s possible that these changes will no longer be at the top of the agenda for the financial services industry and it may be caught out by the changes when they are implemented. Political will may also fade and the regulators need to be wary of this happening. It is possible that, rather than all of the regulatory changes being made, some may not be implemented because of the lack of political will. There’s a real danger that if this happens - if not all of the issues are tackled and changes implemented - financial services could sleepwalk into another financial crisis of a comparable magnitude. 

Focussing on the UK, FRSGlobal’s Blair-Ford sees that the parliamentary election next year could potentially have a disastrous effect on the new regulatory regime. The policy being promoted by the opposition party, the Conservatives, of abolishing the FSA is clearly votedriven and short-termist. " In fact, their pledge to abolish the FSA if the Conservatives win the next UK election would set the UK's regulatory landscape back by seven years. The FSA is little more than ten years old and it has taken the best part of the last decade for the financial industry to adjust to them as regulator," he adds. 

Signing Off in a Stronger Position - but it is all Relative 

The economic conditions that treasurers operate in are, by and large, more positive than they were this time 12 months ago. Whereas at the turn of the year, treasurers could have been forgiven for feeling uncertain that all of their banking partners would still be standing the following week, today you can be fairly sure that they will be, thanks to the M&As and unprecedented government action. Credit can still be hard to come by, but there is a general acceptance that it is available (if not necessarily at the exact time you want it and for an inflated price). This level of certainty means that corporate treasurers can get on with the business at hand - managing their company’s cash and liquidity to the best of their ability. The re-evaluation of old methods of cash management and trade finance, for example, have seen treasurers find new and innovative ways of adapting to the poor economic climate. And as well as merely going ‘back to the future’, treasurers have also shown a great appetite for the latest technological breakthroughs that can add efficiency to their department - for example, EBAM and SWIFT connectivity are both issues that have appeared in the most read gtnews content this year. This flexibility of combining the best of traditional methods with the latest technological developments is something that treasurers can rightly be proud of as 2009 comes to a close.