The treasurer’s lot is not an easy one. More often than not our employers see us as practitioners of a non-core activity. If we’re lucky enough to have a financially savvy management, our business may be considered necessary hygiene rather than a generic service that can be outsourced with all the others. In any case, in these challenging times we come under increasing pressure to do more with less.
In such circumstances, a casual observer might expect treasurers to be a radically innovative bunch, always trying to find new and smarter ways to work. Unfortunately, we seem to be deeply conservative, hiding behind the sanctity of money. This is ironic: money, being just a collection of (hopefully secure) bytes on a network, is highly conducive to technological reinvention.
At Nokia, the search for ever-improved processes in our effort to survive as a cost and technology leader pervades treasury as well as other operations. I often find myself sitting in meetings with my logistics colleagues. After they have explained how they can move physical parts around the world for pennies, it is deeply embarrassing — not to say career threatening — to try to explain why it costs me US$10 to move a few bytes of payment around.
Nor can I shirk my responsibility for this. My logistics colleagues did not wait for the logistic service providers to bring them ready-made solutions on a silver platter. They had to go out and find suitable partners and push them to think and act out of the box. And if I whine that money is highly regulated, they laugh me out of the room. These people have dealt with some of the most recalcitrant customs authorities on the planet. And they have succeeded — to the benefit of both their commercial and governmental counterparts.
Being just a simple treasurer, I am unlikely to succeed in wiping clean hundreds of years of banking legacy so that we can enjoy payment services at email prices. With some frustration, I have decided to accept the legacy clearing systems as entrenched and unchangeable. Consequently I focus my efforts on what I can change — our intra-and inter-corporate processes.
Back in May 2001, The Economist wrote about “a 14th-century banking system”. Since then, various new approaches to clearing have been proposed and some have even gone live. Interestingly, the banks themselves seem the most enthusiastic about avoiding using the traditional clearing systems — witness interbank solutions such as Visa and MasterCard, CLS, and STEP2. (See “A Treasurer’s Alphabet,” at the end of this article, for explanation of the arcana of treasury system acronyms.) If the banks are so eager to avoid traditional clearing, surely that might be a sign that corporates should also be looking for cheaper alternatives?
Some industries like credit card service companies, airlines, and telecoms have developed vertical solutions for off clearing settlement. Visa and MasterCard offer horizontal solutions like VisaCommerce, which are genuine alternatives to traditional clearing systems. But most corporate efforts try to work around legacy clearing systems rather than to effect any fundamental change.