Corporate Perspectives: Talking digital Asia trade and treasury with GE
Manu Taneja, director of regional cash & banking, APAC at GE Corporate Treasury in Singapore sees a role for traditional trade finance in Asia, but digitisation will be core to the future – as will the role of treasury itself.
TXF: How do Asian regional treasury centres of multinationals usually structure their operations?
Manu Taneja: Several variables impact the structure of Regional Treasury Centres (RTCs) in Asia. However, first and foremost, the structures need to align with underlying business realities. Among others, regulatory environment and banking infrastructure, are the factors that play a key role in determining RTC location.
Most Asian regional treasuries tend to have regional headquarters in Singapore or Hong Kong. But at the same time, corporates have treasury presence in large markets, such as China and India, overseen by RTCs.
Exposure Management, trade operations, and cash are the most common functions run out of the RTCs. In a lot of cases, these RTCs are supported by Shared Service Centres for running operations.
TXF: To what extent is trade and treasury digitised in Asia?
Manu Taneja: The momentum of the digital technology agenda is being driven in Asia by increasing consumer power. This will deeply impact businesses and will generate massive opportunities and challenges to corporate treasury centres. Even now, some industries in Asia have tapped treasury as the facilitator for implementing mobile payments, e-commerce payment methods, supply chain financing (SCF), and data analytics.
Regardless of future business expansion into new geographical footprints, restructuring, or new business, this is the time for treasury in Asia to tap digitisation to ensure efficient operations. This will allow for more time to be spent thinking about strategies and improve business partnerships that will provide a competitive edge in this digital age. Generally, the global banks are ahead in this space, with regional banks working to catch up.
TXF: Some banks I speak to say that treasury is not necessarily their first port of call any more when they are discussing trade digitisation solutions, they tend to speak to business development. What do you think treasury’s role should be?
Manu Taneja: Treasury helps the organisation by creating efficient cash management models and capital allocation frameworks. Both aspects link back to trade products. Also, treasury is pivotal for managing financial risks for companies. In the case of presenting trade solutions digitally, a treasury centre’s banking and trade funding experience can be leveraged. Treasury’s experience is also valuable in connecting all stakeholders, including business development, and facilitates discussions as one voice with banks. There are greater efficiencies to be realised when business development and treasury are aligned on digital strategies and initiatives.
TXF: How important is trade finance in relation to working capital solutions in Asia?
Manu Taneja: With major supply chains and trade corridors connected, Asia alone accounts for more than 60% of the value of trade finance transactions in 2017 – amounting to US$6 trillion. Therefore, leveraging trade finance will greatly optimise working capital in Asia.
TXF: What role do traditional trade finance tools play in Asia treasury?
Manu Taneja: While the global trade finance landscape is changing due to technological innovation and increased market competition, traditional trade finance still plays a huge role in Asia, especially regarding usage of letters of credit globally. However, with banks, financial institutions and fintech firms focusing on digital initiatives in Asia, trade finance may look less traditional than ever.
TXF: How progressive are supply chain finance programmes in place across borders in Asia?
Manu Taneja: While the supply chain financing ecosystem has taken root in the West for decades, here in Asia there is still apprehension to move into these advanced solutions, except for a few major MNCs. Fintech firms now entering the market, are competing with banks for market share in Asia – setting the scene with faster, better, simplified services for buy-in from corporates. This means that the tide should be changing fast with huge opportunities to tap into Asia.
TXF: What's the level of interest among corporates in Asia for Swift global payment innovation (Swift gpi)?
Manu Taneja: Due to its sub-one-minute cross-border payment speed and tracking ability, corporates in Asia have shown keen interest in Swift gpi – especially on cross-border flows relating to restricted markets, mostly in Asia. We’re also hoping that this can improve the reconciliation process. The other big advantage we foresee is payment visibility, especially inward remittances, leading to more efficient cash management.
TXF: How is Asia unleashing its trapped cash?
Manu Taneja: Governments across the region are taking a cautious approach, allowing corporates to take cash out of a restricted country. They seem to be open to a dialogue on a case-by -case basis and are more receptive to the needs of the corporates. The governments do understand the role of global corporates in helping with their economies. Overall, we are seeing a definite shift in the region where governments are more open to allow movement of cash with controls in place.
TXF: What are the best practices in forecasting cash, and to what extent is it automated?
Manu Taneja: The best practices in forecasting cash would largely revolve around technology, that is the ability to integrate data from multiple sources, coordination between treasury and business development, and sound analytical tools. A recent trend in Asia is showing data driven analytical tools that pulls from multiple sources, which helps companies do better at forecasting.
TXF: What are the biggest concerns for the future affecting treasury in Asia right now?
Manu Taneja: The 2008 global financial crisis badly impacted Asia economies. Since then, we had a prolonged economic upturn. No one knows when the cycle turns, but treasury can play its part, by being well prepared for the future.
The impact of trade wars and the ever-changing regulatory environment reaches beyond Asia. This presents treasury with challenges and opportunities to partake even more in managing risks and exposures for the company.
With digitisation being the core theme in the upcoming fourth industrial revolution, treasury centres will have to think about how to integrate digital into its core.